Question on Loan Origination Fee

My closing on a $520k home in Huntington, LI is set for June 30th. My
down payment is $70k, $416k 1st mortage, and $36k 2nd loan. I opted a 7
year ARM, and Wells Fargo quoted 5.375%, after buying a point.

The cost of buying a point is 1% of the primary mortage mortage loan
(i.e 1% * 416,000), which equals $4,160 (I believe this is tax
deductible). By buying a point, how much am I saving on my monthly
payment? The bank advised that the fee for breaking this rate lock is
$2k. The new rate on my loan is then 5.5%, without the loan origination
fee. Is it advisable to break the lock and live with the slightly
higher rate?

In article .com,
"tito" wrote:

Question on Loan Origination Fee

My closing on a $520k home in Huntington, LI is set for June 30th. My
down payment is $70k, $416k 1st mortage, and $36k 2nd loan. I opted a 7
year ARM, and Wells Fargo quoted 5.375%, after buying a point.

The cost of buying a point is 1% of the primary mortage mortage loan
(i.e 1% * 416,000), which equals $4,160 (I believe this is tax
deductible). By buying a point, how much am I saving on my monthly
payment? The bank advised that the fee for breaking this rate lock is
$2k. The new rate on my loan is then 5.5%, without the loan origination
fee. Is it advisable to break the lock and live with the slightly
higher rate?

It doesn't matter. You cannot afford this house, and you
will end up giving it back to the bank in a few years. Why
worry about a few bucks now when you are taking a big bath
later on?

-john-

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John A. Weeks III 952-432-2708
Newave Communications http://www.johnweeks.com
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