Origination vs. Discount Point 🏡 Lenders Are Charging Extra Points 😡 - YouTube

Points points points points. Yes. We need to have a serious talk about points

So I am getting loan estimates from around the country. So thank you guys. Keep on sending the man

I'm always happy to look at them and be like, yeah, this makes sense. Er, oh my god. This is concur bitch

this is a trash can fire of garbage and and what I'm noticing on a lot of them is

Points just points points points. So let's talk about what those are so there's two different types of points

There's what's called an origination point, okay?

An origination point is when the lender says hey, I'm gonna charge you a percentage of the loan to do it now

There's a very big lender in the country right now that is charging one origination point up to

$3,000. So if you're buying a

$200,000 house. They're saying hey to even work with me. It's two grand if you're buying a

$300,000 house three thousand dollars to work with them if you're buying a five hundred thousand dollar house

It's three thousand dollars toured with them cuz not over three grand is their thing

This is not normal guys. You don't have to pay origination points to work with the lender now

It's important to note that sometimes the cost of an origination point could be less than other fees

So if you're looking at two loan estimates and you've got you know

Maybe they're charging a quarter origination point but this other lender is charging underwriting processing, you know, blah blah blah

it could be lower nine out of ten times when a lender is charging an origination point it's a sign that they're

More expensive than the rest of the market just from what I've seen in my experience

So I would say hey, I don't want to pay an origination points

Like I'm happy to some level of origination for instance at guaranteed rate. We charge

VA loans we don't charge her origination

anything else is one thousand two hundred and ninety dollars if you buy a

Hundred thousand dollar house if you buy a four million dollar house

If it's an apartment and if it's a condo if it's townhouse, if it if it's a house house if whatever it is

we're twelve ninety period

Period it is not a sliding scale

It is one thousand two hundred and ninety dollars period okay, so you want to make sure you're talking to lenders about hey

What are your charges to do the loan? Because I'm not seeing a ton of people do that?

And that's why I think I'm seeing some loan estimates where I'm like, oh my god

You're paying origination points and discount points and your rate is higher than what I could offer you. That's all I'm so sorry

Let me help you

So original origination points is what you would pay the lender, okay?

Now what's a discount point and also I need to clarify this one point equals one percent of the loan amounts

So let's do some super easy math right now

hundred thousand dollar loan

one point is one thousand dollars half a point is five hundred dollars a

Quarter of a point is two hundred and fifty dollars got it

So whatever your loan amount is if someone's saying oh, yeah, it's like two points

This doesn't mean like two dollars guys. If you have a five hundred thousand dollar loan, that's 10 grand 10 grand

and I have seen I saw a loan estimate last week where it's like

The rate was just a little bit lower than what we could do with no points

It was a five hundred thousand dollar loan. The lender was charging them

Fifteen thousand dollars it points to go into eighth of a percent lower. It makes zero

Mathematical sense, but there are so many winters around country that do not care if it makes sense

They just want you to sign the dotted line. So you guys need to watch out for this

So discount points are supposed to be charged to lower the rate

There is no rule with lenders on how much it has to make sense

Because if you said I really want two point seven five and I say gosh

I mean I can do two point nine nine months no points and two point seven five is gonna cost - that doesn't make sense

Most lenders are just gonna go

Okay, sir

Two point seven five it is and then see if you catch on the good faith estimate

that now you've got two points or let's say it's a

$300,000 loan six thousand dollars to get that lower rate

And

I think it's worse right now because there are there's like articles and there's some lenders that are like were under 3%

And it's like they're under 3% but they're charging money to do it and like nine out of ten cases

Like at non-va. So I've got a lot of veterans that follow me. Love you guys, but this is VA. Yes. You're under 3%

Hundred percent with no points no origination all day long. We're saying it

Conventional loans conventional loans. I have not seen below three percent without a little bit of a charge on a 30-year

Okay, 15-year different story

But the bottom line of this video is you guys need to know like if that lenders giving me a rate

Are they charging me points are their origination points are their discount points and a lot of times?

The thinking is oh, well, we'll make my payment like $40.00 lower and they roll it into the loan anyway, so it doesn't matter

Guys it still matters you need to do the math

If you can't do the math lender needs to do the math if the lender won't do the math

You need to dump the lender and call me seriously

Like I always boggled by this where someone's getting Bulow's below adequate service

They're paying more for below adequate service yet. They have some weird loyalty to the lender. They're like oh, but he was really nice

Yeah, he's super nice cuz he's totally ripping you off and not nothing to teach you anything

I mean, I guess not doing your job and making a ton of money makes you super nice. I don't know

So, please be aware. It does not always make sense to buy points

And there's so many people right now

I got three loan estimates for one client and they were all at this 2.8 at 75 on a 30-year fixed

Conforming loan and all of them had one to two points and I was like, dude, what are you doing?

Like you can just go a little bit higher and not have that money because even though it's rolled onto the loan

One day you're gonna sell that house

And when you saw that house, you're gonna be really sad about all the money you gave away

So it's very important that you guys are careful. If you have more questions about points. I have a video. Um

Gosh, I think I have two videos all about points because it's something that comes up a lot. It's one of those things where like

You know, sometimes if you like you guys don't do loans for a living

So you're like, oh it says origination point that must be normal, right?

Because you don't know what normal is and that's totally excusable. But now you do it is not

Normal to have origination points on a loan

it is not normal to have discount points on a loan you can get alone without an origination point and

Without discount points. So it's important to know. Hey, if I don't have discount points, what would my rate be?

Because sometimes that rate makes a lot more sense. So I hope this has been helpful as always feel free to reach out

There's a link to my calendar so you can book a time to talk and thank you for watching