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I have a good faith estimate showing nothing on line 808, mortgage broker fee. It says compensation to broker from lender (not paid out of applicant’s loan proceeds). I spoke with another mortgage broker who said this is not true, the lender will collect from us and then pay broker. He says they will come to closing saying we need to pay more. He charges $ 660 mort. broker fee. Any idea if he is right? or could we really not have to pay broker fee?

2 Thoughts on Is it possible to have no mortgage broker fee?
  1. src50
    October 21, 2012 at 5:51 pm

    Technically, it may be true. But then the lender is just adding that into it’s own costs.

  2. biggaaron
    October 21, 2012 at 5:57 pm

    The purpose of the GFE is to disclose the estimated costs of the loan prior to getting a loan. If he is going to charge you, he needs to let you know before you go to closing.

    But mortgage brokers can make money in three ways:

    1. Charge a mortgage broker fee (on line 808), or
    2. Be compensated by the lender (which is what you have)
    3. A combination of the two

    When a mortgage broker is figuring out your rate, he is looking at the pricing of a specific rate. For instance, 6.5% may be the par rate, or the rate at which there is no discount and no rebate to the broker. However, if he instead gives you a rate of 6.75%, he may get a rebate of, say 1%.

    Some brokers will give you the lowest rate (par or even lower) and charge you an upfront mortgage broker fee. Others will charge you a smaller amount and make the rest on the “back end.” Still others may charge you nothing, but give you a high enough rate to still make money on the back.

    If you were to go to another broker, they may give you a better rate but charge up front. It’s not a bad thing necessarily. If the higher rate only costs you another $ 10/month, but saves you $ 3000, that’s comparable to paying the same amount for the first 25 years (3000 / 10 is 300 months, which is 25 years) of your loan, ie, it would take 25 years at the lower rate before you actually start saving money compared to that higher rate.

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