What Is a Mortgage Origination Fee?

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4 жыл бұрын

What Is a Mortgage Origination Fee?
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Пікірлер: 141

@pfeiffdog0811 4 жыл бұрын

You could tell Dave was really happy to get this call and help teach someone the basics of a mortgage

@Ryan_DeWitt 4 жыл бұрын

I love calls like this. To learn more about $ and fiances. While it can be entertaining, calls that are more of marriage counseling/therapist type questions aren't really in the scope.

@McLaneFS 4 жыл бұрын

He was being sarcastic

@jcrwzr 10 ай бұрын

If you play the video at 1.25x speed, he sounds even more enthusiastic!

@cheezybred 4 жыл бұрын

Good question, I was uninformed on this topic.

@fmaz1952 4 жыл бұрын

It's like the banks are trying to make financing as obscure and abstract as possible so people can't understand how expensive something is or compare easilly when shopping.

@ninthfloor33020 4 жыл бұрын

Sell the husbands truck and it’s rice&beans and beans&rice for y’all.

@missaida44 4 жыл бұрын

ninthfloor33020 Plus with the corona virus that’s a perfect meal.

@Izael1701 4 жыл бұрын

What he didn't ask was, "What is your credit score?" The points may or may not be "fair" depending on her credit score. Assuming a higher score, then, as a lender myself, I would agree that that was a ripoff deal.

@ericasnyder5109 4 жыл бұрын

Great info thank you Dave!! Reading your book and excited about battling debt and seeing through this COVID storm!!

@SeanBaker 4 жыл бұрын

I understand why they recommend the 15 year, but "life happens" is why you would get the 30 year.

@MichaelP-ke1tm 4 жыл бұрын

You could always refinance to a 30 if the 15 year monthly is too high.

@kristymarie6065 4 жыл бұрын

Exactly it’s great but not everyone can do a 15

@BudgetLove 4 жыл бұрын

@@kristymarie6065 I agree

@penguin12902 4 жыл бұрын

You can always pay off a 30 in 15, you can't change your mind and pay less on your 15 if someone loses a job.

@numanuma20 4 жыл бұрын

I’m glad to the channel posted a practical video. Everyone knows the basics of whah a mortgage is but not everyone know all the extra terminology thrown in some mortgages. I have never heard of this and thanks to this video, I have a better understanding of the additional things some mortgage companies tack on.

@BudgetLove 4 жыл бұрын

Well explained I will do more research on this topic. Buying a home can be stressful but its also important to understand everything single step and term.

@irocitZ 4 жыл бұрын

I remember hearing about an origination fee back when I got my mortgage, I didn't know then what it meant. Even now, it's still freaking confusing. Just listening to Dave explain it to the caller who didn't seem like she was getting it either was starting to make my head spin.

@erichilarious3066 2 жыл бұрын

I’m in mortgage, it is the amount you pay to the mortgage company or bank to originate, process and underwrite your loan. You can pay more up front to decrease your interest over the long run

@AlliNW0nderland. 10 ай бұрын

Jennifer Beeston breaks it down very well. She has videos about points and breaking even and the whole 9

@GARNET-DAGGER-FF9 4 жыл бұрын

Goodness Rachel was talking too much

@myvtec79 4 жыл бұрын

That was great advice and simple to understand thank you sir. 👍

@APBusinessLive 4 жыл бұрын

Dave Ramsey always gives the best advice. 🇯🇲😊

@leonardwharris 4 жыл бұрын

You would get a better rate on 15 opposed to a 30.

@jcrowley1985 4 жыл бұрын

Get a 30 and pay extra. That way you have a lower payment in hard times but can pay more in good times.

@richard1113 4 жыл бұрын

@@jcrowley1985 This. Getting a 15 year makes no sense in the grand scheme of things unless you have high income. Making accelerated payments on a 30 year gives you flexibility and you don't pay much more in the long run if you do so.

@ElectricBlueIX 4 жыл бұрын

Richard Forester have ever used a mortgage calculator? The difference in interest paid between a 30 year and 15 year is astronomical. I’d say 90% of people with a mortgage never pay extra on it. The reason Dave suggests 15 year is because he also recommends you don’t buy more house than you can afford.

@richard1113 4 жыл бұрын

@@ElectricBlueIX Way ahead of you. I had a 30 year mortgage that I refinanced to a 15 year and then paid it off in 9 years. The point I was making is that if you take the 30 and make additional payments you get can easily get the same result without the stress of having to make the higher payments in a 15. Obviously you will pay more interest on a 30 than a 15 if you don't do that.

@BudgetLove 4 жыл бұрын

Not everyone can afford a 15 year loan.

@doctorhorton 4 жыл бұрын

Rachel is correct on the 30 getting a better interest rate than the 15 and was the case for me. Banks make more on a 30 because they get the interest for longer so they give you a better interest to make it more enticing. Check for yourself using an Amortization calculator (I used credit karma) $100000 loan at 4% for 30 years cost you $171,870 $100000 loan at 4% for 15 years cost you $133,144 Even if the bank gave you 3.5% instead on a 30 they still get $161,656 The reason is interest is calculated each month so 180 payment periods on a 15 vs 360 on a 30. This is also why banks don’t even bring up biweekly payment options unless you ask as they would make less money in interest.

@SoHailusive 4 жыл бұрын

Rachel Cruze learned something today

@RusskiCommieBot 4 жыл бұрын

Give me liberty or give me $1200.

@insideoutsideupsidedown2218 4 жыл бұрын

Ted Striker lol

@TheLifeJOGJourneyofGrowth 4 жыл бұрын

Never heard of origination fees before. Thank you for explaining this!

@AlliNW0nderland. 10 ай бұрын

Woo I’m glad she called to ask

@PurpleRose8725 Жыл бұрын

Dave was so excited to answer the question he didn't ask if they were actually ready to buy.

@LearningFast 2 ай бұрын

5:23 Rachel says that a 30 year fixed has a better interest rate than a 15 year fixed. Isn't it the other way around?

@drew3811 4 жыл бұрын

Dave Ramsey handles these really good deeper questions better than anyone els!, idk how he could ever be replaced. (Sorry, I know I’m be a little harsh on his team)

@phildiianni2059 3 жыл бұрын

there is no way charging 6 points would ever get approved. costs would be way too high

@DougAlesUSA 4 жыл бұрын

5:20 Rachel keeps thinking to herself; don’t look like I have no idea what they are talking about. 🤔 I know 💡 I will give my head a small nod. Just don’t talk. That’s it, don’t talk. Oh, they want me to talk. I need to say something. “Some people take out a 30 (year loan) to get the better interest rate then the 15.” 🤣🤣🤣 This girl just showed she does not undertand. 30 year loans have higher rates then 15. Rachel. 🤦‍♂️

@michaelcookielover6091 4 жыл бұрын

Wait, do you have to be a good at all aspects of finance to be on this show, or can you have your own specializations? Go back to your perfect world of understanding everything about all finance and do nothing to spread it.

@DougAlesUSA 4 жыл бұрын

Michael Cookielover, this is not an advanced concept such as Macro Economic Theory or a mid-level concept such as net present-value analysis, its fundamental personal finance, on a show about.... Personal Finance. So yea, if she is going to claim to be a personal financial advisor, she should have this down.

@juniortapafua7287 4 жыл бұрын

@@DougAlesUSA Agreed

@Tandrew 4 жыл бұрын

The biggest problem with the 15-year fixed is that the average American can't afford that per month

@anthonyc362 4 жыл бұрын

Tandrew because housing is way out of line with incomes due to the Fed and government intervention. Housing needs to come down to match incomes.

@Tandrew 4 жыл бұрын

@@anthonyc362 no argument here

@pablolinazi3859 4 жыл бұрын

True the market is very high for now

@lifewithmandy5220 4 жыл бұрын

I absolutely agree, except it depends on how much your house is. We were VERY blessed to find a home for $46,000. We gave a $10,000 down payment and did the 10 year fixed rate. It is very difficult to find a home that price and mostly renovated. I do agree though. Unless, you can afford a mortgage payment to begin with, 15 year fixed wouldn't be the best option, even though you'd save on interest.

@Tandrew 4 жыл бұрын

@@lifewithmandy5220 I could not find a good house that cheap and I live in a lower income region. That's awesome you could. The secret is to try to pay more principal so that pay less interest

@3FAZNI 3 жыл бұрын

Which mortgage company do you guys suggest for the mobile homes in Florida?

@chipsta2008 4 жыл бұрын

I think Rachel misspoke here. The better interest rate should be on the 15, right not the 30?

@DoctorSmartyPants 4 жыл бұрын

You are correct. Good catch!

@DoctorSmartyPants 4 жыл бұрын

I think she meant to say that "you get a better or lower monthly payment" on the 30 year.

@Gmaspoiledbrat 4 жыл бұрын

Should also look at a credit union. Mine is doing a 15 year for 3% with 1/8 points for a refi.

@arinbaghermian9959 2 жыл бұрын

I am a mortgage loan officer and totally cringing at this explanation.

@keithowu 4 жыл бұрын

Rachel misspoke at the end, 30 year fixed does not have better interest rate than 15 yr fixed.

@randy944 4 жыл бұрын

sounds similar to insurance: lower premiums (interest rate) but higher deductibles (points)

@Sexy40baby1 4 жыл бұрын

im so confused. I don't understand points either. glad I don't have to deal with that for now

@jhford1234 4 жыл бұрын

As a mortgage banker, there is hardly ever a time I would recommend to someone to pay points. Unless it is a small amount and you will recoup the cost with your monthly payment savings within a 24 month period, it is not a good investment. There are lots of lenders that will do your loan for a flat fee of $1000 or much less. Dont pay points or high origination fees.

@ittakesavillage5461 4 жыл бұрын

NBKC has been great with no origination fees or points and we have always been under 3%

@NJ-750 5 ай бұрын

Although this does seem high there is far more than cost of loan. The structure needed for the loan means a lot. Also the LO should explain options why the point being used.

@Fullrusher 4 жыл бұрын

Funny I ran into this yesterday while day dreaming about a house lol came in hand right in time lol also who’s the lady ??

@LearningFast 2 ай бұрын

What about the tax benefits of paying a point?

@insideoutsideupsidedown2218 4 жыл бұрын

16 years ago, i wished i had locked in a 15 year fixed mortgage.....i would be sitting in a free and clear house paying only property tax and insurance.

@LG123ABC 4 жыл бұрын

If you have a 30 year mortgage you can still pay extra on the principle and pay it off in 15 years. There's no law against it.

@insideoutsideupsidedown2218 4 жыл бұрын

Yes, but 99% of the people who do that, don't.

@MichaelP-ke1tm 4 жыл бұрын

@@insideoutsideupsidedown2218 Only if you had the income to pay more monthly

@insideoutsideupsidedown2218 4 жыл бұрын

@@MichaelP-ke1tm I have the same income then as I do now, actually less because when we bought the house we didn't have kids.

@richard1113 4 жыл бұрын

Or, you might have lost the house because you couldn't afford the increased payments. Having a 15 year mortgage is not magical. You always had the option to accelerate your payments. Why didn't you?

@joeb1522 4 жыл бұрын

I would not pay 8 points. Typically zero points is best, especially if you want to try to pay to off early.

@Khyleb253 3 жыл бұрын

Just should just looked at the total interest paid over the 30 years for each loan

@callmegorgeouos Жыл бұрын

They always talk about getting a 15-yrs mortgage but how much monthly payment compares to 30-yr; could everyone just pay/get 15-yr??

@Colyers 4 жыл бұрын

She could have just googled mortgage points calculator.

@insideoutsideupsidedown2218 4 жыл бұрын

Lol, Dave, worth millions, still using a TI-3135....

@jonathan3917 4 жыл бұрын

720p in 2020. Nice

@xmen123ify 4 ай бұрын

All she has to is find the breaking even point and see how long she will save on buying points . If you are doing to stay there the whole term do it other wise don’t and if you don’t have the cash for it don’t do it .

@ACCOMPLISHEDSHEIS 4 жыл бұрын

OK.. STILL BAFFLED AT THIS, BUT ITS A MUST TO LEARN IF GETTING A LOAN ON A HOUSE.

@insideoutsideupsidedown2218 4 жыл бұрын

JOURNEY LIFE at no time would i ever pay points.

@twilde3754 4 жыл бұрын

I just googled "origination fee" and discovered that they are at the discretion of the lender, and are often included in the closing costs -- they can be from 1% to 6% of the total loan amount, but usually closer to 1-2%. The only time that origination fees are a sure bet is with student loans -- there's a surprise.This is why I love the Dave Ramsey channel -- I am always learning something new.

@MichaelP-ke1tm 4 жыл бұрын

Why did this lady say you get better interest rate on a 30 at the end?? You get better rates on a 15 but pay more monthly.

@ErinWilke 4 жыл бұрын

She probably mis-spoke meant total dollar amount of interest monthly

@MichaelP-ke1tm 4 жыл бұрын

@@ErinWilke Which is also false. You pay more interest monthly on a 30 year for 2 reasons: 1. The interest rate is higher. 2. It's amortized for 15 years longer which means more total interest. The reason 15 year mortgages have higher monthly payments is because you're paying more into the loan principal. There are only 2 main differences between 15 and 30 year mortgages: 1. 15 year has lower rates. 2. 15 year has higher monthly payments I recommend everyone get 15 year mortgages if they have the budget for it. If the lender qualifies you for a 500k mortgage, get a 300k mortgage instead with a 15 year loan to own the house faster. 30 year mortgages are only good for investors who would use the extra capital to buy rental properties which 99% of people don't know how to do effectively.

@aolvaar8792 4 жыл бұрын

look at Provident funding, can get a lower rate on 30 than 15 also you can get negative points

@MichaelP-ke1tm 4 жыл бұрын

@Sir We Are About to Die The higher monthly payment doesn't benefit the bank. IT BENEFITS YOU because the higher payment is reducing the principal balance of the loan much faster than a 30 year mortgage. And I guess because they recoup their money faster if it's 15 years which means less risk for the bank but I don't know the answer to that.

@MichaelP-ke1tm 4 жыл бұрын

@Sir We Are About to Die Then that person should get a 30 year mortgage and then make extra monthly payments towards the principal if they get a higher income.

@evanmoores4980 4 жыл бұрын

15 yr fixed in southern california. Yeah right

@starrshine5976 4 жыл бұрын

AEW needs to hire this dude as an imposter JR.

@all4godify 4 жыл бұрын

I made a mistake with getting VA loan. wish I found Dave earlier

@makazine 4 жыл бұрын

Why was the VA loan a mistake?

@Christfollower89 4 жыл бұрын

VA Loan is PMI exempt, I'm not sure why it would be worse. I have a VA loan on my house

@louislouis19801980 2 жыл бұрын

@@Christfollower89 Unless service-related disability plats then still have Funding Fee (which is somewhat cheaper, I guess)

@Christfollower89 2 жыл бұрын

@@louislouis19801980 well I didn't have a funding fee with mine or when I refinanced due to my disability rating

@LG123ABC 4 жыл бұрын

I understand the thinking behind getting a 15 year mortgage but why not just get a 30 year mortgage and pay extra on it? You can pay off a 30 year mortgage in 15 years (or sooner) as long as you're disciplined about it but you're not locked into a higher minimum payment during tough times (like right about now).

@beenaroundlongerthanyou7424 4 жыл бұрын

Be sure to get a loan with no prepayment penalty.

@canadianjatti 3 жыл бұрын

hardly anyone is disciplined enough to do so and like they said. life happens.

@n.r.krishna995 4 жыл бұрын

First time I could not understand anything of the Math & Calculation. Could you please explain in detail with another video.

@MichaelP-ke1tm 4 жыл бұрын

The mortgage company gives you a rate of 4%. You say, no I want 3.5% so the lender charges you money to lower it down to 3.5%. If you're in a low interest rate environment like right now, buying down interest is smart. You could probably get a 2-3% interest rate mortgage these days by buying down rates.

@canadianjatti 3 жыл бұрын

that is some twisted stuff....glad we dont have that in canada. Mortgages are very straight forward here. No such thing as origination

@dadisig.3445 4 ай бұрын

I don’t hear her question being answered

@teixeirao Жыл бұрын

That was not too helpful. breaking down the monthly and total cost of the loan and maybe bringing it to present value would have been a better way to help her.

@demonfox0958 4 жыл бұрын

Should you go for a 15 year mortgage when u have no intentions of living in the house for a long time? Should u instead go 30 years to keep your payments low and invest what u save?

@grayandgray 4 жыл бұрын

I think Dave would say you stick to 15 years on your house and then do you investing separately. Not favor investing with the idea that you'll "beat the mortgage rate" in the market. Even if you're going to move, you're building equity over 15 years to try and get to that paid off home goal.

@demonfox0958 4 жыл бұрын

@@grayandgray i see that as pointless when u can use the extra money to improve the house and make some profit when u sell in a few years.

@DarknessFalls29 4 жыл бұрын

The caller needs to take a free first time homebuyer class or seminar. Hopefully it's offered in her area by the county, credit union or non-profit organization.

@blackworldtraveler3711 4 жыл бұрын

DarknessFalls29 All I did was spend time at the library before buying my first home.

@DarknessFalls29 4 жыл бұрын

BlackWorldTraveler that's another too! Better than going in blind.

@williamperez9827 4 жыл бұрын

She messed up ... you will never get a lower rate on a 30 year loan vs a 15 year loan.

@McLaneFS 4 жыл бұрын

What is a point?

@DoctorSmartyPants 4 жыл бұрын

It is short for saying "percentage point". Therefore, 1 point is one percent of the loan.

@McLaneFS 4 жыл бұрын

Karen M thank you

@twilde3754 4 жыл бұрын

Does an origination fee only come into play when someone is not putting 20% down? Thanks Dave, Tamara

@insideoutsideupsidedown2218 4 жыл бұрын

T Wilde no, i got a mortgage without 20% and paid no point nor origination fees.

@twilde3754 4 жыл бұрын

@@insideoutsideupsidedown2218 Thanks so much! I appreciate your answer. Stay safe and healthy :)

@DoctorSmartyPants 4 жыл бұрын

Origination fee is the lender's commission. Has nothing to do with how much you put down. Lenders do not work for free, so if they waive their fee, they will make up for it elsewhere.

@canadianjatti 3 жыл бұрын

@@DoctorSmartyPants so is it always in play then? this concept is foreign to me...we dont have this in canada.

@kongstrong1938 3 жыл бұрын

Look up Jennifer Beeston if you want a great loan on your mortgage. She is the best with little to no origination fees. 0 for VA loans, and 1,200 for FHA loans no matter the loan amount.

@ordinaryman1603 4 жыл бұрын

don't get into debt and come back to Dave for reducing debt again.

@djpuplex 4 жыл бұрын

Thank God I have no desire to own a home.

@blackworldtraveler3711 4 жыл бұрын

K Roddy I'm glad I paid mine off in 9 years and paid cash for my beach home.

@hurt1704 4 жыл бұрын

BlackWorldTraveler that's the life I want. Beach home and regular home. Nice work man

@GardenerEarthGuy 4 жыл бұрын

If they charge origination fees, just stop in front of their house for a few minutes and just say you delivered their pizza.

@terriesmith8219 4 жыл бұрын

If she was smart, she'd wait to purchase a house. Prices will go down even more.

@rdbeaz Жыл бұрын

But remember use Dave's guy....

@DrMedicineManMD 4 жыл бұрын

No thanks, I'll Google the answer.

@abdullahjamal3063 4 жыл бұрын

Davey pls stay at home, be safe. We don't want you dying from Corona. I hoped to see you on KZfaq for another 2-3 years. Oh well, I guess I will just watch Rachel then.