mortgage refinancing question

[albionmoonlight]

We are planning to refinance our mortgage.

We got the initial estimate, and I wrote the lender back and asked if he could do anything about closing costs.

So now we have new proposals with lower closing costs.

And I have a question about how he got there.

Basically, in the list of items payable, he has a loan origination fee as a negative number. However, my google-fu (any my common-sense understanding of the word "fee") leads me to think that that should actually be a positive number.

Basically, we have all of the fees there, and then most of them are taken away by the negative loan origination fee.

Is that just the common way of lowering closing costs? Or am I missing something?

I'd ask him, but I hate to betray how little I know about such things.

Thanks.

[Logan]

Don't take it as gospel, but most likely the other costs are real fees being paid out to other companies for services (appraisal, survey, title search, credit report, etc) so those can't be eliminated. Crediting the origination fee is the way to get the overall expenses lowered for you.

[QuikSand]

I am no expert either, but I haggled like hell during our last home purchase and got a similar treatment, which seemed baffling to me but it all worked out as explained.

[dacman]

They're likely rolling the origination fee (and the negative difference) into your principal.

[henry296]

The other option is negative points which leads to a slightly higher interest rate.

[cubboyroy1826]

Yeah the broker is likely taking the rate a little higher and then crediting you back part of the yield spread premium the lender is paying his company. After 4/11 brokers have to agree to a set percentage on all loans and anything above that percentage can be used as a credit towards 3rd party closing costs. So for example if his agreed upon percentage with the lender is 2% and he locks the loan at a rate that would pay his company 3% the extra 1% is then credited back to the borrower at closing.