Points charged on Mortgages <$100K in St. Louis?

[Mike B.]

Good Afternoon All!

I'm in my last steps to lock up financing (conventional) on my first investment property - final inspection was this morning and am discussing options with my lender.  

For those purchasing homes that are less than $100K, are you being charged points? I'm told that at 20% and 25% down, I will be charged 2.50pts and 1.25pts, respectively. They say on funding over $100K, there are no points charged.  Is this typical?

Thanks in advance,

Mike

[Andrew Postell]

@Mike B. that does sound like a lot of points but in reality lenders actually lose money on these loan sizes.  Many lenders won't even lend below $100k.  Some wont' lend below $75k.  You found one that will, and maybe those fees help them "stay in the green" on their balance sheets for those loan sizes.  I am assuming this is a normal, conforming Fannie Mae/Freddie Mac type of loan.  There are other lenders out there who have no loan minimums and that don't charge those fees.  Up to you if you want to switch but maybe try posting this in the Missouri forum too?  Just state you are looking for a conventional lender with no loan minimum and see if any local people can give guidance.  Hope this helps!