I use a rudimentary amortization schedule I’ve had saved for eons in google sheets. Currently unable to send from work laptop but here is a better one i’ve been meaning to tinker with to replace my rudimentary copy:
Amortization Schedule with Principal Paydown
I’m not the most tech savy individual so let me know if that doesn’t work. But you can probably fine similar amortization schedules online.
That seems really low. Typically, there is an origination fee of at least 0.5% ($2,000 on a $400k loan), plus an appraisal fee of at least $400, and then there’s the lender’s title insurance, which is generally at least another 0.5% ($2,000). So that right there adds up to $4,400 on a $400k loan. None of those costs would occur if you didn’t get a mortgage.
I’m confused - the initial loan is not a refi - it’s a purchase loan, or possibly a conversion from a construction loan. So how would @footsox be doing “another no cost refi”?
I would point out that @footsox lives in FL.
Then the best calculator is probably your own spreadsheet. If the link that @tlucio provided doesn’t work, let me know and I can post one in dropbox.
AJ
AJ:
What state are you located in? "Typically, there is an origination fee of at least 0.5% ($2,000 on a $400k loan).: origination fee should be a flat amount: my company it’s $1,200 and competitors are anywhere from 1,100-1,800. Not based on percentages.
“I’m confused - the initial loan is not a refi - it’s a purchase loan, or possibly a conversion from a construction loan.”
And I’m basing it on an end-loan refinance as OP stated he’s doing new construction. With new construction, initial loan will be a construction loan (Interest Only). I based figures on his final loan after home is completed. Title fees, again vary by state, but here in IL on an end-loan; will be $653. On construction loans, OP is going to get whatever that lender’s posted rate is as there are not options to buy down or buy up the rate.
“I would point out that @footsox lives in FL.” I can update later how Florida would look like as that state charges intangible and county taxes based on loan amount. So in his situation, he will get dinged twice: Initial Construction Loan and then on the End Loan Refinance. And Florida does have much higher title fees.
I guess you don’t consider Rocket Mortgage to be a competitor? From their website Mortgage Origination Fee: The Inside Scoop | Rocket Mortgage
Every mortgage I’ve gotten has had the origination fee expressed as a percentage, not a flat fee. That said, the last mortgage I got was about 4 or 5 years ago.
Edited to add:
Sorry, I didn’t answer your question about what state. I’ve gotten mortgages in Iowa, Connecticut, Pennsylvania, Utah, Nevada, Texas and Washington state.
Are you including the lender’s title insurance as one of those title fees? Because, again, that seems quite low on a $400k mortgage. Or is there something that charges lender’s title insurance on the front end of the construction loan and then doesn’t charge on the end-loan? If so, I would point out that by ignoring the closing costs of the construction loan, you are ignoring costs that wouldn’t occur if the OP just didn’t get a mortgage. The closing and interest costs for the construction loan need to be included for an apples to apples comparison of mortgage vs. no loan or using a margin loan.
Verifies my contention above that you have not accounted for all of the costs in getting a mortgage vs. not getting one.
AJ
AJ, not trying to argue with you but i’m in the business and been doing this a long time. Rocket Mortgage, lmao; they are the worse! And I do not consider them a competitor as if someone tells me they got preapproved with Rocket, I know I have won the deal. Rocket obviously posting that to make it seem that’s okay to pay but talk to any bank or broker: they are not charging origination fees based on the loan. Chase, Bank of America, PNC, Citi, Guaranteed Rate…none of those lenders charge a % of loan amount for a fee but rather flat dollar amount.
“I’ve gotten mortgages in Iowa, Connecticut, Pennsylvania, Utah, Nevada, Texas and Washington state.” - Conn, PA, TX, and Washington all have higher title fees. Texas by far the worse of that bunch and up there with Florida. Iowa, Nevada, and Utah on lower end. Heck Iowa doesn’t even have title companies as they barred it and have the Iowa Title Guaranty which other states should incorporate (but lobbying will prevent it).
I was in the mortgage servicing business a long time, and have gotten at least 15 mortgages over the past 40 years.
Well, you may not consider them a competitor, but as of 2022, they were still the largest mortgage originator nationwide according to Bankrate 10 Largest Mortgage Lenders In The U.S. | Bankrate
When the 2023 stats get tallied up, my guess is they still will be the largest.
I’ve gotten loans from some of those originators in the past (and many others), and the origination fees were a percent of the loan amount, not a flat fee.
My loan in Iowa was so long ago I got an abstract.
All of that said, lender’s title insurance fees have nothing to do with mortgage origination fees, except that both are costs that are avoidable by not getting a mortgage. Which is my point - if the mortgage is going to be paid off in 2 or 3 years by selling the same stock that would be sold before the house is built, it seems like a waste of money to get a mortgage.
AJ
This is indeed the critical point. The only exceptions being:
In general, unless you have to, getting a mortgage for only 2 years is costly, time-consuming, and kind of annoying to deal with. Mortgages become worth it over longer periods of time due to the wonderful relatively inexpensive leverage they provide. But if you’re not using that leverage effectively, then why bother paying the cost of it?
Unless you obtained a mortgage from Chase, BofA, PNC, Citi, Guaranteed Rate in the 80s or 90s; I guarantee no way you paid a % origination fee. Are you referencing discount points? Maybe some other lender like a small credit union but these big banks and lenders have charged a flat processing/underwriting fee.
Mortgage Servicing way different than Originations.
Rocket is a marketing machine but if one truly takes the time to shop around; you will be able to find a better deal as they push points hard on borrowers. I do not consider them a competitor because it’s so easy to show potential borrower the higher fees Rocket charges. I can honestly say I have never lost a deal to Rocket. Not sure if their procedures have changed, but they push hard for that $400 application fee to get the borrower in their web. If you ever do online chat, they will never give you rate quote and push you to first apply before providing their rates.
Now I’m completely confused by what you are saying. Please read this and send them your corrections ASAP!
Mark, I am saying that pretty much all lenders charge a FLAT origination, processing, underwriting fee (whatever a lender calls it). They do not charge an origination fee based on the % of the loan amount. And as you can see further in the article “sometimes referred to as discount fees or points” that is totally different. If one is paying points, you are paying basically prepaid interest to buy the rate down. One can avoid paying points buy getting a zero point rate (called par rate), but one cannot avoid a lender’s origination/underwriting/processing fee. A lender per law must charge that fee to every borrower and cannot vary.
Origination Fee and Points are two different things and that article does not properly state that as makes them seem intertwined.
Exactly. And in @footsox’s position, where the reason for getting a mortgage was:
seems like a bad reason to get a mortgage for only 2 or 3 years - especially at today’s rates. If they’re taking the stocks out anyway over a 2 or 3 year period, they stocks are only “growing” a max of 3 years. I put “growing” in quotes because the overall market is down 1 out of every 4 years, on average. That means that there’s a high likelihood that the stocks will be “shrinking” instead of growing over at least part of the time carrying a mortgage over 2 - 3 years. Carrying a mortgage for 10 or 15 years, overall, it’s likely that the growth will outpace the current 6.5% - 7% rates. But over just 2 or 3 years? A good chance that not only will they have to pay $50k+ in interest and fees, their stocks won’t outpace the current interest rates.
AJ
also, person that wrote that article (Carol Kopp) has no mortgage experience. She’s a journalist. Carol M. Kopp
Here is a CD snapshot from a refinance closing last week. Flat processing fee (not a % of loan) and title fees $628.
I found a hundred other pieces that said the same thing. Forbes for example. Almost every single mortgage sellers site. Even some HUD sites and FHA sites. Did you know that FHA used to limit the origination fee to 1%? Also expressed as a percentage.
On all FHA loans an origination fee is typical. An origination fee is a percentage of the loan amount. For instance a 1% origination on a loan amount of $100k would be $1,000. The difference with an FHA 203k loan is that a supplemental origination fee is charged on the repair & rehab portion. That amount is 1.5% of the repair or rehab amount or $350.00 whichever is more. Consider this cost as an administration fee for setting up the escrow account that will handle and disburse the checks as needed.
https://www.hud.gov/program_offices/housing/sfh/hecm/hecmabou
You will pay an origination fee to compensate the lender for processing your HECM loan. A lender can charge the greater of $2,500 or 2% of the first $200,000 of your home’s value plus 1% of the amount over $200,000.
Could it be that on loans less than, say, $100k, the fee is charged at a %? Because the $1200 that you show on your closing cost details would be 1.5% on an $80k loan for a $100k house. (I get that nowadays, it’s difficult to find a house for $100k, but just 10 years ago, it was quite possible.)
AJ
Hi guys. I am understanding that with all the fees, and me trying to pay off the mortgage in 3-4 years, and with a 6.5% interest rate, it looks like it’s not a good idea. But nobody asked how my portfolio did every year. What if it makes 20% per year… what if it makes 30% per year. It seems to me that no one factored in what percentage my portfolio would make in those 3-4 years. Would that not be a BIG factor? Oh sure, it could LOSE money. That’s the unknown. But if I leave most of my money in the market for 3-4 years, it might be a pretty good thing to do. And then all those big fees to get the mortgage will have been worth it. Right?? You guys are so great to discuss every nuance of me getting this mortgage. I TRULY appreciate it. It has been fun to read each and every post. You are all so passionate about the things to consider. Thank you.
How long have those stocks been earning that much a year and how much did they go down the last time they dropped? And how long did they stay down after they dropped last time?
Sure, it might be a good thing, or it might be a bad thing. It depends on how your gamble turns out. (Because counting on stocks to make 2 - 4 times the market average on an annual basis is gambling on those stocks.)
And if your stocks are making that much money, why would you to want to sell them to pay off the mortgage? Why wouldn’t you just keep letting it ride and keep the mortgage?
AJ
I think you are right – If the stocks are making really good returns, I might just keep the mortgage and make the payments. And of course, I could decide in a year… or in 5 years… depending on how I feel and how the stocks are doing. Good point.
