California Loan Closing, Points & Fees
Meet Michael Moss, loan counselor.
Frank talk about closing costs,
loan points, fees
...and those $395 mortgages you see on TV.
What is your record for closing loans on time at the end of the escrow process?
I would say that it's a rare day that a loan doesn't sign because of something that we have done. I think it's also important to recognize that there is a difference between refinance mortgages and purchases. When you're doing funding for a purchase, time is a much more critical element. For a refinance, it's much less critical. This is because there is only one party to the transaction. If you're buying a house, you have a buyer and seller. If you are refinancing, there is only the owner of the property, which makes the time involved much less of an issue.
The seller wants the deal to close, he wants to move to Wisconsin or wherever he's going off to, so escrow needs to close. On a refi, unless the borrower needs cash out desperately, the time involved tends to be less of an issue.
Dennis Anderson, Senior Loan Consultant: We do have locks which guarantee our rate for a certain amount of time. If they go over that time, they can end the deal, or it will cost the borrower some extra money. Normally, locks are around 30 days.
Michael Moss, at work.
What are points on a loan?
Points on a loan are the charge by the broker to get the transaction completed. Due to the nature of how a deal is structured, there may or may not be points. One point is one percent of the loan amount.
Dennis: Points are usually charged to facilitate a loan rate. You have a choice. You can take points on a loan and get a low interest rate, or you can forgo the points and get a higher rate.
What percentage of loans do you close?
With the ones originated here, with the borrower's cooperation, we close north of 90%. Almost always, the reason a loan doesn't close is because the borrower has given us inaccurate information, or we can't get the needed information. Maybe the borrower has lost his motivation, or has decided to take another life course, whatever. But it's almost always due to borrower participation issues.
What about places that advertise on TV a home loan for a total of $395? Is that all there really is for the average borrower?
No, and here's the trick. By charging the borrower a higher interest rate, they receive a rebate from the bank that ultimately funds the loan. The higher the rate, the more the rebate. In this way, they pay for a lot of the costs affiliated with the loan, but the borrower ultimately pays for it in the form of higher monthly payments because they have been sold this really high interest rate. It's a terrible game.
California Mortgage Home Loan Brokers,
a Los Angeles mortgage company
Attn: Michael McKown
16027 Ventura Blvd. Suite #500
Encino, CA 91436
818-841-0051 Local
888-632-9939 Toll Free
E-mail to Michael