All Forum Posts by: Michael Hutchinson

Quote from @Doug Smith:

Brokers are paid in 2 ways: Borrower Paid and Lender Paid. Most brokers build in 2.75% to the pricing (we build in less). That means that if this broker is building in 2.50% into the pricing, then if they go lender paid, the rate is higher, but you have no points. For borrower paid, they got off the base rate, called a "Par" rate, and then charge you points for their fee. When we go borrower paid, we might also bump the rate a bit to provide a lender credit, which offsets that a bit or completely. Does the estimate also provide a lender credit to offset it somewhere? If they are making 2.5%, that's pretty reasonable. They might not be raising your rate as high as they normally would if less points are being charges. I hope that helps. 

 100% right.  I will add information to that to complicate things.   If they are a correspondent, they get greater flexibility.   You can vary the fees and rate to get the front/back end payout without needing to disclose the changes as it is in the rate.      My Correspondent channel has more flexibility than my Broker channel.    The lending channel makes it hard to distinguish the deal quality.    Personally, I didn't know all of the differences in how deals are structured until I did multiple channels.  

Key is to get a competitive quote IMO if you are unsure if you are getting a fair deal.   

Quote from @Nate Marshall:

It is average. 1-3 is normal. The more you know you know. 

 True IMO.  However, the cost to process a loan is really almost $3k at most firms.   Now, that isn't always shown to the customer and people will say "in house processing" or underwriting or whatever.   Those people still get paid, facilities, cost, etc.   That cost is passed through in the rate, but also in secondary on the resale of the loan.   Good news is that most lenders have compressed margins in some fashion ... if you are dealing with a reputable lender.  

I hate to say this lender is over charging because I don't know his/her program, but getting a second quote is certainly a good idea here IMO because the fee on that product appears quite high.

Quote from @Jonathan Riordan:

Quote from @Michael Hutchinson:

Quote from @Jonathan Riordan:

Quote from @Jay Hurst:

Quote from @Jonathan Riordan:

I am under contract on a house and my lender sent over the closing cost estimations. It looks like they are charging an origination fee of 2.5%. This seems high compared to what I have seen in the past. What have y'all seen in regards to origination fees? 

Thanks in advance! 

 @Jonathan Riordan    The cost is just like the rate in that it depends on the details.  is this for a conventional loan?  Owner occupied or non-owner?  Credit score, down payment all play into the rate AND costs of a loan. It may very will be overpriced but no way to know without the details. 

Yes it is a conventional loan, owner-occupied, high credit score (near 800), 5% down, $220,000 loan! Thanks for all of the help. 

 I agree with others, depends on the firm.   However, a general comment is that lenders are thin on margin right now to entice customers into the market.   If they are charging a higher fee, they may either be giving you some back in rate or they are just fat with overhead and have to charge it.   In the Charlotte market, I see most fees ranging from $1,800 to $3,000 when I compare our costs.   

However, I have complete control over my charged fees in most of my business and I can charge the cost on the front (fees) or the back (rate) so it is a balancing act to find the right fit to the customer and business.   My recommendation is look at the total offer and work with people you trust over time.

 That is a good point. I will likely just discuss with him and see if there is an area where I am making up for the higher up front cost. Thank you for the input. 

That is where I am having a hard time, I see people recommending shopping multiple different lenders, but also know there is a lot of benefit in using the same lender for every deal if possible and forming that relationship. Do you recommend searching for the best rate? or using the same loan officer if it is someone that you trust/form a relationship with regardless of their rates and fees? 

 Happy to help.   About 1/2 my business shops me and that is fine.   We are very well priced in my market usually hold up.  However, it depends on loan product.  As an example, it is hard to beat out a large depository who can service the business for a big Jumbo ... those businesses will do it at cost or a loss to maintain the other parts of the financial relationships.   Builder is similar where the builder is buying down the cost so that they can have preferred lenders that they feel comfortable can close every time.   

Personally, I steal a lot from large online lenders because many in the industry value relationships because the client/realtor experience can be hit or miss with those huge shops.

I would go back to the lender and also get at least one other quote in parallel.   

Quote from @Jonathan Riordan:

Quote from @Jay Hurst:

Quote from @Jonathan Riordan:

I am under contract on a house and my lender sent over the closing cost estimations. It looks like they are charging an origination fee of 2.5%. This seems high compared to what I have seen in the past. What have y'all seen in regards to origination fees? 

Thanks in advance! 

 @Jonathan Riordan    The cost is just like the rate in that it depends on the details.  is this for a conventional loan?  Owner occupied or non-owner?  Credit score, down payment all play into the rate AND costs of a loan. It may very will be overpriced but no way to know without the details. 

Yes it is a conventional loan, owner-occupied, high credit score (near 800), 5% down, $220,000 loan! Thanks for all of the help. 

 I agree with others, depends on the firm.   However, a general comment is that lenders are thin on margin right now to entice customers into the market.   If they are charging a higher fee, they may either be giving you some back in rate or they are just fat with overhead and have to charge it.   In the Charlotte market, I see most fees ranging from $1,800 to $3,000 when I compare our costs.   

However, I have complete control over my charged fees in most of my business and I can charge the cost on the front (fees) or the back (rate) so it is a balancing act to find the right fit to the customer and business.   My recommendation is look at the total offer and work with people you trust over time.

Quote from @Casey Ratlief:

Been looking into the Columbia market and it seems attractive. But I have read conflicting reports about its future prospects.

I’ve seen reports highlighting its population growth potential: http://www.thestate.com/news/l...

And I’ve seen reports throwing cold water on their growth prospects: https://www.postandcourier.com...

Anyone have experience there?  what are you thinking about this market long term?

I look at it as a stable, secure market.  USC keeps it relevant and it is a cross roads in the state, so I don't see it going down.   If I were looking there, I would be in class B-C properties and not A.   My concern is upside growth and the taxes on investment properties.   I personally invest in NC, not SC, but Columbia would be very stable in my view.  Here is the current outlook.    Good luck and reach out if I can help as I am in Fort Mill, SC.

Quote from @Kai Kopsch:

Overall, the Charlotte-Concord-Gastonia real estate market is poised for growth in the coming years, offering opportunities for both buyers and sellers this spring of 2023.

Looking ahead to March 2023, the Charlotte region's housing market will likely remain relatively stable, with a gradual increase in inventory, as more sellers enter the market. Months Supply of Inventory increased from just 0.6 to 1.3 a + 116.7% & Median Sales Price year to year from  $360,000 to $365,000 + 1.4%.

For buyers, this market forecast suggests it may be a good time to purchase a home in the Charlotte-Concord-Gastonia area. With a significant percentage of sales occurring below the list price, buyers may be able to negotiate better deals.

For sellers, the forecast indicates that there will be continued demand for homes in the Charlotte-Concord-Gastonia area. However, inventory is rising, which may lead to increased competition among sellers. Homes in good areas priced reasonably still reserve multiple offers and sell quickly.

 It is a good time to buy here IMO.   I am also in market and the influx of people keep this market from having appreciation issues.   Here is some data to help those looking.

Quote from @Sarah Schopbach:

Hello BP's,

We live in Asheville, NC and I wanted to see if there is anyone on here who has done recent ADUs on their property.  Did you decide to do a prefab or get a contractor?  What was the cost?  Has it been worth it?

Are you doing STR, MTR or LTR with it?

Thank you!

I haven't done what you are describing, but one piece of advice I might give is to check with your lender on loan constraints.   As an example, I had a customer get a property with an ADU on an FHA loan.  What they didn't realize is that the full property has to be FHA compliant and their plan was an issue because the additional space didn't meet FHA guidelines.   Just check in advance to make sure you won't have unforeseen issues.    Hit me up if I can help.

Quote from @Israel Merchan:

Good Morning everyone, i wanted to reach out and hopefully gather ideas on ways i can start my investing journey. A little background information im currently in the navy but getting out in December and moving back to Rock Hill SC in July, i have a small savings and im starting school again come January. once december hits i will lose my Military pay and rely on GI bill BAH and what ever i make off a part time while i am in school. ive thought of purchasing my first home when i hit SC and using my military income to get approved for a loan and house hack, ive also thought about moving in with my brother and saving the 5-6K a month the military pays me for the last 6 months of my service, which would boost my savings quite a bit, but without the steady income from the military after, i see getting a loan quite difficult. thoughts? ideas? 

SC is a great option and Rock Hill is cute. A house hack can work IMO, but you have to get your loan while you have income. Once you lose income you will lose that purchasing power unless you do a DSCR type loan. Lots of places around a little further out that are a steal. Look at places like Clover and hit me up if you need a few tips. Good hunting!

Quote from @Russell Brazil:

An inquiry on your report only affects your score a couple of points. Its not a big deal.

 Yep.   Amazed how many people think this is a big issue.   I usually see 3-4 points.   Lenders price in 20 point bands and often do free credit advice to help customers.    I have never seen the credit pull be an issue, though I discuss with most customers as that is the common perception.  

Quote from @Jonathan Farber:

Hello BP world.  I know you can receive a commission as a real estate agent / broker if you have a license and refer business to someone, but does the same rule apply to mortgage lenders/brokers.  

Example - you have a lenders license and know someone ready to buy a house, you refer them to another lender - can you be paid some finders fee in this example? 

Thanks

Generally, no.  Here is the regulation.   Compensation practices   "no loan originator may receive compensation from another person in connection with the same transaction".    On the external side, it is labeled a "kickback" and unethical.  You can lose your license, suffer fines and jail time.  

That said, there are exceptions and here are a few:

- Paying referrals is covered by RESPA (Internal referral fees)  - This is normally inside of the firm where you are not licensed in a particular state.  
- Dual role - My company today has its real estate license.  In theory, I could put a realtor under me and it would be an internal referral fee.  
- MSA - You are allowed to build MSA's for co-marketing purposes, which kinda meets your purpose.  It is a gray area in the rules, but one were a lender might work with you.

I can't think of another exception, but the group may be able to.