Loans loans and more loans!

[Joseph Pucci]

DO lenders always have loan points or depends on the lender itself? Any regs that I should know about?

when buying up the interest rates its increments on bases points are always .25 bases points increments correct? 

Discount points are always tied to the loan never the property. Does anyone have the Pts tied to the property itself? or is it regulated to only go to the loan?

What do others look for when discussing discount points?

Can anyone help me understand how brokers are paid? Different ways? 

[Stephanie P.]

Originally posted by @Joseph Pucci:

DO lenders always have loan points or depends on the lender itself? Any regs that I should know about?

when buying up the interest rates its increments on bases points are always .25 bases points increments correct? 

Discount points are always tied to the loan never the property. Does anyone have the Pts tied to the property itself? or is it regulated to only go to the loan?

What do others look for when discussing discount points?

Can anyone help me understand how brokers are paid? Different ways? 

1.  Some loans are priced with points and others are not.  Conventional loans don't typically have origination points.  Portfolio loans almost always do.  There are so many regulations you should know about, that it's best to employ a good mortgage broker and let them worry about them for you.
2. No, buy ups are in 1/8 increments
3. I've never heard of points being tied to the property.  Discount points are used to buy down the interest rate.
4. When discussing points, it's simply math.  The formula is how long you're going to own the property and whether it makes sense to pay points, get a higher rate, or buy down the rate to keep the property for a long time.
5. I'm a portfolio lender/broker, so my answers are geared that way.  I don't do conventional financing.  Brokers are paid either with points or yield spread.  Some wholesale lenders will allow the broker to increase the rate and will pay them points for the higher rate.  Some brokers have a set amount of money that they make on each deal and will adjust the rate and points and yield spread accordingly.  For example, a 100K loan may have 3 points on it at 6% interest.  That's $3,000.  If the borrower is short on cash, they may increase the rate by .5% or up to 6.5% and only charge 2 points and get 1 in yield spread.  They may take it to 7.25% and charge no points.  That's how lenders/brokers do no cost refinances; the rates are jacked up so they get paid yield spread on the back.  No one does anything for free.