BassNBrew
Footballguy
How does 3.125% on $700k 7/1 ARM, 30 yr amortization (15% down, no PMI) with a HELOC with 5% available offered at the same time sound for an in house loan?
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Mortgage Rates (5 Viewers)
- Thread starter MechEng
- Start date
Chadstroma
Footballguy
I enjoy your Raider posts more GB....
If you know that your window is 5-10 years then you are pretty much clear to move ahead.
The how to investigate is your Loan Estimate. Use that to review true cost of the loan in points, fees, title, etc. Do not include escrow and pre-paids if any because those are not costs to refinance. More time with the property than the break even and you benefit.
As for the 15 vs 20, that is your preference. With these rates, I lean more towards increased cash flow than I do retiring the debt. I mean, less than 3% interest? You can pretty much blindly pick investments and get a better return than that. It is pretty much as close to free money as we are ever really going to get. Who knows if we will see this ever again. However, you could drive the rate down and pay more into retiring the debt with the lower term and when you sell have a bigger wire amount into your account. There is no real 'right' answer here. It is just your preference.
What is PNW?
Chadstroma
Footballguy
Rates went up a decent amount yesterday. (Market had a solid rally) Down a bit today (Market went down).Buck Bradcanon said:
Chadstroma
Footballguy
Stompin' Tom Connors
Footballguy
PNW = Pacific Northwest.
If no one has said it yet, thank you so much for sharing your knowledge and advice here with me and with everyone. It's super generous and kind, and you clearly not only have incredibly deep expertise, but it's truly great advice and extremely appreciated.
In normal times, I think you are spot on about taking the cash flow over retiring debt. These days are pretty dicey in terms of return volatility, but might still be the right thing to do. Guess I was thinking that by switching to a 20-year, I will incur more interest payment in the refini, but perhaps pay down principle faster than I would 7-8 years in on a 30-year instrument.
I am not sure how to calculate that, and the resulting equity position I'd have in 10 years compared to, say, refinancing to a 30 year loan and the ~$16.4K I'd have by investing the $100 saved in mortgage payments per month at a conservative 6% ($20.5K if using historical return rate of 10%).
Shatner!
Footballguy
Hey, check out this Mortgage Calculator app for android. https://play.google.com/store/apps/details?id=com.utilities.mortgagecalculator
Lots of them out there. One I just found and tried.
Buck Bradcanon
Footballguy
2.5% is hard to come by..thats awesome. But in general Guinis I would think you should at least be able to get it down to 3.0 or lower on a 15 year.
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Shatner!
Footballguy
I locked a 2.5 for $275 in points on a cashout refi...but I'm paying .625 of the loan for the cash out plus another $1k for a slightly low FICO.
joey
Footballguy
Here’s a payment calculator I used to do some math for my recent (as of Monday!) refi...
https://www.calculator.net/mortgage-payoff-calculator.html?cloanamount=250000&cloanterm=30&cinterestrate=3.25&cremainingyear=20&cremainingmonth=0&cpayoffoption=together&cadditionalmonth=510&cadditionalyear=0&cadditionalonetime=0&type=1&x=37&y=30#loanterm
Put in your original loan info and it’ll show you how much your "remaining payments" will be. Then open a 2nd tab and put in the info for your brand new loan and see what those total payments would be. I also put the amount into "repayment with extra payments" field that would make my new payment equal my current (higher) payment to see what the total payments looked like from there. To me, that was the true test: ie. If I still pay exact what I’m paying now, how much money do I save by refinancing to a lower rate?
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Chadstroma
Footballguy
Ask him what he can do if you pick up the costs. Essentially, he is taking money out of his commission to pay the costs for you. If you want to pick up the costs instead he can use that spread on the margin to get the rate lower.
Chadstroma
Footballguy
Some of the economics involved recently we have seen some CU's being able and willing to offer some great deals.
Chadstroma
Footballguy
No worries, you are welcome. Honestly, I could make a living coaching people on personal finance, I would over mortgage lending. I enjoy it.
You certainly would increase equity in going 20 year which could be used for the down on the newer home down the line. You are pretty much locking in a 3% (whatever rate you get) "return" on that debt versus taking a slightly higher rate, not paying as much a month and hoping your spread on return is better over the 7-10 years in whatever you invest in. Some people are built to just get the rate lower and pay down/off faster. Some are built to take the gamble and look for the bigger overall return.
leftcoastguy7
Footballguy
My credit union wants to charge me a 1% origination fee on a $400K refinance.
Is this something worth haggling about? Any other fees I might get the credit union to drop? Thanks
Is this something worth haggling about? Any other fees I might get the credit union to drop? Thanks
Chadstroma
Footballguy
The answer is it depends.
CU's are a crap shoot. I have seen awesome deals from them and I have seen some that were ugly as poo.
Feel free to send me the Loan Estimate and I can tell you if it looks good or not.
Closed yesterday - 10 day turnaround was great and traveling notary asked where we found out about our lender. I said Chad on a footballguys.com forum had a mortgage rates topic and he sent me to the lender we used. "That's a new one." She's been a notary for mortgages for over 20 years!
Buck Bradcanon
Footballguy
Locked at 2.75% on a 20 year yesterday. Thanks to everyone in this thread. Much appreciated.
Shatner!
Footballguy
Wow. I hope ours moves half as fast. I did get an email from current lender saying they received a request for a payoff statement so I know there is some movement. They wanted a chance to compete. I logged into their set and their rates were higher than what I locked. I see today my broker's rates are slightly better than what I locked. Can get a 2.5 15 year with a few hundred credit as opposed to paying in a couple hundred.makoman said:
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Chadstroma
Footballguy
I don't know the details but I know that was a UWM loan just on how fast it was. No one goes as fast as them.
Related to my recent refinance, but I discovered an issue with my credit report and need to get this fixed. I recently refinanced (merged my two open mortgages into one at a lesser rate). Everything went fine, and have been making payments since March, but was doing my taxes this weekend and decided to check my credit report and noticed that I now have 2 open mortgages - both with the same information on the mortgage.
New Mortgage (Home Point Financial): I have been paying since March and receive monthly bills.
Newly Discovered Mortgage (Midwest Bank): Just discovered this on my credit report; has the same information (open date, balance) as my New Mortgage, but no payments. I don't see any late payments either, but it does show a 'last payment' of 01/08/2020 which I didn't make, but I am wondering was somehow tied to my refinance. Current status says 'ok'.
In any case, I need to resolve this and get the Midwest Bank mortgage cleared up. What is the best way to resolve this?
New Mortgage (Home Point Financial): I have been paying since March and receive monthly bills.
Newly Discovered Mortgage (Midwest Bank): Just discovered this on my credit report; has the same information (open date, balance) as my New Mortgage, but no payments. I don't see any late payments either, but it does show a 'last payment' of 01/08/2020 which I didn't make, but I am wondering was somehow tied to my refinance. Current status says 'ok'.
In any case, I need to resolve this and get the Midwest Bank mortgage cleared up. What is the best way to resolve this?
Chadstroma
Footballguy
Huh... odd.cubd8 said:
Dispute with credit bureaus.
Yes, definitely odd. I did contact the Midwest Bank about this so hoping they can help provide some insight.
Would it make sense to go back to my re-fi person to see if they can provide any details? Was thinking of doing that also.
It's very weird that the other mortgage is not showing late payments, etc. (yet).
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Chadstroma
Footballguy
Home Point services almost all their loans so if the loan was with them originally it wouldn't go anywhere else. It doesn't hurt to ask though.
Yeah, it's almost as if the re-fi went to different companies, but hoping that Midwest Bank will realize the error and report the account accurately (remove it)
Sand
Footballguy
mquinnjr
Footballguy
Chad, looking at a home purchase soon. I’m a member of two credit unions that I’ve asked to call me this week for their rates and fees to get a ballpark. Planning to start looking once things open up in PA, highest tier credit rating for a 30-yr conventional with 20% down at the ready.
Any thoughts on PenFed (have a gas CC with them) and Citadel (local CU in south East PA that I have an auto loan with)? PenFed has a 1k lender credit on final loan amount as well as no lender fees promo right now on a 30-year fixed starting at 2.75%.
I stopped into Citadel when I did a car loan with them, the mortgage rates did not seem very competitive.
Ted Lange as your Bartender
Footballguy
fruity pebbles
Footballguy
Ted Lange as your Bartender
Footballguy
A lot of what @Chadstroma has been saying the last few months. The CARES act and it’s forebearence rules has totally gummed up the works for people seeking mortgages and refinances and caused lenders to tighten their standards even moreso than in 2008. Rates, while low, are higher vs the 10 year than they historically should be.
Basically, don’t even indicate interest in a forbearance with your lender unless you absolutely have to or you have zero plans of seeking an equity-based loan over the next 12 months.
Chadstroma
Footballguy
I keep seeing Citadel and it gives me the heebee geebee's cause there is a wholesaler called Citadel that does non-QM loans and it feels better to gouge your eyes out than do a loan with them.
NOT that same companies, just share a name but that doesn't help when I read the name. lol
Chadstroma
Footballguy
I am like Readers Digest but for loans. lol
I don't have time to read the article though I would like to.
We have seen a lot of 'forced' forbearance come up... some people placed in it with just inquiring about the option or not having any contact at all. Almost like some sort of way of keeping these loans with the lender or something.
The good news is that there was some guidance that came out last week that will make it easier for those who did do forbearance to be able to do a new loan. I am going off memory since I don't have time to look it up but basically I think with everything paid up to date and 3 months of on time payments then they are good on conventional? I can be off on that... just not something I am worried about right now and my brain is on overload do details on that are fuzzy but it was positive for the consumers who were in a forbearance.
The discrepancy with the decoupling of the 10 year and rates is the primary reason I believe that rates have room to go lower moving ahead. That being said, if you said a few months before all hell broke loose... "Hey Chad, what if we had a pandemic and the 10 year went to ridiculously low levels. Do you think the rate would follow it or not?" I would have said that I don't see any reason why they wouldn't follow them..... and they didn't because of a whole bunch of stuff.... or "Hey Chad, I have a 3.25% fixed mortgage what are the chances that I will be able to refinance that into another 30 yr fixed and make sense for a rate/term?" I would have laughed and said "you are good bud, you likely will have that loan until you sell or maybe get a lower term." ..... so there is plenty of room to be wrong in guessing future rates..... cause what the hell do I know? I have been damn wrong plenty. lol
-OZ-
Footballguy
I had my mortgage with penfed for around 6 years and was about to refi with them recently until I found a slightly lower elsewhere. Overall they were fine by me and I do agree their fees seemed as low as I could find.
-OZ-
Footballguy
@Chadstroma - is it normal for the mortgage broker to contact you 3 months after closing to review documents "for compliance purposes"?
They called and emailed today but I haven't opened the file (slightly apprehensive about doing so on my computer or work computer). What documents would these be?
They called and emailed today but I haven't opened the file (slightly apprehensive about doing so on my computer or work computer). What documents would these be?
Chadstroma
Footballguy
I wouldn't say normal but to be fair I don't deal with the back office audit type stuff at all. They might be reviewing something and needed info that was missing for some reason or another?
I would just cover your base and make sure you contact the person you dealt with if someone else is reaching out. I would prob just make a quick phone call to them to make sure it was legit so it isn't some phishing scam or something.
Chadstroma
Footballguy
Jumbos are ugly right now. Industry wide.
I had a guy reach out to me because Wells killed a purchase deal for him because they decided to change how they calculated rental income (rather, they do not calculate it at all now). A ton of lenders just aren't doing jumbos and the ones that are the cost is not one to make you smile. He had a pretty good rate on a 7/1 with Wells but couldn't find anything near that now. He ultimately decided to pull out of the purchase.
TripItUp
Footballguy
thank you.
This makes me want to sell my house...banks see risk and are being proactive to not take on additional liability.
⚡DEADHEAD⚡
Footballguy
Got a note back from WF today. They reduced my HELOC loan app to $150,000 at 3.5%. Basically said we didn't have enough income to support the $250,000 loan at 3.25%. Fair enough. Banks are mitigating risk more conservatively than "before."
Not sure I can do better out there right now.
SouthJersey
Footballguy
Is there a best site/place to shop refi rates?
Chadstroma
Footballguy
Don't go to any site. They are all just lead generators and you will hate life as your phone does not stop ringing for a week as all these retail shops that paid for the lead call you. Also, don't go to any place you saw an advertisement on TV for (Quicken/Rocket for example) that is a dead give away that they are just marketing and will screw you over.
Connect with a local mortgage broker. They shop for you. (My brokerage is signed up with about 50 lenders). If you want extra peace of mind, check a few other places out along with them and compare.
Scroll back a bit and read through my 'tips manifesto' post... here... I will copy and paste since it has been a bit...
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Chadstroma
Footballguy
Here is a few tips for you guys when it comes to mortgages. (ok, more than a few)
#1: The difference between retail and wholesale. Retail is your banks, credit unions and direct lenders (some big direct lenders would be Quicken, Guaranteed Rate, Fairway, etc). Wholesale is your mortgage broker. I shouldn't have to tell you which is going to end up giving better rates and cost on average.
#2: The bigger the Bank the more they usually suck. UNLESS you are your typical FBG rolling in cash. If you are, then the big and regional banks that have wealth management departments will be very aggressive in offering jumbo loans. They basically use it as a loss leader. They will give you a great deal and then get you into their wealth management where they make all their money off of you. When it comes to mortgages, a jumbo is pretty much the only time you want to talk to a bank. Otherwise, avoid banks though sometimes your smaller banks will have a pretty good deal.
#3: If you see them advertising on TV, I promise you, they suck. Quicken spends ridiculous amounts of money on advertising. Why? Because the people who don't know better who have done loans with them before and almost always got bent over are paying for this marketing machine. Plus, they are pretty much the slimiest lender out there. Over and over and over again hearing clients tell me "they said X to me" and in reality it is "Y". They also typically will start off with what seems like a great rate and then charge 3 points in origination charges. DO NOT go to Quicken (aka Rocket Mortgage) or one of the slim ball VA lenders like Veterans United or New Day.
#4: I love credit unions. Huge fan of them. I belong to two of them. CU's are usually your best bet for checking, savings, car loans, personal loans, equity loans or lines, etc. However, one area that they are not usually your best bet is mortgages. The reason is mostly about scale. There are some large CU's but most are still relatively small. They do not do enough volume to be efficient and the large loan amounts take a big chunk of their reserves. Go ahead and check with your CU, they can offer some good deals, I have seen it and they will still tend to beat banks and direct lenders but not usually the best bet.
#5: Rate is not the end all be all of doing a loan. You have the rate which of course is important but there are also fees and origination charges. A typical game that is played is showing a great rate but then when you compare to another lender you see that you are really PAYING for that great rate. Often times as a broker, I am able to match the rate and give a credit versus the origination points they are charging. Be mindful of that.
#6: Use the Loan Estimate! Wherever you go, when you get the Loan Estimate, shop it to other lenders. You can just send it to the lender and let them come back with their offer or you can put more work in it and just shop and compare rates. What happens if you do? Worst case, you get the peace of mind that you are getting a good deal. Best case, you save yourself thousands of dollars!
#7: Your current lender is not going to make it easier than going to another lender. They will need to get all new docs or if it a streamline another lender can do a streamline as well.
#8: Unless you hate yourself and want to throw your phone away forever do not go to a website that 'shops' loans. First of all, they don't really. All they are doing is selling the leads to lenders. Second, you will get bombarded by phone calls and wish you never even heard of Lending Tree or whatever else.
#9: Always shop lenders. Mortgage brokers do the shopping for you accessing multiple lenders and getting wholesale pricing.
#10: Don't make assumptions about what you can or can not do with a refinance. Talk to someone who actually knows. They can go over your options after figuring out your situation and your goals. I have seen some bad thinking in here that is costing people significant money.
#11: The better your credit score the better your rate. You are going to top out around the 740-750 area. So, don't worry about getting an 800 credit score.
#12: If you have more debt other than the mortgage/equity loan or line then you might be better off refinancing all the debt into the home.
#13: DO NOT listen to Dave Ramsey when it comes to mortgages. He is a dolt when it comes to mortgages, gives horrible advice and then sends his followers to Churchill mortgage because he gets paid advertising from them. It disgusts me. People trust him and he sends them to a crappy retail lender because he gets a big check from them on top of giving really HORRIBLE advice that ends up costing people tons. Just ignore him when it comes to mortgage advice.
#14: If you are getting a mortgage, don't do anything stupid like deposit a bunch of cash into your account or buy a new car or change jobs. Anything to do with your job, credit and income can cause problems for the loan. Yes, I don't care if you are doing the same job for more money- I can't close your loan on time now. (real life situation, I was able to save the loan but this ding dong couldn't get through his head that most lenders would have killed the deal and it was all our fault somehow that we couldn't close on time).
#15: Realize that the vast majority of down payment assistance programs are pushed by lenders who do them and realtors who want you to buy a home with them as free money is NOT. Why do they pitch it like that? Well, why wouldn't you use a lender or realtor who is offering you free money?! This is the way that most of them work... they are set up to give money in a form of a forgivable loan or silent second or another such form. You must keep the loan for an extended period of time 5-7 years is most common. Once you do (meaning you can not sell or refinance that loan) then you are free! Here is the thing... that 3-3.5% of the purchase price that they gave you jacked up your rate. I have calculated the differences- not from different lenders but from lenders that I know using a program, the rate you would get with them without the DPA and the rate you get with it... and let's say you got $10K from them... that $10K ends up costing you $30-40K over the period that you did PLUS potentially an opportunity cost of refinancing as I have done for all my clients who listened to me last year and now that rates have dropped are realizing large savings. There are true grants out there (where there is no ties to the money) but most of these also have a higher rate. I have access to some of these programs but only have done one in the last few years and that was after being sure to explain everything in detail and the real cost to the client (side not, the plan was to refi them later which we plan on doing in a couple of months).
#16: If you are veteran, first responder, medical profession- the great sounding program (Homes for Heroes is the largest one) where you get money back isn't as great as it sounds. I promise you. The realtor part of it is actually a good deal for you but the lender side where they typically pay for your appraisal (around $400-600) is likely costing you a ton of money in the rate and cost of the loan. These are usually retail lenders who have lot's of extra cash (there is a reason why they have to charge higher rates and fees/origination) that pay into these programs, which are relatively expensive (for a lender about $1800 a year for Homes for Heroes just to be part of their program and that is it). You can still shop the lender. DO SO!
#17: First time home buyer programs are usually marketing schemes. There are some benefits offered if you are doing a conventional loan which anyone can have access to. Other things are usually the DPA programs (see #15) and should be avoided. Your third cousins best friend's dog's breeders brother who got $10K free money to buy a home is more times than not money that cost them.
#18: Most loans over 80% loan to value that doesn't have mortgage insurance is costing you in a higher rate. If you are doing conventional loan, you can get rid of the MI later. If it is baked into the rate it is there for life of the loan.
#19: FOR THE LOVE OF GOD AND ALL THAT IS HOLY if you are building a home PLEASE understand that the builders preferred lender that they are going to give you $10K in free upgrades for using them is going to cost you much more money than the $10K they are 'giving' you. Here is how this scheme works. The free upgrades actually are going to cost them maybe $2K if that to do. In return for you using their preferred lender and getting absolutely bent over they are going to get a nice big fat check worth alot more money. The builder and the lender will laugh at you sitting in the model house counting your money you just forked over as they watch you move in.
#20: A realtors 'preferred lender' can be good or can be bad. There is no way to tell. Here is how it works in the industry. Retail lenders who tend to charge more have bigger budgets to spend on marketing. They will 'partner' with realtors and pay for the realtors marketing (also sponsor things like their meetings, or holiday party, or conferences or whatever else) and in return the realtor makes them their 'preferred lender' so the realtor will refer you to them when you are not already using a lender. Now, you can also have 'preferred lenders' that don't do that stuff and the realtor has found them to be a good lender. (side note here, in the average realtors eyes, a good realtor is one that closes deals and does it on time and not so much about rate and cost) For example, I am several realtors 'preferred lender' but do not spend money on them and it is really based on them knowing I can get more loans approved, close on time and give their clients great deals. Overall, NEVER get loan advice from a realtor unless they are the rare ones that are licensed for lending and actually know what they are talking about (that is significantly less than 1% of them)
#21: You don't need 20% down. Don't keep waiting to buy when you are spending money away on rent. Every month you pay someone else's mortgage (paying rent) is money you will never see a dime of again. As an owner you are building wealth. Think of it this way... landlords are landlords for a reason. They are not losing money and on top of it are gaining equity. For most Americans, their 'wealth' is almost exclusively in their homes. Not retirement accounts or stocks etc but built up equity from paying down principle and appreciation of their homes which is historically pretty consistently 5% over periods of time (including booms and crashes).
#22: You don't need perfect credit to get a mortgage. You can do a FHA loan with a minimum credit score of 580 with as little as 3.5% down of the purchase price.
#23: When picking a good realtor find out these things about them: A) Do they do this as a full time job or is it a side gig or something they do when they are bored etc. You want a full time realtor for the experience and focus. Trust me. The exception on this would be a semi-retired realtor but honestly, they are usually ones to pass on as well. You want someone who knows the market, is sharp on negotiation and has good contacts. B) How long have they been doing the job. Experience counts for sure. But I rather go with a rookie doing it full time than someone been doing it 10 years as a part time gig. C) What is their availability. You want someone that will be available on your time tables and not theirs. D) How many houses have they sold or closed on? It will give you an idea about how productive they are. But keep in mind, someone who isn't as productive might be hungrier and more flexible to you versus someone who is doing tons of volume.
#24: Always get an inspection done from a good inspector. Do not skimp here. A good inspector will give you very important info on the home even if there is nothing to be concerned over and potentially catch a very big problem. Keep in mind even the best inspectors will not be able to find out anything and everything wrong with a house. Find out of they do mold and radon testing or not and if it is extra if they do. I would go ahead and do it. Keep this in mind, this is usually the largest financial transaction of your life so far. Do you want to be penny wise and dollar foolish on it?
#25: If you are military or a vet. Run away from supposedly veterans lenders like Veterans United and New Day (and more but those are two big ones) THEY SUCK. Even good places like USDAA (who does insurance well), Navy Fed, may do a lot of good for vets in other areas but are not the best in mortgages.
#26: As I will get to soon... brokers are better. This is true for insurance too. I see insurance quotes often and I personally did my own shopping where I shopped 10 carriers plus one insurance broker. The broker easily won out. Plus, the big carriers suck if you end up with a claim. I have a whole personal story about Allstate sucking big hairy monkey balls. On top of it all an agent at a large carrier has NO sway on anything on a claim. A broker actually does (as counter intuitive as that seems) because they can tell the insurer that if they don't do something right that he will not send that insurance company any more business. The captive agent has no choice.
#27: If you are in a rural area, check out a USDA loan. You can finance up to 100% but keep in mind, you actually might end up better served doing a FHA loan depending on specifics.
#28: Brokers are better. They weren't always... they use to be a pack of scumbags and slimballs who would screw over their own mothers for an extra 20 spot. Before 2008 I had plenty of chances to be a broker and would not even though I would have made 3 or 4 times more than I was making because again the vast majority were nastier than moldy dog poo with worms in it. That being said, even back then you could get a better deal from a broker IF you knew what you were doing and could protect yourself. Otherwise, you could get screwed so badly that it would make going to Quicken seem like a good deal. In fact, I actually used a broker on both of my home purchases even though at both times my wife and I worked at banks. That is right, when bankers want to do their loans- you know who they come to? Brokers. Things have changed and really the consumer advocates are now brokers and the things they use to do before that would screw people over are things that can not be done now. Not only are you going to get a better deal at a broker the vast majority of the time but you are also not going to get screwed over. Plus they have options that banks, credit unions and direct lenders don't have to get you approved if you have a harder to finance situation like a business owner, bad credit, recent major credit event (foreclosure, bankruptcy, etc) etc. Also, brokers can close quicker than other lenders on average. How do you find a broker? Well, you can ask me, I know brokers throughout the country. I have no problem connecting you to one (and if you are wondering, by regulation and the risk of losing my license, I can not get paid for referring you to a broker... it is purely out of help you out) or if you want you can check out www.findamortgagebroker.com oh... and if you are in Illinois, I can help you directly. (a few other states indirectly too)
#29: You are not locked in to a lender with a pre-approval. Unscrupulous lenders who tend to overcharge will have a lot of nasty little tricks that they do to keep you stuck with them. Fear is one of the big ones backed with lies. That fear will be to tell you that you can not change lenders once you have an offer accepted from a pre-approval or you can lose your earnest money. FALSE! Or that you will end up not being able to close on time with another lender (a favorite of retail loan officers to say about brokers when broker turn around times are actually quicker than retail). Your Loan Estimate is provided to assist you as the consumer to not only better understand the true costs of the loan but to be able to shop your loan around or the best options for you and then be able to compare them as close to apples to apples as possible. Don't let liars overcharging you win!
Hope this helps guys.
Best of luck.
#1: The difference between retail and wholesale. Retail is your banks, credit unions and direct lenders (some big direct lenders would be Quicken, Guaranteed Rate, Fairway, etc). Wholesale is your mortgage broker. I shouldn't have to tell you which is going to end up giving better rates and cost on average.
#2: The bigger the Bank the more they usually suck. UNLESS you are your typical FBG rolling in cash. If you are, then the big and regional banks that have wealth management departments will be very aggressive in offering jumbo loans. They basically use it as a loss leader. They will give you a great deal and then get you into their wealth management where they make all their money off of you. When it comes to mortgages, a jumbo is pretty much the only time you want to talk to a bank. Otherwise, avoid banks though sometimes your smaller banks will have a pretty good deal.
#3: If you see them advertising on TV, I promise you, they suck. Quicken spends ridiculous amounts of money on advertising. Why? Because the people who don't know better who have done loans with them before and almost always got bent over are paying for this marketing machine. Plus, they are pretty much the slimiest lender out there. Over and over and over again hearing clients tell me "they said X to me" and in reality it is "Y". They also typically will start off with what seems like a great rate and then charge 3 points in origination charges. DO NOT go to Quicken (aka Rocket Mortgage) or one of the slim ball VA lenders like Veterans United or New Day.
#4: I love credit unions. Huge fan of them. I belong to two of them. CU's are usually your best bet for checking, savings, car loans, personal loans, equity loans or lines, etc. However, one area that they are not usually your best bet is mortgages. The reason is mostly about scale. There are some large CU's but most are still relatively small. They do not do enough volume to be efficient and the large loan amounts take a big chunk of their reserves. Go ahead and check with your CU, they can offer some good deals, I have seen it and they will still tend to beat banks and direct lenders but not usually the best bet.
#5: Rate is not the end all be all of doing a loan. You have the rate which of course is important but there are also fees and origination charges. A typical game that is played is showing a great rate but then when you compare to another lender you see that you are really PAYING for that great rate. Often times as a broker, I am able to match the rate and give a credit versus the origination points they are charging. Be mindful of that.
#6: Use the Loan Estimate! Wherever you go, when you get the Loan Estimate, shop it to other lenders. You can just send it to the lender and let them come back with their offer or you can put more work in it and just shop and compare rates. What happens if you do? Worst case, you get the peace of mind that you are getting a good deal. Best case, you save yourself thousands of dollars!
#7: Your current lender is not going to make it easier than going to another lender. They will need to get all new docs or if it a streamline another lender can do a streamline as well.
#8: Unless you hate yourself and want to throw your phone away forever do not go to a website that 'shops' loans. First of all, they don't really. All they are doing is selling the leads to lenders. Second, you will get bombarded by phone calls and wish you never even heard of Lending Tree or whatever else.
#9: Always shop lenders. Mortgage brokers do the shopping for you accessing multiple lenders and getting wholesale pricing.
#10: Don't make assumptions about what you can or can not do with a refinance. Talk to someone who actually knows. They can go over your options after figuring out your situation and your goals. I have seen some bad thinking in here that is costing people significant money.
#11: The better your credit score the better your rate. You are going to top out around the 740-750 area. So, don't worry about getting an 800 credit score.
#12: If you have more debt other than the mortgage/equity loan or line then you might be better off refinancing all the debt into the home.
#13: DO NOT listen to Dave Ramsey when it comes to mortgages. He is a dolt when it comes to mortgages, gives horrible advice and then sends his followers to Churchill mortgage because he gets paid advertising from them. It disgusts me. People trust him and he sends them to a crappy retail lender because he gets a big check from them on top of giving really HORRIBLE advice that ends up costing people tons. Just ignore him when it comes to mortgage advice.
#14: If you are getting a mortgage, don't do anything stupid like deposit a bunch of cash into your account or buy a new car or change jobs. Anything to do with your job, credit and income can cause problems for the loan. Yes, I don't care if you are doing the same job for more money- I can't close your loan on time now. (real life situation, I was able to save the loan but this ding dong couldn't get through his head that most lenders would have killed the deal and it was all our fault somehow that we couldn't close on time).
#15: Realize that the vast majority of down payment assistance programs are pushed by lenders who do them and realtors who want you to buy a home with them as free money is NOT. Why do they pitch it like that? Well, why wouldn't you use a lender or realtor who is offering you free money?! This is the way that most of them work... they are set up to give money in a form of a forgivable loan or silent second or another such form. You must keep the loan for an extended period of time 5-7 years is most common. Once you do (meaning you can not sell or refinance that loan) then you are free! Here is the thing... that 3-3.5% of the purchase price that they gave you jacked up your rate. I have calculated the differences- not from different lenders but from lenders that I know using a program, the rate you would get with them without the DPA and the rate you get with it... and let's say you got $10K from them... that $10K ends up costing you $30-40K over the period that you did PLUS potentially an opportunity cost of refinancing as I have done for all my clients who listened to me last year and now that rates have dropped are realizing large savings. There are true grants out there (where there is no ties to the money) but most of these also have a higher rate. I have access to some of these programs but only have done one in the last few years and that was after being sure to explain everything in detail and the real cost to the client (side not, the plan was to refi them later which we plan on doing in a couple of months).
#16: If you are veteran, first responder, medical profession- the great sounding program (Homes for Heroes is the largest one) where you get money back isn't as great as it sounds. I promise you. The realtor part of it is actually a good deal for you but the lender side where they typically pay for your appraisal (around $400-600) is likely costing you a ton of money in the rate and cost of the loan. These are usually retail lenders who have lot's of extra cash (there is a reason why they have to charge higher rates and fees/origination) that pay into these programs, which are relatively expensive (for a lender about $1800 a year for Homes for Heroes just to be part of their program and that is it). You can still shop the lender. DO SO!
#17: First time home buyer programs are usually marketing schemes. There are some benefits offered if you are doing a conventional loan which anyone can have access to. Other things are usually the DPA programs (see #15) and should be avoided. Your third cousins best friend's dog's breeders brother who got $10K free money to buy a home is more times than not money that cost them.
#18: Most loans over 80% loan to value that doesn't have mortgage insurance is costing you in a higher rate. If you are doing conventional loan, you can get rid of the MI later. If it is baked into the rate it is there for life of the loan.
#19: FOR THE LOVE OF GOD AND ALL THAT IS HOLY if you are building a home PLEASE understand that the builders preferred lender that they are going to give you $10K in free upgrades for using them is going to cost you much more money than the $10K they are 'giving' you. Here is how this scheme works. The free upgrades actually are going to cost them maybe $2K if that to do. In return for you using their preferred lender and getting absolutely bent over they are going to get a nice big fat check worth alot more money. The builder and the lender will laugh at you sitting in the model house counting your money you just forked over as they watch you move in.
#20: A realtors 'preferred lender' can be good or can be bad. There is no way to tell. Here is how it works in the industry. Retail lenders who tend to charge more have bigger budgets to spend on marketing. They will 'partner' with realtors and pay for the realtors marketing (also sponsor things like their meetings, or holiday party, or conferences or whatever else) and in return the realtor makes them their 'preferred lender' so the realtor will refer you to them when you are not already using a lender. Now, you can also have 'preferred lenders' that don't do that stuff and the realtor has found them to be a good lender. (side note here, in the average realtors eyes, a good realtor is one that closes deals and does it on time and not so much about rate and cost) For example, I am several realtors 'preferred lender' but do not spend money on them and it is really based on them knowing I can get more loans approved, close on time and give their clients great deals. Overall, NEVER get loan advice from a realtor unless they are the rare ones that are licensed for lending and actually know what they are talking about (that is significantly less than 1% of them)
#21: You don't need 20% down. Don't keep waiting to buy when you are spending money away on rent. Every month you pay someone else's mortgage (paying rent) is money you will never see a dime of again. As an owner you are building wealth. Think of it this way... landlords are landlords for a reason. They are not losing money and on top of it are gaining equity. For most Americans, their 'wealth' is almost exclusively in their homes. Not retirement accounts or stocks etc but built up equity from paying down principle and appreciation of their homes which is historically pretty consistently 5% over periods of time (including booms and crashes).
#22: You don't need perfect credit to get a mortgage. You can do a FHA loan with a minimum credit score of 580 with as little as 3.5% down of the purchase price.
#23: When picking a good realtor find out these things about them: A) Do they do this as a full time job or is it a side gig or something they do when they are bored etc. You want a full time realtor for the experience and focus. Trust me. The exception on this would be a semi-retired realtor but honestly, they are usually ones to pass on as well. You want someone who knows the market, is sharp on negotiation and has good contacts. B) How long have they been doing the job. Experience counts for sure. But I rather go with a rookie doing it full time than someone been doing it 10 years as a part time gig. C) What is their availability. You want someone that will be available on your time tables and not theirs. D) How many houses have they sold or closed on? It will give you an idea about how productive they are. But keep in mind, someone who isn't as productive might be hungrier and more flexible to you versus someone who is doing tons of volume.
#24: Always get an inspection done from a good inspector. Do not skimp here. A good inspector will give you very important info on the home even if there is nothing to be concerned over and potentially catch a very big problem. Keep in mind even the best inspectors will not be able to find out anything and everything wrong with a house. Find out of they do mold and radon testing or not and if it is extra if they do. I would go ahead and do it. Keep this in mind, this is usually the largest financial transaction of your life so far. Do you want to be penny wise and dollar foolish on it?
#25: If you are military or a vet. Run away from supposedly veterans lenders like Veterans United and New Day (and more but those are two big ones) THEY SUCK. Even good places like USDAA (who does insurance well), Navy Fed, may do a lot of good for vets in other areas but are not the best in mortgages.
#26: As I will get to soon... brokers are better. This is true for insurance too. I see insurance quotes often and I personally did my own shopping where I shopped 10 carriers plus one insurance broker. The broker easily won out. Plus, the big carriers suck if you end up with a claim. I have a whole personal story about Allstate sucking big hairy monkey balls. On top of it all an agent at a large carrier has NO sway on anything on a claim. A broker actually does (as counter intuitive as that seems) because they can tell the insurer that if they don't do something right that he will not send that insurance company any more business. The captive agent has no choice.
#27: If you are in a rural area, check out a USDA loan. You can finance up to 100% but keep in mind, you actually might end up better served doing a FHA loan depending on specifics.
#28: Brokers are better. They weren't always... they use to be a pack of scumbags and slimballs who would screw over their own mothers for an extra 20 spot. Before 2008 I had plenty of chances to be a broker and would not even though I would have made 3 or 4 times more than I was making because again the vast majority were nastier than moldy dog poo with worms in it. That being said, even back then you could get a better deal from a broker IF you knew what you were doing and could protect yourself. Otherwise, you could get screwed so badly that it would make going to Quicken seem like a good deal. In fact, I actually used a broker on both of my home purchases even though at both times my wife and I worked at banks. That is right, when bankers want to do their loans- you know who they come to? Brokers. Things have changed and really the consumer advocates are now brokers and the things they use to do before that would screw people over are things that can not be done now. Not only are you going to get a better deal at a broker the vast majority of the time but you are also not going to get screwed over. Plus they have options that banks, credit unions and direct lenders don't have to get you approved if you have a harder to finance situation like a business owner, bad credit, recent major credit event (foreclosure, bankruptcy, etc) etc. Also, brokers can close quicker than other lenders on average. How do you find a broker? Well, you can ask me, I know brokers throughout the country. I have no problem connecting you to one (and if you are wondering, by regulation and the risk of losing my license, I can not get paid for referring you to a broker... it is purely out of help you out) or if you want you can check out www.findamortgagebroker.com oh... and if you are in Illinois, I can help you directly. (a few other states indirectly too)
#29: You are not locked in to a lender with a pre-approval. Unscrupulous lenders who tend to overcharge will have a lot of nasty little tricks that they do to keep you stuck with them. Fear is one of the big ones backed with lies. That fear will be to tell you that you can not change lenders once you have an offer accepted from a pre-approval or you can lose your earnest money. FALSE! Or that you will end up not being able to close on time with another lender (a favorite of retail loan officers to say about brokers when broker turn around times are actually quicker than retail). Your Loan Estimate is provided to assist you as the consumer to not only better understand the true costs of the loan but to be able to shop your loan around or the best options for you and then be able to compare them as close to apples to apples as possible. Don't let liars overcharging you win!
Hope this helps guys.
Best of luck.
RUSF18
Footballguy
All of that is great, thanks.
I'm in the early stages of trying to buy our first house. You said only talk to banks if you're looking for a jumbo mortgage. Would I typically still do better with a mortgage broker than going with a bank at that point?
If it helps, I'm in Northern NJ, buying in Central NJ, credit score well past the point where it stops helping...
I'm in the early stages of trying to buy our first house. You said only talk to banks if you're looking for a jumbo mortgage. Would I typically still do better with a mortgage broker than going with a bank at that point?
If it helps, I'm in Northern NJ, buying in Central NJ, credit score well past the point where it stops helping...
Todem
Footballguy
Welp we locked in yesterday as we are 27 days away from my closing date.
Purchase Money Conventional 3.125 paying 1.625points. (I waived escrow .25 points, I also have a combo HELOC going behind that which added a .375 premium too). The points are fully tax deductible (and I can use them for sure) and the break even vs paying .75 points for a 3.5% mortgage was only 4 years. This is our forever dream home. From year 4 on we are saving a bundle in interest. Don't be afraid to buy down your rate if you know you are staying at least 10 years or more. Especially for higher balance mortgages (We are taking a 500K first). Well worth it, and tax deductible if you itemize.
I wanted under 3 but.....it was stupid expensive. Was hoping for that 2.875% that was around for the same price a month ago.....but the 10YR crept back up. I can’t complain at all about 3.125 for life. My current home is at 3.875 and I thought that was amazing when I got it back in 2012.
USE A BROKER FOLKS!!!!! Forget online rocket mortgage BS or big banks (I work for a massive financial company and I still used my broker who has been helping me for over 20 years...I am loyal). Could have I gotten a slightly better price with my own company? Yeah.....but this guy has been there for me thick and thin and there is something to be said about relationships. When I needed a big bank the most (back in 2009 for my current home) none of them wanted to touch my purchase mortgage and I was scrambling. My broker was there to get me into my current home (long story). Loyalty. Then this year the jumbo market collapsed before my eyes. He was there again to get me this combo strategy and he acted lighting fast. That is why having a professional is critical.
Purchase Money Conventional 3.125 paying 1.625points. (I waived escrow .25 points, I also have a combo HELOC going behind that which added a .375 premium too). The points are fully tax deductible (and I can use them for sure) and the break even vs paying .75 points for a 3.5% mortgage was only 4 years. This is our forever dream home. From year 4 on we are saving a bundle in interest. Don't be afraid to buy down your rate if you know you are staying at least 10 years or more. Especially for higher balance mortgages (We are taking a 500K first). Well worth it, and tax deductible if you itemize.
I wanted under 3 but.....it was stupid expensive. Was hoping for that 2.875% that was around for the same price a month ago.....but the 10YR crept back up. I can’t complain at all about 3.125 for life. My current home is at 3.875 and I thought that was amazing when I got it back in 2012.
USE A BROKER FOLKS!!!!! Forget online rocket mortgage BS or big banks (I work for a massive financial company and I still used my broker who has been helping me for over 20 years...I am loyal). Could have I gotten a slightly better price with my own company? Yeah.....but this guy has been there for me thick and thin and there is something to be said about relationships. When I needed a big bank the most (back in 2009 for my current home) none of them wanted to touch my purchase mortgage and I was scrambling. My broker was there to get me into my current home (long story). Loyalty. Then this year the jumbo market collapsed before my eyes. He was there again to get me this combo strategy and he acted lighting fast. That is why having a professional is critical.
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leftcoastguy7
Footballguy
If you're getting a refi and have to have a home appraisal...
What do you do if the appraisal comes in MUCH lower than you were expecting? Is it worth it to pay for another appraisal? Can you request a different appraisal company? looking for options here
What do you do if the appraisal comes in MUCH lower than you were expecting? Is it worth it to pay for another appraisal? Can you request a different appraisal company? looking for options here
Juxtatarot
Footballguy
The first thing to do is study the appraisal. Look online at the comps. You'll often be able to see inside pictures on Zillow and elsewhere. Look at the adjustments based on the various differences between your home and the comps.
I know people like to rip on appraisers but usually (not always) their analysis is better than the owner's.
Phil Elliott
Footballguy
Was hoping to close on our refi last week but it is being pushed to maybe next week or week after. Priority going to home purchases. Our 60 day lock “expired” a couple days ago but they are honoring the lock until we close.
Chadstroma
Footballguy
I didn't say ONLY talk to a bank but on jumbo you have a pretty good chance of getting a better deal specially if you go through their private banking or wealth management department as they use the mortgage as a loss leader to get your relationship and make money there. However, jumbos SUCK all around right now. You need a clean file and I still have had people reach out to me to help save them from a bank that all of a sudden decides to change how they underwrite them and won't do the loan.
