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1% origination fee and itemized charges on a VA purchase loan?

I am getting a loan through the preferred lender of the builder of the property. I was under the impression that we were going to be charged the itemized fees, or the 1% origination fee, but it looks like we are being charged for both. Should I switch lenders? The lender's explanation is that the builder is paying 2.5% of non-allowable fees at closing, so that's how they justify charging the origination fee? I'm confused. by kevin.s100 from Redmond, Washington. Nov 18th 2015 Reply


Christopher Stancato (Kyle Stancato)
#3 ranked lender in Washington - 59 contributions

The biggest thing is that you compare apples to apples. See what the builders preferred lender is going to offer you. Rate, program. And the key question to ask is how much money will you have to bring to closing. Will the builder pay for any closing costs if you use your own lender?? Usually it is best to go with the builders lender, but you always want to check. On a VA 30 year fixed conforming loan what is the rate and fees they are charging? Call if you have questions..I am a preferred lender for a couple builders and I can show you both sides. I am local. Kyle Stancato. 253.460.6000

Nov 18th 2015
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William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,938 contributions

Va guidelines are very clear as to which fees you can be charged for and which fees you cannot. The fees might be real, and are allowed to be listed, but if lender is giving you a credit to offset the costs, then that is allowable.. Example: The total of all your closing costs including origination fee, title, escrow etc.. equal 3.5% of the sale price, but the builder is giving you a 2.5% credit, then the NET cost to you is 1% which falls within the VA guidelines.. IMPORTANT... builders have relationships with lenders mainly because they want to control the entire process.. however this is not required.. you can use your own lender.. and if you do use your own lender, the builder will still have to give you a credit to pay for the non allowable fees.. so I suggest you contact a local mortgage broker and let them give you a written quote so you can compare.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Nov 18th 2015
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Dave Skow (daveskow)
#16 ranked lender in Washington - 142 contributions

On a VA loan - the buyer ( you ) is only allowed to be charged certain fees ...there are some buyer fees that the seller ( in this case - the builder ) will be responsible to pay for ..... I would recommend contacting this lender and several others on the same day and asking a " loan cost worksheet " using the same exact parameters and then compare and contrast what you receive......often using a builders lenders isn't as good as it might sound .......if you use a non preferred lender - is builder will to provide any additional credit for your costs ( other than the fees that they are mandated to pay for by VA guidelines)??

Nov 18th 2015
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Derick Condron (rightstartoregon)
#32 ranked lender in Oregon - 597 contributions

As stated the lender can charge both if you are not paying all of them. You should be getting a better rate for the 1% origination charge then if it was not being charged. The preferred lender usually has a relationship with the builder so it is always good to get a second option. We lend in Washington if you would like to see a second quote.Derick CondronRight Start Mortgage, Inc.dcondron@rightstartmortgage.com

Nov 18th 2015
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,524 contributions

Any Loan Officer worth dealing with can easily explain any question you ask... VA doesn't allow lenders to charge a couple of normal fees... But in no way shape or form do those fees come anywhere close to 2.5%. Ask him for a breakdown. Watch him squirm. Next, probably the worst place you can ever get a loan if from the builders preferred lender. Too many games played in higher rates, and phony items... For example, the builder says you are going to get a free finished basement if you use the preferred lender. Or they will pay all you closing costs if you use the preferred lender. The reality is that those "free" items are already built into the cost of the home, and now they can make even more money be zinging you on the loan too.

Nov 18th 2015
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