Mortgage Rates (8 Viewers)

[dkp993]

We passed on this house. Was $100k over our budget. Despite how awesome the house was, it just wasn't the smart thing to do financially. Sure we were under the metrics that Chad outlined, but the new mortgage would be like 75% higher than our current one. It was just untenable.

Thanks a lot COVID for jacking up the interest rates!

Marry the house, date the interest rate.

While I made the opposite decision I absolutely applaud yours. I (we) stretched ourselves while the rates were low (got a 2.75%) and leveled up to a house I wouldn’t be able to afford at todays rates. And we are house poor right now. It sucks to not have the disposable income I should have with what I make, there’s no getting around that fact. But the other side of it is we love our home and plan on being here for 10/15 more years and as some of our cars and debt get paid off in the next yr or 2 our current financial situation should ease significantly. It’s a risk for sure, but almost 2 yrs into that choice I’m still happy we did it.

 

[DA RAIDERS]

We passed on this house. Was $100k over our budget. Despite how awesome the house was, it just wasn't the smart thing to do financially. Sure we were under the metrics that Chad outlined, but the new mortgage would be like 75% higher than our current one. It was just untenable.

Thanks a lot COVID for jacking up the interest rates!

Marry the house, date the interest rate.

While I made the opposite decision I absolutely applaud yours. I (we) stretched ourselves while the rates were low (got a 2.75%) and leveled up to a house I wouldn’t be able to afford at todays rates. And we are house poor right now. It sucks to not have the disposable income I should have with what I make, there’s no getting around that fact. But the other side of it is we love our home and plan on being here for 10/15 more years and as some of our cars and debt get paid off in the next yr or 2 our current financial situation should ease significantly. It’s a risk for sure, but almost 2 yrs into that choice I’m still happy we did it.

Where’d you buy? I’m in south oc

 

[dkp993]

Where’d you buy? I’m in south oc

Stayed in Temecula, we love it here. Bigger house with pool and a bigger yard.

You‘re by one of my venues right?

 

[DA RAIDERS]

Where’d you buy? I’m in south oc

Stayed in Temecula, we love it here. Bigger house with pool and a bigger yard.

You‘re by one of my venues right?

Irvine is closest

 

[The Z Machine]

We passed on this house. Was $100k over our budget. Despite how awesome the house was, it just wasn't the smart thing to do financially. Sure we were under the metrics that Chad outlined, but the new mortgage would be like 75% higher than our current one. It was just untenable.

Thanks a lot COVID for jacking up the interest rates!

Marry the house, date the interest rate.

While I made the opposite decision I absolutely applaud yours. I (we) stretched ourselves while the rates were low (got a 2.75%) and leveled up to a house I wouldn’t be able to afford at todays rates. And we are house poor right now. It sucks to not have the disposable income I should have with what I make, there’s no getting around that fact. But the other side of it is we love our home and plan on being here for 10/15 more years and as some of our cars and debt get paid off in the next yr or 2 our current financial situation should ease significantly. It’s a risk for sure, but almost 2 yrs into that choice I’m still happy we did it.

Happy for you. But there's a big difference between 6.75% (or whatever it is right now) and 2.75%. I'm at the latter for my current note. Hard to walk away from that type of equity building. We have less than 15 years left on it now.

We don't really have any other debt besides mortgage, but we're not willing to be house poor. The appreciation in our area has been low over the last decade (unlike everywhere else), so even though the house could be a 20-30 year house for us, it was tough to justify the monthly spend.

 

[dkp993]

Happy for you. But there's a big difference between 6.75% (or whatever it is right now) and 2.75%. I'm at the latter for my current note. Hard to walk away from that type of equity building. We have less than 15 years left on it now.

We don't really have any other debt besides mortgage, but we're not willing to be house poor. The appreciation in our area has been low over the last decade (unlike everywhere else), so even though the house could be a 20-30 year house for us, it was tough to justify the monthly spend

For sure, and to be clear I admire your decision. There’s no question it’s not the better/smarter financial one. Was just giving the other side of the perspective to help with the decision making process should you go down that road again.

The bottom line is one has to be comfortable with the decision they’re making with something of this magnitude, and it sounds like we both are.

 

[The Z Machine]

Agreed @dkp993 . Maybe the high interest rates will mean the house is on the market for a while and they'll consider a lower offer. I doubt it though. The sellers are wealthy and don't need the money. The house has no mortgage on it. They've been renting it out for the last year, but don't want to be landlords. Someone will pick it up that doesn't need as much financing as we do.

 

[Chadstroma]

We passed on this house. Was $100k over our budget. Despite how awesome the house was, it just wasn't the smart thing to do financially. Sure we were under the metrics that Chad outlined, but the new mortgage would be like 75% higher than our current one. It was just untenable.

Thanks a lot COVID for jacking up the interest rates!

Marry the house, date the interest rate.

While I made the opposite decision I absolutely applaud yours. I (we) stretched ourselves while the rates were low (got a 2.75%) and leveled up to a house I wouldn’t be able to afford at todays rates. And we are house poor right now. It sucks to not have the disposable income I should have with what I make, there’s no getting around that fact. But the other side of it is we love our home and plan on being here for 10/15 more years and as some of our cars and debt get paid off in the next yr or 2 our current financial situation should ease significantly. It’s a risk for sure, but almost 2 yrs into that choice I’m still happy we did it.

Best hedge against inflation.

 

[Chadstroma]

Agreed @dkp993 . Maybe the high interest rates will mean the house is on the market for a while and they'll consider a lower offer. I doubt it though. The sellers are wealthy and don't need the money. The house has no mortgage on it. They've been renting it out for the last year, but don't want to be landlords. Someone will pick it up that doesn't need as much financing as we do.

Rates are not going to crush the housing market to the point houses are staying on the market because of them. People who want to buy will buy and there are plenty who can qualify for whatever the price point is. Now the caveat to that is RE being local and if things are going south because economy or crime or some other reason that make the area undesirable that is one thing but rates are not going to be the reason houses stay on the market. Inventory is still low and though rates have cooled things off from what they were in most areas- most areas were crazy hot. It is all subjective really and the perception has been skewered by what we have lived through recently. We have been ridiculously spoiled for the last few years with insanely low interest rates. Where rates are right now is actually the historical norm.

Every situation is different and unique but my general advice to those who listen to me about these things is if you can qualify and want to spend the amount on a home now- do it. Don't worry about the rates as rates will lower and when they do you can refinance and take the savings. If rates stay the same then waiting does nothing for you. If rates go up further then you are better off moving now than waiting. It is better to buy in a higher rate with less competition for offers than a lower rate with tons of competition in offers. Once you have the house, you have the house.

This is NOT saying you made the wrong choice. Your choice is your choice. Just because you can qualify for a home loan does not mean you should get that home loan. A home purchase and paying your mortgage is one part of the full financial picture. You know your whole picture best which includes your wants and needs about everything financial.

 

[-OZ-]

Thanks, @Chadstroma . How do you calculate the DTI, and is that gross income or net income after taxes, retirement, insurance, college fund, etc.?

Also, the debt is the anticipated mortgage debt + car loans + CC debt + student loans? Say I'm looking at a note of $500k and my income is $100k after taxes and $150k before taxes and the other stuff listed above.

Gross.

$150K/12 = $12500 a month.

Add PITI + car + min CC payments + student loans = your monthly debt obligations. For conventional, you really want to be under 36% but with strong credit, good reserves, etc that can get pushed up to an absolute max of 49.99%.

I’ve often wondered about this as we approach retirement.
Hypothetically, say in retirement We’ll bring in $90k in pensions, are we looking at an absolute maximum of $45k in housing; including insurance and tax, which lets say $500/month tax, $500/month insurance, leaving a bit less than $3k for PI? With current rates that’s somewhere in the $500-600k range? Even with 2-3 million invested? Not that we’d necessarily want a 6% mortgage in retirement but if rates came close to 3% again we might (of course that would bump the available buying price up).
Am I basically on track here or totally missing something?
Eta: probably VA if that matters.

 

[Chadstroma]

Thanks, @Chadstroma . How do you calculate the DTI, and is that gross income or net income after taxes, retirement, insurance, college fund, etc.?

Also, the debt is the anticipated mortgage debt + car loans + CC debt + student loans? Say I'm looking at a note of $500k and my income is $100k after taxes and $150k before taxes and the other stuff listed above.

Gross.

$150K/12 = $12500 a month.

Add PITI + car + min CC payments + student loans = your monthly debt obligations. For conventional, you really want to be under 36% but with strong credit, good reserves, etc that can get pushed up to an absolute max of 49.99%.

I’ve often wondered about this as we approach retirement.
Hypothetically, say in retirement We’ll bring in $90k in pensions, are we looking at an absolute maximum of $45k in housing; including insurance and tax, which lets say $500/month tax, $500/month insurance, leaving a bit less than $3k for PI? With current rates that’s somewhere in the $500-600k range? Even with 2-3 million invested? Not that we’d necessarily want a 6% mortgage in retirement but if rates came close to 3% again we might (of course that would bump the available buying price up).Tj
Am I basically on track here or totally missing something?
Eta: probably VA if that matters.

$600K at 6% P&I is $3,597
VA does make a difference in DTI in as much as VA has "residual income" calculation which is basically more important than the DTI. The other nice thing about VA is being able to do an IRRRL to refinance.
I would be expecting 4's in the not too far off future... maybe 1-2 year range. 3's, I am not so sure.

 

[Chadstroma]

A different kind of mortgage crisis

Banks are retreating from the mortgage market

www.axios.com

 

[Chadstroma]

Ok... a little bit of venting....

I am on a real bad streak right now professionally. The market is rough for a lot of mortgage loan officers as interest rates have risen taking away most refi business and things are much slower on the purchase side than they have been as well. My wife has been battling cancer for the last 6+ months so that has taken the majority of my attention, time and energy. That said, I still need to make money so I have tried to get some business done as we go....

I have probably lost more loans in a span of about 6 months than I have ever have before in that time frame. The craziest things have happened from more 'normal' things like clients ghosting me suddenly to an appraisal comes in low to a verification of income comes in lower than expected etc. Today, I am just looking at my phone like "Wha?" on this conversation with my processor.

Now, let me preface that though I am venting about here about how it impacts me, my heart is broken for my client. It is a horrible situation and I recognize and know that it is a much harder and suckier thing for her to go through.

This particular client, I have actually worked with for about 9 months. Helping her improve her credit and planning out exactly what she needed to do in order to make the loan work. She owns a home free and clear that her adult daughter lives out of and then lived with her boyfriend in another state. She had part time income so we had to wait until she hit 2 years worth of time with it so we could average out the income for her to qualify. What she needed to do was take out a cash out refinance (still considered refinance even if there is no loan we are refinancing) to pay off some debt, which was highlighted by a very costly loan she had to take. I don't remember all the exact details as that conversation took place about 9 months ago but the interest on it is high teen's and killing her. We got her credit up enough to make something work and she hit the two year mark. We proceeded with the loan application and recently go the approved with conditions from the underwriter. My processor reach out to her to tell her what documentation we needed to clear the conditions and among them was a letter from her boyfriend stating that she lives there rent free. When my processor called her, she informed her that her boyfriend passed this weekend. Hence no letter.

I have no idea if this will indeed kill the loan beyond any way of making it work as I have never come across this scenario before. I have no idea what we would use as part of the debt obligations to re-run it through UW but it is very possible, more like probable, that this loan is unable to move forward.

Be a mortgage broker they said.... it will be great they said.....

 

[Psychopav]

Be a mortgage broker they said.... it will be great they said.....

Be honest. Nobody ever said that. Not just to you, to anyone. Ever.

 

[Nick Vermeil]

Ok... a little bit of venting....

I am on a real bad streak right now professionally. The market is rough for a lot of mortgage loan officers as interest rates have risen taking away most refi business and things are much slower on the purchase side than they have been as well. My wife has been battling cancer for the last 6+ months so that has taken the majority of my attention, time and energy. That said, I still need to make money so I have tried to get some business done as we go....

I have probably lost more loans in a span of about 6 months than I have ever have before in that time frame. The craziest things have happened from more 'normal' things like clients ghosting me suddenly to an appraisal comes in low to a verification of income comes in lower than expected etc. Today, I am just looking at my phone like "Wha?" on this conversation with my processor.

Now, let me preface that though I am venting about here about how it impacts me, my heart is broken for my client. It is a horrible situation and I recognize and know that it is a much harder and suckier thing for her to go through.

This particular client, I have actually worked with for about 9 months. Helping her improve her credit and planning out exactly what she needed to do in order to make the loan work. She owns a home free and clear that her adult daughter lives out of and then lived with her boyfriend in another state. She had part time income so we had to wait until she hit 2 years worth of time with it so we could average out the income for her to qualify. What she needed to do was take out a cash out refinance (still considered refinance even if there is no loan we are refinancing) to pay off some debt, which was highlighted by a very costly loan she had to take. I don't remember all the exact details as that conversation took place about 9 months ago but the interest on it is high teen's and killing her. We got her credit up enough to make something work and she hit the two year mark. We proceeded with the loan application and recently go the approved with conditions from the underwriter. My processor reach out to her to tell her what documentation we needed to clear the conditions and among them was a letter from her boyfriend stating that she lives there rent free. When my processor called her, she informed her that her boyfriend passed this weekend. Hence no letter.

I have no idea if this will indeed kill the loan beyond any way of making it work as I have never come across this scenario before. I have no idea what we would use as part of the debt obligations to re-run it through UW but it is very possible, more like probable, that this loan is unable to move forward.

Be a mortgage broker they said.... it will be great they said.....

I would love to refinance one of my two properties to do some work on our primary to make more space for my growing kids. If something doesn't give soon I have to decide between paying too much or trying to sell and buy a different house that is a better fit from the jump. Otherwise it will be too late to make space for the boys. I know my usual broker is hurting. I've done 5 deals with him over the years but nothing since the pandemic killed our last attempt.

 

[Chadstroma]

Ok... a little bit of venting....

I am on a real bad streak right now professionally. The market is rough for a lot of mortgage loan officers as interest rates have risen taking away most refi business and things are much slower on the purchase side than they have been as well. My wife has been battling cancer for the last 6+ months so that has taken the majority of my attention, time and energy. That said, I still need to make money so I have tried to get some business done as we go....

I have probably lost more loans in a span of about 6 months than I have ever have before in that time frame. The craziest things have happened from more 'normal' things like clients ghosting me suddenly to an appraisal comes in low to a verification of income comes in lower than expected etc. Today, I am just looking at my phone like "Wha?" on this conversation with my processor.

Now, let me preface that though I am venting about here about how it impacts me, my heart is broken for my client. It is a horrible situation and I recognize and know that it is a much harder and suckier thing for her to go through.

This particular client, I have actually worked with for about 9 months. Helping her improve her credit and planning out exactly what she needed to do in order to make the loan work. She owns a home free and clear that her adult daughter lives out of and then lived with her boyfriend in another state. She had part time income so we had to wait until she hit 2 years worth of time with it so we could average out the income for her to qualify. What she needed to do was take out a cash out refinance (still considered refinance even if there is no loan we are refinancing) to pay off some debt, which was highlighted by a very costly loan she had to take. I don't remember all the exact details as that conversation took place about 9 months ago but the interest on it is high teen's and killing her. We got her credit up enough to make something work and she hit the two year mark. We proceeded with the loan application and recently go the approved with conditions from the underwriter. My processor reach out to her to tell her what documentation we needed to clear the conditions and among them was a letter from her boyfriend stating that she lives there rent free. When my processor called her, she informed her that her boyfriend passed this weekend. Hence no letter.

I have no idea if this will indeed kill the loan beyond any way of making it work as I have never come across this scenario before. I have no idea what we would use as part of the debt obligations to re-run it through UW but it is very possible, more like probable, that this loan is unable to move forward.

Be a mortgage broker they said.... it will be great they said.....

I would love to refinance one of my two properties to do some work on our primary to make more space for my growing kids. If something doesn't give soon I have to decide between paying too much or trying to sell and buy a different house that is a better fit from the jump. Otherwise it will be too late to make space for the boys. I know my usual broker is hurting. I've done 5 deals with him over the years but nothing since the pandemic killed our last attempt.

Yea, a lot are hurting and retail is getting hit even harder than brokers. I do have more than a few of my colleagues that are just knocking it out of the park rigth now but I am not where near that largely due to my preoccupation with the wifey and to be honest... even if that wasn't the case, likely wouldn't be doing as well as they are too.

 

[Leeroy Jenkins]

I cannot believe that this thread started in 2008.

 

[Chadstroma]

I cannot believe that this thread started in 2008.

You won't believe some of the posts from back then

 

[Leeroy Jenkins]

I cannot believe that this thread started in 2008.

You won't believe some of the posts from back then

We should review in preparation of what is ahead.

 

[Buckna]

Ok... a little bit of venting....

I am on a real bad streak right now professionally. The market is rough for a lot of mortgage loan officers as interest rates have risen taking away most refi business and things are much slower on the purchase side than they have been as well. My wife has been battling cancer for the last 6+ months so that has taken the majority of my attention, time and energy. That said, I still need to make money so I have tried to get some business done as we go....

I have probably lost more loans in a span of about 6 months than I have ever have before in that time frame. The craziest things have happened from more 'normal' things like clients ghosting me suddenly to an appraisal comes in low to a verification of income comes in lower than expected etc. Today, I am just looking at my phone like "Wha?" on this conversation with my processor.

Now, let me preface that though I am venting about here about how it impacts me, my heart is broken for my client. It is a horrible situation and I recognize and know that it is a much harder and suckier thing for her to go through.

This particular client, I have actually worked with for about 9 months. Helping her improve her credit and planning out exactly what she needed to do in order to make the loan work. She owns a home free and clear that her adult daughter lives out of and then lived with her boyfriend in another state. She had part time income so we had to wait until she hit 2 years worth of time with it so we could average out the income for her to qualify. What she needed to do was take out a cash out refinance (still considered refinance even if there is no loan we are refinancing) to pay off some debt, which was highlighted by a very costly loan she had to take. I don't remember all the exact details as that conversation took place about 9 months ago but the interest on it is high teen's and killing her. We got her credit up enough to make something work and she hit the two year mark. We proceeded with the loan application and recently go the approved with conditions from the underwriter. My processor reach out to her to tell her what documentation we needed to clear the conditions and among them was a letter from her boyfriend stating that she lives there rent free. When my processor called her, she informed her that her boyfriend passed this weekend. Hence no letter.

I have no idea if this will indeed kill the loan beyond any way of making it work as I have never come across this scenario before. I have no idea what we would use as part of the debt obligations to re-run it through UW but it is very possible, more like probable, that this loan is unable to move forward.

Be a mortgage broker they said.... it will be great they said.....

Very sorry to hear and fingers crossed for your wife bud.

Gotta keep plugging away in this type of role and the luck will turn. It’s definitely hard out there, my wife was a loan processor and got laid off twice in the last 14 months. Last one it was the day after Xmas and her entire office got completely shutdown here in Colorado Springs. She ended up going back to nursing as all the mortgage lenders have been laying off left and right. Personally we are 15 months into a housing renovation for a house we were going to refi and rent-out. GC screwed us and almost went bankrupt, we are inching along with subs trying to get it finished and listed for sale in May. Definitely now have to sell as refi is definitely not an option anymore after rates spiked.

Any chance you can work a HELOC for your client if cashout refi is no longer an option?

 

[bcat01]

Looks like mortgage cost could go up for those with good credit. https://www.foxnews.com/us/biden-rule-redistribute-high-risk-loan-costs-homeowners-good-credit

 

[Chadstroma]

Ok... a little bit of venting....

I am on a real bad streak right now professionally. The market is rough for a lot of mortgage loan officers as interest rates have risen taking away most refi business and things are much slower on the purchase side than they have been as well. My wife has been battling cancer for the last 6+ months so that has taken the majority of my attention, time and energy. That said, I still need to make money so I have tried to get some business done as we go....

I have probably lost more loans in a span of about 6 months than I have ever have before in that time frame. The craziest things have happened from more 'normal' things like clients ghosting me suddenly to an appraisal comes in low to a verification of income comes in lower than expected etc. Today, I am just looking at my phone like "Wha?" on this conversation with my processor.

Now, let me preface that though I am venting about here about how it impacts me, my heart is broken for my client. It is a horrible situation and I recognize and know that it is a much harder and suckier thing for her to go through.

This particular client, I have actually worked with for about 9 months. Helping her improve her credit and planning out exactly what she needed to do in order to make the loan work. She owns a home free and clear that her adult daughter lives out of and then lived with her boyfriend in another state. She had part time income so we had to wait until she hit 2 years worth of time with it so we could average out the income for her to qualify. What she needed to do was take out a cash out refinance (still considered refinance even if there is no loan we are refinancing) to pay off some debt, which was highlighted by a very costly loan she had to take. I don't remember all the exact details as that conversation took place about 9 months ago but the interest on it is high teen's and killing her. We got her credit up enough to make something work and she hit the two year mark. We proceeded with the loan application and recently go the approved with conditions from the underwriter. My processor reach out to her to tell her what documentation we needed to clear the conditions and among them was a letter from her boyfriend stating that she lives there rent free. When my processor called her, she informed her that her boyfriend passed this weekend. Hence no letter.

I have no idea if this will indeed kill the loan beyond any way of making it work as I have never come across this scenario before. I have no idea what we would use as part of the debt obligations to re-run it through UW but it is very possible, more like probable, that this loan is unable to move forward.

Be a mortgage broker they said.... it will be great they said.....

Very sorry to hear and fingers crossed for your wife bud.

Gotta keep plugging away in this type of role and the luck will turn. It’s definitely hard out there, my wife was a loan processor and got laid off twice in the last 14 months. Last one it was the day after Xmas and her entire office got completely shutdown here in Colorado Springs. She ended up going back to nursing as all the mortgage lenders have been laying off left and right. Personally we are 15 months into a housing renovation for a house we were going to refi and rent-out. GC screwed us and almost went bankrupt, we are inching along with subs trying to get it finished and listed for sale in May. Definitely now have to sell as refi is definitely not an option anymore after rates spiked.

Any chance you can work a HELOC for your client if cashout refi is no longer an option?

it is what it is... just a nasty streak.

My strength is actually figuring out solutions. This one may be a hard one though but I can't figure out a solution until I figure out how lenders will treat her liabilities.

That sucks about the GC, sorry to hear that. If I had a dollar for every time I have heard about contractors screwing peope over.... I wouldn't have to worry about losing loans.

 

[Chadstroma]

Looks like mortgage cost could go up for those with good credit. https://www.foxnews.com/us/biden-rule-redistribute-high-risk-loan-costs-homeowners-good-credit

They basically already kind of did that already with changes to the LLPA.

 

[Chadstroma]

Well... ain't this just a microcosm view of the life of being a mortgage lender...

So, from the whining from yesterday of the two loans that I 'lost'.... I worked on them with my team and figured out routes forward on both. I got notification today that the one loan will continue with the conditions being met and the other one is being moved to another lender that it will work with. And as dessert for the main course, I sent out a pre-approval today for another client that was a heckuva hard time to figure out a way forward for her.

Chalk one up for the good guys.

 

[Phil Elliott]

Looks like mortgage cost could go up for those with good credit. https://www.foxnews.com/us/biden-rule-redistribute-high-risk-loan-costs-homeowners-good-credit

What could go wrong?
Going to watch "The Big Short" again tonight.

 

[Chadstroma]

Looks like mortgage cost could go up for those with good credit. https://www.foxnews.com/us/biden-rule-redistribute-high-risk-loan-costs-homeowners-good-credit

They basically already kind of did that already with changes to the LLPA.

I should be more clear than trying to be cute... they already did this about two months ago in the LLPA for loans being sold in May which is why the press is picking up on it now.

 

[Terpman22]

New to this whole home ownership thing. Bought a home in September basically, me and the wife really didn't want to be in that whole market "pay above asking price/waive the inspection" etc as all the homes here in the local market (Long Beach/Orange County) were just flying and also having to compete with 40 offers. Now, we started going to open houses "To see what was out there" b/c she was 5 months pregnant in March last year and well, there wasn't a whole lot of things we were doing. Yadda yadda yadda, found a house in August we "REALLY" liked, got the deal done, closed at 4.5% with a VA home loan, luckily. We are just now wondering "How long" it will be until a VA home loan goes below this rate so we can refinance. My guess is its going to be 3-4 years minimum. Got a nice sized separate garage we'd love to convert to a ADU, mainly for family/out of town friends to have extended stays, but since we both work from home, it would be nice to "get away" and rent that prospective ADU out to basically cover out travel costs. Not really contributing much to the theme here just wondering I guess "do we need an economic crash to get a better rate" lol

 

[Sand]

So, @Chadstroma , what does your office think about the new rule going into place to penalize savers with good credit? Will it affect your business?

High credit score borrowers penalized under new federal mortgage fee plan

Under the new matrix, borrowers with high credit scores will face higher mortgage fees than before and those with lower credit scores will face lower fees.

reason.com

 

[Keerock]

So, @Chadstroma , what does your office think about the new rule going into place to penalize savers with good credit? Will it affect your business?

High credit score borrowers penalized under new federal mortgage fee plan

Under the new matrix, borrowers with high credit scores will face higher mortgage fees than before and those with lower credit scores will face lower fees.

reason.com

 

[Chadstroma]

New to this whole home ownership thing. Bought a home in September basically, me and the wife really didn't want to be in that whole market "pay above asking price/waive the inspection" etc as all the homes here in the local market (Long Beach/Orange County) were just flying and also having to compete with 40 offers. Now, we started going to open houses "To see what was out there" b/c she was 5 months pregnant in March last year and well, there wasn't a whole lot of things we were doing. Yadda yadda yadda, found a house in August we "REALLY" liked, got the deal done, closed at 4.5% with a VA home loan, luckily. We are just now wondering "How long" it will be until a VA home loan goes below this rate so we can refinance. My guess is its going to be 3-4 years minimum. Got a nice sized separate garage we'd love to convert to a ADU, mainly for family/out of town friends to have extended stays, but since we both work from home, it would be nice to "get away" and rent that prospective ADU out to basically cover out travel costs. Not really contributing much to the theme here just wondering I guess "do we need an economic crash to get a better rate" lol

Overall, there are two overarching things that make rates go up and down: Economic health and inflation. When the economy sucks and there is no inflation rates go down and switch that around and rates go up.

You can sign up for this service I offer my clients: Homebot https://hmbt.co/aXP66A among other things such as value of your property, rent comps, etc it will also help you keep an eye out on rates and potential for a refinance with a monthly digest. It gets about 80% open rates on the monthly digest which is exceptional so it means that people actually like it and open it every month.

 

[Chadstroma]

So, @Chadstroma , what does your office think about the new rule going into place to penalize savers with good credit? Will it affect your business?

High credit score borrowers penalized under new federal mortgage fee plan

Under the new matrix, borrowers with high credit scores will face higher mortgage fees than before and those with lower credit scores will face lower fees.

reason.com

When they came out with the LLPA updates on these a couple of months ago we basically all were looking at it like WTF. There is no lending or economic sense to this. It is all politics.

It should be neutral. If anything, it could help us make a little more money in that there is a pricing penalty for putting a higher down payment. So, it makes sense to run the pricing at 5% down versus 20% down and see if it is better for the client. If so, then we get paid more (we get paid bps on the loan amounts) and then tell the client to make an extra principal payment later and recast the loan which would drop their PMI and lower their payment but retain the better pricing on the loan.

Essentially the government is dumb.

 

[Sand]

So, @Chadstroma , what does your office think about the new rule going into place to penalize savers with good credit? Will it affect your business?

High credit score borrowers penalized under new federal mortgage fee plan

Under the new matrix, borrowers with high credit scores will face higher mortgage fees than before and those with lower credit scores will face lower fees.

reason.com

When they came out with the LLPA updates on these a couple of months ago we basically all were looking at it like WTF. There is no lending or economic sense to this. It is all politics.

It should be neutral. If anything, it could help us make a little more money in that there is a pricing penalty for putting a higher down payment. So, it makes sense to run the pricing at 5% down versus 20% down and see if it is better for the client. If so, then we get paid more (we get paid bps on the loan amounts) and then tell the client to make an extra principal payment later and recast the loan which would drop their PMI and lower their payment but retain the better pricing on the loan.

Essentially the government is dumb.

So it's totally gameable. I kinda figured that. (Also, incentivizing low down payments is a 2006-8 move. This should turn out well.)

I did get a bit bent when they talked about a "minimal increase in payment" when their example really added up to 15k over 30 years. Yeah, that's minimal, guys. Freakin' morons.

 

[Chadstroma]

So, @Chadstroma , what does your office think about the new rule going into place to penalize savers with good credit? Will it affect your business?

High credit score borrowers penalized under new federal mortgage fee plan

Under the new matrix, borrowers with high credit scores will face higher mortgage fees than before and those with lower credit scores will face lower fees.

reason.com

When they came out with the LLPA updates on these a couple of months ago we basically all were looking at it like WTF. There is no lending or economic sense to this. It is all politics.

It should be neutral. If anything, it could help us make a little more money in that there is a pricing penalty for putting a higher down payment. So, it makes sense to run the pricing at 5% down versus 20% down and see if it is better for the client. If so, then we get paid more (we get paid bps on the loan amounts) and then tell the client to make an extra principal payment later and recast the loan which would drop their PMI and lower their payment but retain the better pricing on the loan.

Essentially the government is dumb.

So it's totally gameable. I kinda figured that. (Also, incentivizing low down payments is a 2006-8 move. This should turn out well.)

I did get a bit bent when they talked about a "minimal increase in payment" when their example really added up to 15k over 30 years. Yeah, that's minimal, guys. Freakin' morons.

Well... not fully gameable but at least the down payment part is. If you have good credit then you are still taking a hit and there is nothing you can do about it if you are doing a conventional loan but it is not something you will really see in the pricing. It is all baked into everything. In the eyes of the people making these decisions, it is you paying your fair share. Damn you for being responsible, paying your debts back and making good choices!!! Check your privilege.

If there is a new political party in the White House, my guess is that the LLPA will be changed back to more reflect what it was before. These are basically mandates being given by the FHFA to Fannie/Freddie- hence political and hence susceptible to the winds of political change.

 

[Chadstroma]

To explain in a way I didn't have the inclination to put the time into doing myself about the cha ges to LLPA with all the news reports...

Is There Really a New, Unfair Mortgage Tax on Those With High Credit?

By: Matthew Graham
Fri, Apr 21 2023, 5:06 PM
Seemingly overnight, the internet is awash with news regarding a "new," unfair tax on mortgage borrowers with higher credit scores. Some have gone so far as to suggest that someone could intentionally lower their credit score in order to get a better deal.

Before you stop paying your bills in the hope of cashing in, let's separate fact from fiction. First and most importantly, you will absolutely NOT get a better deal on a mortgage rate if your credit score is lower, even if your nephew just texted you a screenshot of a news headline saying "620 FICO SCORE GETS A 1.75% FEE DISCOUNT" and "740 FICO SCORE PAYS 1% FEE."

So why would your nephew make such a claim?

This all has to do with changes to Loan Level Price Adjustments (LLPAs) imposed by Fannie Mae and Freddie Mac (the "agencies"), the two entities that guaranty a vast majority of new mortgages. LLPAs are based on loan features such as your credit score and the loan-to-value ratio among other things. They've been changed several times over the years and a fairly substantial change was announced in January of this year.

See Rates from Lenders in Your Area

Wait... This news is from JANUARY?! Why are people talking about it now?

Yes, in fact, we already told you about it. People are confused because they don't understand how "delivery dates" work when it comes to Fannie and Freddie. Changes that impact fees and guidelines are almost always implemented based on the date the loan in question is "delivered" to Fannie/Freddie. "Delivery," in this context, typically occurs a matter of weeks AFTER the loan is closed, although it can be more than a month.

Now consider that a closed loan has often been quoted and locked for more than 3 weeks--call it a month to be safe. Since these changes go into effect on loans delivered on or after May 1st, 2023, lenders began to implement them weeks ago. Many lenders implemented them months ago--especially for loans that are locked for longer periods of time.

So low credit borrowers are already getting a discount while high credit borrowers pay more?

Not exactly, and this is where the confusion comes in. Also, from here on out, please note that there is no opinion offered here as to whether this is good/bad/etc. The only goal is to clear up confusion and offer facts.

The fact of matter is that LLPAs are indeed changing in a way that improves costs for those with lower credit scores and increases costs for those with higher credit scores (in many cases, anyway). But people are confusing the CHANGE for the ACTUAL cost.

So a low credit borrower isn't paying less than a high credit borrower? The gap between what they pay is just smaller than it was?

YES! Again, all value judgements and political commentary aside, the change amounts to a tweak of an existing fee structure in favor of those with lower credit scores and at the expense of those with higher credit scores, but there's no scenario where someone with lower credit will have a lower fee. In other words, don't go skipping those credit card payments in the hopes of getting a lower rate.

Yes, it's a big change, so why is the government doing this to people with higher credit?!

Fannie and Freddie technically have a "mission" to promote affordable home ownership. Here is the statement on the topic by their regulator, the FHFA: FHFA Announces Updates to the Enterprises’ Single-Family Pricing Framework.

Any other misconstrued news I need to know about?

Yes, actually. While not as viral as the LLPA stuff, there has been a fair amount of press on a new 40yr FHA mortgage. THERE IS NO NEW 40yr FHA LOAN! Lenders who collect payments on FHA loans have a new option to offer loan modifications with terms of 40 years to borrowers who are unable to pay their existing FHA loans.

 

[-OZ-]

So, @Chadstroma , what does your office think about the new rule going into place to penalize savers with good credit? Will it affect your business?

High credit score borrowers penalized under new federal mortgage fee plan

Under the new matrix, borrowers with high credit scores will face higher mortgage fees than before and those with lower credit scores will face lower fees.

reason.com

When they came out with the LLPA updates on these a couple of months ago we basically all were looking at it like WTF. There is no lending or economic sense to this. It is all politics.

It should be neutral. If anything, it could help us make a little more money in that there is a pricing penalty for putting a higher down payment. So, it makes sense to run the pricing at 5% down versus 20% down and see if it is better for the client. If so, then we get paid more (we get paid bps on the loan amounts) and then tell the client to make an extra principal payment later and recast the loan which would drop their PMI and lower their payment but retain the better pricing on the loan.

Essentially the government is dumb.

So it's totally gameable. I kinda figured that. (Also, incentivizing low down payments is a 2006-8 move. This should turn out well.)

I did get a bit bent when they talked about a "minimal increase in payment" when their example really added up to 15k over 30 years. Yeah, that's minimal, guys. Freakin' morons.

Well... not fully gameable but at least the down payment part is. If you have good credit then you are still taking a hit and there is nothing you can do about it if you are doing a conventional loan but it is not something you will really see in the pricing. It is all baked into everything. In the eyes of the people making these decisions, it is you paying your fair share. Damn you for being responsible, paying your debts back and making good choices!!! Check your privilege.

If there is a new political party in the White House, my guess is that the LLPA will be changed back to more reflect what it was before. These are basically mandates being given by the FHFA to Fannie/Freddie- hence political and hence susceptible to the winds of political change.

The down payment part doesn’t really apply but is there any impact on VA loans? Not that we’re moving any time soon but friends do.

 

[Chadstroma]

So, @Chadstroma , what does your office think about the new rule going into place to penalize savers with good credit? Will it affect your business?

High credit score borrowers penalized under new federal mortgage fee plan

Under the new matrix, borrowers with high credit scores will face higher mortgage fees than before and those with lower credit scores will face lower fees.

reason.com

When they came out with the LLPA updates on these a couple of months ago we basically all were looking at it like WTF. There is no lending or economic sense to this. It is all politics.

It should be neutral. If anything, it could help us make a little more money in that there is a pricing penalty for putting a higher down payment. So, it makes sense to run the pricing at 5% down versus 20% down and see if it is better for the client. If so, then we get paid more (we get paid bps on the loan amounts) and then tell the client to make an extra principal payment later and recast the loan which would drop their PMI and lower their payment but retain the better pricing on the loan.

Essentially the government is dumb.

So it's totally gameable. I kinda figured that. (Also, incentivizing low down payments is a 2006-8 move. This should turn out well.)

I did get a bit bent when they talked about a "minimal increase in payment" when their example really added up to 15k over 30 years. Yeah, that's minimal, guys. Freakin' morons.

Well... not fully gameable but at least the down payment part is. If you have good credit then you are still taking a hit and there is nothing you can do about it if you are doing a conventional loan but it is not something you will really see in the pricing. It is all baked into everything. In the eyes of the people making these decisions, it is you paying your fair share. Damn you for being responsible, paying your debts back and making good choices!!! Check your privilege.

If there is a new political party in the White House, my guess is that the LLPA will be changed back to more reflect what it was before. These are basically mandates being given by the FHFA to Fannie/Freddie- hence political and hence susceptible to the winds of political change.

The down payment part doesn’t really apply but is there any impact on VA loans? Not that we’re moving any time soon but friends do.

No. This change is only on conforming conventional loans.
When your friends do move... you know who to get them in touch with.

 

[Sand]

To explain in a way I didn't have the inclination to put the time into doing myself about the cha ges to LLPA with all the news reports...

Is There Really a New, Unfair Mortgage Tax on Those With High Credit?

By: Matthew Graham
Fri, Apr 21 2023, 5:06 PM
Seemingly overnight, the internet is awash with news regarding a "new," unfair tax on mortgage borrowers with higher credit scores. Some have gone so far as to suggest that someone could intentionally lower their credit score in order to get a better deal.

Before you stop paying your bills in the hope of cashing in, let's separate fact from fiction. First and most importantly, you will absolutely NOT get a better deal on a mortgage rate if your credit score is lower, even if your nephew just texted you a screenshot of a news headline saying "620 FICO SCORE GETS A 1.75% FEE DISCOUNT" and "740 FICO SCORE PAYS 1% FEE."

So why would your nephew make such a claim?

This all has to do with changes to Loan Level Price Adjustments (LLPAs) imposed by Fannie Mae and Freddie Mac (the "agencies"), the two entities that guaranty a vast majority of new mortgages. LLPAs are based on loan features such as your credit score and the loan-to-value ratio among other things. They've been changed several times over the years and a fairly substantial change was announced in January of this year.

See Rates from Lenders in Your Area

Wait... This news is from JANUARY?! Why are people talking about it now?

Yes, in fact, we already told you about it. People are confused because they don't understand how "delivery dates" work when it comes to Fannie and Freddie. Changes that impact fees and guidelines are almost always implemented based on the date the loan in question is "delivered" to Fannie/Freddie. "Delivery," in this context, typically occurs a matter of weeks AFTER the loan is closed, although it can be more than a month.

Now consider that a closed loan has often been quoted and locked for more than 3 weeks--call it a month to be safe. Since these changes go into effect on loans delivered on or after May 1st, 2023, lenders began to implement them weeks ago. Many lenders implemented them months ago--especially for loans that are locked for longer periods of time.

So low credit borrowers are already getting a discount while high credit borrowers pay more?

Not exactly, and this is where the confusion comes in. Also, from here on out, please note that there is no opinion offered here as to whether this is good/bad/etc. The only goal is to clear up confusion and offer facts.

The fact of matter is that LLPAs are indeed changing in a way that improves costs for those with lower credit scores and increases costs for those with higher credit scores (in many cases, anyway). But people are confusing the CHANGE for the ACTUAL cost.

So a low credit borrower isn't paying less than a high credit borrower? The gap between what they pay is just smaller than it was?

YES! Again, all value judgements and political commentary aside, the change amounts to a tweak of an existing fee structure in favor of those with lower credit scores and at the expense of those with higher credit scores, but there's no scenario where someone with lower credit will have a lower fee. In other words, don't go skipping those credit card payments in the hopes of getting a lower rate.

Yes, it's a big change, so why is the government doing this to people with higher credit?!

Fannie and Freddie technically have a "mission" to promote affordable home ownership. Here is the statement on the topic by their regulator, the FHFA: FHFA Announces Updates to the Enterprises’ Single-Family Pricing Framework.

Any other misconstrued news I need to know about?

Yes, actually. While not as viral as the LLPA stuff, there has been a fair amount of press on a new 40yr FHA mortgage. THERE IS NO NEW 40yr FHA LOAN! Lenders who collect payments on FHA loans have a new option to offer loan modifications with terms of 40 years to borrowers who are unable to pay their existing FHA loans.

What I find funny about this conversation is that the premium charged to low credit score folks isn't a concern. I'd like to see these fees charged in such a way that equilibrate the foreclosure risk across the spectrum of credit scores. If we did that without the social engineering what would these fees look like? That's the baseline to start this conversation, not just yelling across the aisle about who's paying more or not.

As of yet, of course, I have seen no analyses like that. Shocked, I tell you. Shocked!

 

[Chadstroma]

To explain in a way I didn't have the inclination to put the time into doing myself about the cha ges to LLPA with all the news reports...

Is There Really a New, Unfair Mortgage Tax on Those With High Credit?

By: Matthew Graham
Fri, Apr 21 2023, 5:06 PM
Seemingly overnight, the internet is awash with news regarding a "new," unfair tax on mortgage borrowers with higher credit scores. Some have gone so far as to suggest that someone could intentionally lower their credit score in order to get a better deal.

Before you stop paying your bills in the hope of cashing in, let's separate fact from fiction. First and most importantly, you will absolutely NOT get a better deal on a mortgage rate if your credit score is lower, even if your nephew just texted you a screenshot of a news headline saying "620 FICO SCORE GETS A 1.75% FEE DISCOUNT" and "740 FICO SCORE PAYS 1% FEE."

So why would your nephew make such a claim?

This all has to do with changes to Loan Level Price Adjustments (LLPAs) imposed by Fannie Mae and Freddie Mac (the "agencies"), the two entities that guaranty a vast majority of new mortgages. LLPAs are based on loan features such as your credit score and the loan-to-value ratio among other things. They've been changed several times over the years and a fairly substantial change was announced in January of this year.

See Rates from Lenders in Your Area

Wait... This news is from JANUARY?! Why are people talking about it now?

Yes, in fact, we already told you about it. People are confused because they don't understand how "delivery dates" work when it comes to Fannie and Freddie. Changes that impact fees and guidelines are almost always implemented based on the date the loan in question is "delivered" to Fannie/Freddie. "Delivery," in this context, typically occurs a matter of weeks AFTER the loan is closed, although it can be more than a month.

Now consider that a closed loan has often been quoted and locked for more than 3 weeks--call it a month to be safe. Since these changes go into effect on loans delivered on or after May 1st, 2023, lenders began to implement them weeks ago. Many lenders implemented them months ago--especially for loans that are locked for longer periods of time.

So low credit borrowers are already getting a discount while high credit borrowers pay more?

Not exactly, and this is where the confusion comes in. Also, from here on out, please note that there is no opinion offered here as to whether this is good/bad/etc. The only goal is to clear up confusion and offer facts.

The fact of matter is that LLPAs are indeed changing in a way that improves costs for those with lower credit scores and increases costs for those with higher credit scores (in many cases, anyway). But people are confusing the CHANGE for the ACTUAL cost.

So a low credit borrower isn't paying less than a high credit borrower? The gap between what they pay is just smaller than it was?

YES! Again, all value judgements and political commentary aside, the change amounts to a tweak of an existing fee structure in favor of those with lower credit scores and at the expense of those with higher credit scores, but there's no scenario where someone with lower credit will have a lower fee. In other words, don't go skipping those credit card payments in the hopes of getting a lower rate.

Yes, it's a big change, so why is the government doing this to people with higher credit?!

Fannie and Freddie technically have a "mission" to promote affordable home ownership. Here is the statement on the topic by their regulator, the FHFA: FHFA Announces Updates to the Enterprises’ Single-Family Pricing Framework.

Any other misconstrued news I need to know about?

Yes, actually. While not as viral as the LLPA stuff, there has been a fair amount of press on a new 40yr FHA mortgage. THERE IS NO NEW 40yr FHA LOAN! Lenders who collect payments on FHA loans have a new option to offer loan modifications with terms of 40 years to borrowers who are unable to pay their existing FHA loans.

What I find funny about this conversation is that the premium charged to low credit score folks isn't a concern. I'd like to see these fees charged in such a way that equilibrate the foreclosure risk across the spectrum of credit scores. If we did that without the social engineering what would these fees look like? That's the baseline to start this conversation, not just yelling across the aisle about who's paying more or not.

As of yet, of course, I have seen no analyses like that. Shocked, I tell you. Shocked!

I don't have the data to say that they were perfectly in line but I think they were more so aligned with risk of default and adjustments to pricing to pay for those elevated defaults. After all, that is exactly what LLPA is all about.

You can debate whether it is right or wrong/good or bad but what you can't do is try to make it seem like this is a decision about lending risk or economics. It is a political decision with political/social goals.

 

[Chadstroma]

To give a real life example of a client of mine showing the new LLPA....

I just ran numbers for a client looking to buy at a $775K price point in IL.

From 20% down to 10% down with the same lender, same rate but goes from a $84 charge in points to a $1059 lender credit. So, putting down 10% less will save them about $1100. Another lender on the switch will give an eight of a point better for a charge of about $500 in points on todays pricing.

So, even though they are planning on putting 20% down, I will likely advise them to put 10% down and then put the rest down later then recast the loan which will drop the PMI and then lower their payment for some benefit that is worth the effort. On a smaller loan amount, it may not be worth it but then I can also price it at 95% LTV to see how the pricing goes with that.

 

[The Z Machine]

You have to be under the jumbo limit for recast, right?

 

[Chadstroma]

You have to be under the jumbo limit for recast, right?

In this scenario, you have to as jumbo's do not do 5% down and going to 5% puts it into jumbo status. Going to jumbo is not going to help pricing. As for being able to recast, that is up to the lender. Some do and some don't. So, for the above scenario, I would check with the lender first to make sure that they will recast.

However, even if they will not, then as long as you are ok with the payment, you can do this- pay the extra to principal and drop the PMI. Then the larger payment just shortens the term of the loan.

 

[SouthJersey]

Question for @Chadstroma and others. Facing an ethical dilemma right now.

Under contract to buy a house after looking for 1.5 years (losing multiple offers to folks with straight cash). During this time I've been working with the broker who refi'd me a few years ago. Good guy, would spend time on the phone with me talking offers, the market and writing preapproval letters on short notice because the timeline for offers are so quick these days. Overall I'm really happy with him and intended to get my mortgage with him.

This morning I get a call from Schwab where I have my checking account. They noticed I'm moving lots of cash into the account and wanted to speak with me. I explain it's for a down payment on a house that I'm under contract on. Then I'm told Schwab has a deal with RocketMortgage to get better rates for customers who have balances over a certain amount. They connect me with a RocketMortgage guy.

My guy has me in a 30-year fixed at 6% with about $1k in origination costs.
RocketMortgeage/Schwab quoted me at 5.375% with no points or origination costs.

I wouldn't ditch someone I worked with over $1k, but this is quite a bit more. Nothing is locked, but my guy has never quoted me below 6% anytime recently. What's the move here?

 

[Dezbelief]

Question for @Chadstroma and others. Facing an ethical dilemma right now.

Under contract to buy a house after looking for 1.5 years (losing multiple offers to folks with straight cash). During this time I've been working with the broker who refi'd me a few years ago. Good guy, would spend time on the phone with me talking offers, the market and writing preapproval letters on short notice because the timeline for offers are so quick these days. Overall I'm really happy with him and intended to get my mortgage with him.

This morning I get a call from Schwab where I have my checking account. They noticed I'm moving lots of cash into the account and wanted to speak with me. I explain it's for a down payment on a house that I'm under contract on. Then I'm told Schwab has a deal with RocketMortgage to get better rates for customers who have balances over a certain amount. They connect me with a RocketMortgage guy.

My guy has me in a 30-year fixed at 6% with about $1k in origination costs.
RocketMortgeage/Schwab quoted me at 5.375% with no points or origination costs.

I wouldn't ditch someone I worked with over $1k, but this is quite a bit more. Nothing is locked, but my guy has never quoted me below 6% anytime recently. What's the move here?

Talk with your guy and tell him the situation. Maybe he can get under 6 now that he knows you have a better offer. If not it's business, he'll understand.

 

[dkp993]

Question for @Chadstroma and others. Facing an ethical dilemma right now.

Under contract to buy a house after looking for 1.5 years (losing multiple offers to folks with straight cash). During this time I've been working with the broker who refi'd me a few years ago. Good guy, would spend time on the phone with me talking offers, the market and writing preapproval letters on short notice because the timeline for offers are so quick these days. Overall I'm really happy with him and intended to get my mortgage with him.

This morning I get a call from Schwab where I have my checking account. They noticed I'm moving lots of cash into the account and wanted to speak with me. I explain it's for a down payment on a house that I'm under contract on. Then I'm told Schwab has a deal with RocketMortgage to get better rates for customers who have balances over a certain amount. They connect me with a RocketMortgage guy.

My guy has me in a 30-year fixed at 6% with about $1k in origination costs.
RocketMortgeage/Schwab quoted me at 5.375% with no points or origination costs.

I wouldn't ditch someone I worked with over $1k, but this is quite a bit more. Nothing is locked, but my guy has never quoted me below 6% anytime recently. What's the move here?

Talk with your guy and tell him the situation. Maybe he can get under 6 now that he knows you have a better offer. If not it's business, he'll understand.

Yep. 3/4 of a point is significant over the life of the loan. I was in the same situation two years ago when I bought a current home. I switched and went with the better rate. My guy understood, it’s business. He’d do the same if it were his money.

 

[Ron Swanson]

Question for @Chadstroma and others. Facing an ethical dilemma right now.

Under contract to buy a house after looking for 1.5 years (losing multiple offers to folks with straight cash). During this time I've been working with the broker who refi'd me a few years ago. Good guy, would spend time on the phone with me talking offers, the market and writing preapproval letters on short notice because the timeline for offers are so quick these days. Overall I'm really happy with him and intended to get my mortgage with him.

This morning I get a call from Schwab where I have my checking account. They noticed I'm moving lots of cash into the account and wanted to speak with me. I explain it's for a down payment on a house that I'm under contract on. Then I'm told Schwab has a deal with RocketMortgage to get better rates for customers who have balances over a certain amount. They connect me with a RocketMortgage guy.

My guy has me in a 30-year fixed at 6% with about $1k in origination costs.
RocketMortgeage/Schwab quoted me at 5.375% with no points or origination costs.

I wouldn't ditch someone I worked with over $1k, but this is quite a bit more. Nothing is locked, but my guy has never quoted me below 6% anytime recently. What's the move here?

Rocket is pretty shady. I would compare the deals in writing very closely.

 

[SouthJersey]

Question for @Chadstroma and others. Facing an ethical dilemma right now.

Under contract to buy a house after looking for 1.5 years (losing multiple offers to folks with straight cash). During this time I've been working with the broker who refi'd me a few years ago. Good guy, would spend time on the phone with me talking offers, the market and writing preapproval letters on short notice because the timeline for offers are so quick these days. Overall I'm really happy with him and intended to get my mortgage with him.

This morning I get a call from Schwab where I have my checking account. They noticed I'm moving lots of cash into the account and wanted to speak with me. I explain it's for a down payment on a house that I'm under contract on. Then I'm told Schwab has a deal with RocketMortgage to get better rates for customers who have balances over a certain amount. They connect me with a RocketMortgage guy.

My guy has me in a 30-year fixed at 6% with about $1k in origination costs.
RocketMortgeage/Schwab quoted me at 5.375% with no points or origination costs.

I wouldn't ditch someone I worked with over $1k, but this is quite a bit more. Nothing is locked, but my guy has never quoted me below 6% anytime recently. What's the move here?

Rocket is pretty shady. I would compare the deals in writing very closely.

Yea I insisted they send it to me in writing. I was getting the hard press to committ to a deposit and rate lock -- though I also think they're worried I'll shop it back with my guy. They delivered with the rate in writing, only origination fee is an $800 processing fee (my guy has a $950 administrative fee).

Sending it to my guy to see if he can match or come close.

 

[Chadstroma]

Question for @Chadstroma and others. Facing an ethical dilemma right now.

Under contract to buy a house after looking for 1.5 years (losing multiple offers to folks with straight cash). During this time I've been working with the broker who refi'd me a few years ago. Good guy, would spend time on the phone with me talking offers, the market and writing preapproval letters on short notice because the timeline for offers are so quick these days. Overall I'm really happy with him and intended to get my mortgage with him.

This morning I get a call from Schwab where I have my checking account. They noticed I'm moving lots of cash into the account and wanted to speak with me. I explain it's for a down payment on a house that I'm under contract on. Then I'm told Schwab has a deal with RocketMortgage to get better rates for customers who have balances over a certain amount. They connect me with a RocketMortgage guy.

My guy has me in a 30-year fixed at 6% with about $1k in origination costs.
RocketMortgeage/Schwab quoted me at 5.375% with no points or origination costs.

I wouldn't ditch someone I worked with over $1k, but this is quite a bit more. Nothing is locked, but my guy has never quoted me below 6% anytime recently. What's the move here?

I will answer this from a couple of different angles.

First, the broker side of it. Full honesty and transparency: Nothing sucks more than spending a ton of time helping someone and them just ghosting you when you are in the middle of a deal. In the very least, I feel like the time I invested earned me the right to have real upfront conversations with the client and give me every chance to win the business. If I am still getting blown out of the water- then it is what it is and even though it really sucks, I can understand it. I have helped numerous people who literally have told me "We bought our house today! Thank you so much Chad! You helped us in every way and there was no way for us to have got where we are without you." and it really sucks. Soul crushing. It makes MLO's not want to spend time and energy in helping people. The best of us smile and grin through it and say "I understand." and do our best to get the future business by not saying/acting on what we are thinking/feeling. Then turn around and vent to other MLO's that understand. Of course, there are degrees to this.... the more time spent vs the less of a difference in the loan matters. If I spent minimal time on something and I get beat out then oh well.... If I invest hours and hours helping then it matters and it takes a big difference for it not to matter to me. Again, no matter what, I always put on the best customer service face and position myself to still be their main person. However, you can bet if I was burned once, I am not going to go out of my way to help going forward. I hear from them again on a deal, I will still try to win their business but the calls at 6pm on a Saturday to get a pre-approval on this house won't have the same sense of urgency on my end and I will basically ask them to give me the details and let them know what I can do and if that beats whatever else they got. It isn't out of spite or anything it is simply been shown that my time and energy isn't valuable to them so I am reluctant to spend it on them where as other return clients- I will go out of my way to do everything I possibly can at the earliest I can at all times.

Now, Rocket.... so here is the BIG first thing with them. Unless you have a LOCKED Loan Estimate from them whatever they say absolutely means ZERO. I can't tell you how many times I know of instances where Rocket will say anything (literally, this is what they are taught to do) to get you to apply with them and then "oops, rates, changed" when you go to lock in and they hope it is too late in the process for you to do anything about it. You stick with them or pull out of the deal. Rocket is the most shadiest of all lenders. They have the absolute worst reputation among not just other lenders but realtors, title, lawyers.... pretty much anyone that is around the industry. The second part of that with Rocket is that not only do they have the worst reputation for being shady they have the worst reputation for getting the job done. If there is one lender that you have the highest probability of them screwing up- it is Rocket. Essentially they churn employees, almost everyone you talk/deal with will have been working for Rocket in a matter of months (perhaps with the industry change they might have some veterans that are actually over a year) and have no clue what they are doing. I know more than a few people who got their start at Rocket. I know of NO ONE who has ever worked in the industry and then went to work there. Can they close? Sure. I mean, they are the second largest lender in the nation, but they also drop the ball at a higher rate than any other lender.

My suggestion? Get Rocket to send you a locked Loan Estimate. When you have that LOCKED loan estimate (an unlocked loan estimate is near worthless.... specially with Rocket) send it over to your guy. Let him do what he can to meet it or beat it or get close to it. If he can't then you have to decide if it is worth the risk of this deal blowing up in your face because the kid handling your loan was waiting tables 4 months ago.

Me personally, Rocket could offer me 2% rate and I wouldn't do it because they are a carrying manure that is on fire. I am not going to risk my home purchase with that crap. There are other retail lenders that suck for various reasons like taking advantage of vets and the most vulnerable of society or the execs are jerkoffs or whatever else but Rocket is the only one that I would question whether they would get the deal done at all. The big banks are second behind that in terms of ineptitude but that is a different story altogether.

 

[Chadstroma]

Question for @Chadstroma and others. Facing an ethical dilemma right now.

Under contract to buy a house after looking for 1.5 years (losing multiple offers to folks with straight cash). During this time I've been working with the broker who refi'd me a few years ago. Good guy, would spend time on the phone with me talking offers, the market and writing preapproval letters on short notice because the timeline for offers are so quick these days. Overall I'm really happy with him and intended to get my mortgage with him.

This morning I get a call from Schwab where I have my checking account. They noticed I'm moving lots of cash into the account and wanted to speak with me. I explain it's for a down payment on a house that I'm under contract on. Then I'm told Schwab has a deal with RocketMortgage to get better rates for customers who have balances over a certain amount. They connect me with a RocketMortgage guy.

My guy has me in a 30-year fixed at 6% with about $1k in origination costs.
RocketMortgeage/Schwab quoted me at 5.375% with no points or origination costs.

I wouldn't ditch someone I worked with over $1k, but this is quite a bit more. Nothing is locked, but my guy has never quoted me below 6% anytime recently. What's the move here?

Rocket is pretty shady. I would compare the deals in writing very closely.

Yea I insisted they send it to me in writing. I was getting the hard press to committ to a deposit and rate lock -- though I also think they're worried I'll shop it back with my guy. They delivered with the rate in writing, only origination fee is an $800 processing fee (my guy has a $950 administrative fee).

Sending it to my guy to see if he can match or come close.

"in writing" means nothing. They will likely sent over a fee worksheet which you can print out and use for toilet paper. The only thing that matter is a locked loan estimate. Even a loan estimate that is unlocked means nothing. Your guy, if he is good, will send back and tell you to get a locked loan estimate and then we can talk.

The deposit is a total crock as well. It is part of their way to try to grab your business and keep you. It is another thing I would never do. NO ONE in the industry does a deposit other than them. Why? Because the rest of the industry isn't shady mcshady like they are. It is their playbook of 'how to rip off people'.

 

[SouthJersey]

So no need for a deposit for a locked loan estimate?

 

[Chadstroma]

So no need for a deposit for a locked loan estimate?

Absolutely freaking not. And chances are that if you tell them you won't pay one they will still do it for you. It is just part of their nasty dirty gross tricks we play book. Again, they are the only lender I know who does that and the only reason they do is cause they suck and it is part of their effort to 'capture' customers.