THE LENDING GEEK
The word “penalty” usually drums up less-than-stellar images in one’s mind. So why are loan brokerages and banks so quick to attach penalties to your loan, after having jumped through so many hoops just to procure it? The answer is not clear-cut, but there are a few common reasons you might have to deal with one.
When a loan agent starts talking about a “loan origination fee” or “points,” a signal may go off in the borrower’s head alerting her to a problem. These two things (which are the same thing) have been recently ingrained in many of us to represent a red flag, and for a very good reason.
Telling someone I work using the “no-cost loan” principle usually leads to the feeling of “there’s gotta be a catch.” When you tell someone something that sounds like it’s too good to be true, it usually is. Fortunately for my borrower (but unfortunately for me to have to convince them), it really is just that.
So how do you know whether your broker is treating you right? You check the “Good Faith Estimate” you [should] receive within three days of submitting an application with any loan brokerage. Without an explanation of this form, however, you might as well be signing a document written in a foreign language. In this article, I’ll do my best to dissect these fees and give you an understanding of what needs to be there, what might be there, and what should not be there.
I am a real estate salesperson. What this ultimately means is that I can both act as an agent in the buying and selling of real estate and I can also originate loans, including construction loans, rate/term refinances, cash-out refinances, purchase money mortgages, etc. There are tons of licensed real estate salespeople in California, but there are also a bunch of unlicensed agents doing business under a bank’s corporation license. This only comes into play when you’re talking about loans, because all real estate agents must be licensed to sell houses.