Question:

Did I pay too much mortgage points and fees?

Answer:

If the mortgage points and fees you paid included discount points, origination fee and a broker fee of more than 3% in total you certainly paid too much.

Normal Mortgage Points and Fees

If you choose to pay discount points, plus origination and broker fee amounting to more than 2%, you are paying through the nose. Normally, origination and broker fees cannot exceed 1% each. If you are paying more, you are probably charged less for other closing costs of the loan but in that case those points are not fully tax deductible.

Normally, a borrower would pay no more than 3% in mortgage points and fees as prescribed by state law. Sometimes a mortgage broker will charge higher origination fee if the borrower was particularly difficult to qualify for a loan and the broker went out of the way to get the loan for them. It is also common for borrowers with perfect credit to be charged lower origination fee.

A borrower should know they shouldn't be paying more than 3% in mortgage points and fees. If you are charged more, you'd better demand an explanation.

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