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Tulsa Mortgage : Podcast 18 – Part 2

Steve: We’re in the twilight zone right now, folks. Just give us a second. If the $50,000 purchase, the seller can only pay 3000. What if those title fees or those closing costs are going to change? What portion of them? None of them. Your prepaid interest it’s going to go down. Your insurance maybe will go down a little bit. Maybe. You never know. It depends on the condition of the property, and the roof, and whatnot Tulsa Mortgage.

Tyler: Title insurance it’s going to get a little cheaper.

Steve:  Tulsa Mortgage Title insurance it’s going to get a little cheaper, but you’re still going to have the same underwriting fee, you’re still going to have the same processing, the same appraisal, the same title. The attorney title it’s the same price, no matter if it’s a 50,000 house or a 500.

Tyler: Doesn’t it take less work on a $50,000 house?

Steve: No. It takes more work. Stop. Why would you say something like that?

Tyler: Well, it’s just a $50,000 house.

Steve: It’s a what?

Tyler: Tulsa Mortgage It’s just a $50,000 house. I’m not asking for a $300,000.

Steve: Don’t talk to me right now with that.

Tyler: I just want $50,000.

Steve: I want to fight Tyler over this. Has anyone ever got into a live fight on a podcast? A fight. I want you, Facebook people, to see this. I’m going to fight him. Tulsa Mortgage On live Facebook and podcast. Not really. Tyler, come on man. No, it doesn’t matter if it’s a 50,000. The costs are going to be – a lot of them are going to remain the same.

Tyler: Why?

Steve: Well, what’s the appraisal cost on a $50,000 house?

Tyler: $500.

Steve: What’s the appraisal cost on a $200,000 house?

Tyler: $500.

Steve: What is $500 as a percentage, compared to 50,000? Do you know what that number is?

Tyler: What’s the question?

Steve: 20%. It’s 20% of 3000. It’s going to be a 20th of 1% and on a $50,000, in terms of thousands, the number goes up, because that’s the point. You’re working out for percentage. That’s why it can be a little wicked. Somebody wrote in and said to me, “Why do lenders charge fees?” Well, you’re going to want to go to the internet, which someone has to pay for, and google that.

Tyler: Google it please. Please google it.

Steve: You have to google it. “Why do lenders charge fees?” Because they can. Those are the answers. I’m totally kidding, I’m the one who wrote in. This is what’s on the sheet. Look. This is from what I typed earlier, when I was just typing and I was just going crazy because I can. If your local market has established that most lenders charge a $200 application fee, then you can expect that fee.

Lenders charge fees to offset the initial expenses of finding and founding a mortgage loan request. Look, we’re a business like anybody else, so we have to have money in order to be able to pay for thing like – even though we don’t pay Tyler, we have said that on our previous podcast, we have to figure out, we have to collect money in order to be able to do your loan. That’s why lenders charge fees. Closing costs you can save on versus closing costs you cannot. Tyler, what do you think?

Tyler: You might be able to get cheaper insurance somewhere Tulsa Mortgage.

Steve: Cheaper insurance?

Tyler: Yes.

Steve: Yes. That’s a closing cost you can save on.

Tyler: You can save on that.

Steve: What else could you save on?

Tyler: You can get some help. I don’t know if you necessarily save on. Costs are what they are in most cases.

Steve: Third-party fees, what we call third-party fees, like title, are pretty standard across– we had a little dust-up today about a title company, didn’t we?

Tyler: Sorry, because [background noise] Tyler dropped the bomb up in this place.

Steve: I love that one, “What? You’re saying weird”.  There really aren’t costs you can save on. You could take a much higher insurance rate like we talked about earlier and potentially [background noise] – What’s that “boing-boing” that keeps happening?

Tyler: That’s when we got an email. We got feedback.

Steve: That has to be what it is.

Tyler: We got some feedback.

Steve: You know what it is? ITunes down here it’s trying to open, because my phone is connected, and I think it’s charging or something Tulsa Mortgage.

Tyler: That would be why.

Steve: Look. That’s what’s happening. My phone is trying to connect to this going “boing-boing”.

Tyler: We figured it out.

Steve: We figured it out live, on a podcast. We’re down to three live viewers on Facebook. Thanks for staying engaged people. I’m kidding. We have 350, because we’re big deal. Listen. Here’s the thing. This gives an example here that I typed earlier. Say you have $50,000 on a loan, you’ve been quoted at 1% origination fee, along with a $300 appraisal fee. By the way, this book must have been written — that I wrote in 1990. See that $300 appraisal fee, $300 underwriting fee, $300 processing fee Tulsa Mortgage.

That’s a total of 1500 plus 900 we’re at $2400. Your loan officer tends to make half of that, or $1200. Do you see that Tyler? This is old school by the way none of that is true, because your loan officer does not make a percentage of the underwriting fee. That is not what happens. It’s not like the lender charges a 1000 bucks, and I get half of it. Tyler, what if you got half of the underwriting fee? Would that be okay?

Tyler: No. Well, I don’t know Tulsa Mortgage.

Steve: You got half the underwriting fee and the discount. Whatever. You just got half it. All the time. There’s a thing called Dodd-Frank and that’s why they enacted this, because loan officers used to get paid that way, and they didn’t want your income to be tied to the cost to the buyer, or the borrower. They put a stop to it, because they don’t want you giving someone a higher rate, or a higher cost, so that you could profit from it. If you have a lender that’s doing that, that’s highly illegal, so run away from that lender.

We put lots of laws in place to protect people from that. Maybe more laws than we need. Actually, probably. The new loan estimate is a new thing that came out in October that protects you from that, but not really. The point is, when it comes to closing cost, you just want to know that up front, because we do run into this happening a lot, and we dealt with it one today, Tyler, where somebody didn’t really plan for the fact that they were going to have closing costs. They’re doing an USDA loan, which is a 100% loan, it doesn’t require down payment, right?

Tyler: Right.

Steve: In doing that loan, they don’t have to bring a down payment. But what they didn’t account for is that they had closing cost and they’re closing cost are– I mean their credit is not that good. So their costs are higher.

Tyler: But loans are free.

Steve: No, loans aren’t free bill. I’m up —

Tyler: But it’s a 100% financed, right?

Steve: That was inappropriate.

Tyler: It’s a 100% funny.

Steve: Please take that back. So yes, loans aren’t free. But here’s the thing. They didn’t account for all those costs we went through. Okay and in her case insurance was 1800 so that was higher. She actually had some origination cost because of her credit score. So her closing scores were 60, like right at about 6,000. Is that what you came up with? She didn’t have 6,000 dollars. She didn’t plan accordingly. So what was going to happen Tyler? She was going to closing with six grand?

Tyler: If she could.

Steve: Hey what would you do? What would you do? You think I’m coming to closing with nothing because it’s a 100% loan? Right? Then you get the fee estimate from me and it says you bring in 6,000 bucks. What goes through your mind?

Tyler: O-M-G.

Steve: O-M-G I don’t have the six grand. That’s what goes through your mind. So find that out before you even find a house. Talk to your lender about what the costs are going to be. Be prepared so that when you do make your offer, you know what to ask for. You know what to tell the seller, “Hey seller, I love you, I think your house is wonderful. I know you want 154,000 dollars for your house. I’m going to give you that. But I want you to pay 6,000 of my closing cost. Because I’m not paying you retail for your house. But I want to pay my closing cost.” Why not do that? Then you know. Then you’ve planned for it. Then you know what you’re going to bring. That’s the point, right? How many houses does that happen in a week?

Tulsa Mortgage Tyler: All the time.

Steve: All the time. So what happens? We get a contract, just like we did today and it says, let’s see if we’re going to recall this one. It was 160,000 — it was a new construction. 151 or something like that.

Tyler: 161.

Steve: 161 and they were not paying any closing costs really.

Tulsa Mortgage Tyler: Zero dollars.

Steve: So the buyer was going to bring six grand. So guess what happened? We fixed it. Look, I don’t mind fixing problems, I’m kind of a fixer, Tyler is a fixer, the Steve n Tyler show combined, we’re fixers. I know I said it, even Tyler. That’s correct, even Tyler. Steve and Tyler, even Tyler. I think that’s a play on words.

So, ask your lender before so that I don’t have to come back and correct it because it’s just to raise your loan. Because if I get your contract on a Monday and its takes me three days to get your realtor to renegotiate it and change it and increase closing cost paid by the seller, it just puts you and everybody in a bad position and it puts us two or three days behind in closing.

So be aware of that and there’s another thing that came up that someone was asking is our fees on purchase and re finances the same? So I’ll hit on that real quick. No, they’re not because you have some fees that are different and how you can say on appraisal fees is impossible because they’re what they are and they’re not the same.

Tyler: You can’t negotiate it but —

Steve:  Tulsa Mortgage You cannot negotiate appraisal fees. You can negotiate your closing cost which could reduce and therefore eat up on appraisal fee but you’re not really going to change much when it comes to the appraisal fee. So that is — that’s us for today that we’ve got. Talking about closing costs and what you can expect and I hope that was helpful beneficial for everyone and that’s Steve and Tyler in the Steve n Tyler show, signing off of our episode number 18. See you.