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Ask Shop Rate: Linda, FL

Posted by  on Apr 16, 2009
 
What does it mean if a lender tells me we are in a High Cost State?

Thanks A 'high cost state' is one that has more strict regulations on the amount of points and fees that can be charged to the person taking out the mortgage- aka either the buyer or refinancer. Some states let you pay up to 8% of the loan amount in total costs where other 'high cost states' limit you to 4%.

Example: 50,000 loan 4% is $2000 total costs (Including title insurance lender fees etc) This is meant to protect the borrower but often makes lenders shy away and thereby less competition drives up the rate.



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