Just bought a house!

[RhodyGreg14]

Well, we signed a P&S. Inspection is this week. Buyers market definetly helped us. Now we need to secure a mortgage. We're meeting on Monday with a broker. I know rates have been coming down, and with the market tanking towards the end of the week I am hopeful we'll be able to get something in the high-5's with no points.

Brokers get paid on a fee basis correct? If he quotes me a higher then I thought rate, is that just him trying to take me for a ride or are they paid based on rates, or both?

Thanks

 

[Texarkandy]

Why are you using a broker rather than dealing directly with a mortgage bank?

 

[cute fuzzy bunny]

Mortgage broker - Wikipedia, the free encyclopedia

Make sure you dont sign one of those "applications" that also says you'll pay the broker a fee whether you actually originate a loan through their service or not. Understand implicitly how the broker gets paid, who pays him, and then infer their motivations from that. Obviously most of them are going to act in best interest of the entity producing the payment and seek to optimize their fees. That may or may not be congruent with getting you the very best rates.

You might also look at some credit unions like Digital Credit Union or Pentagon Federal. Both can be joined for about a $20 one time fee and may offer better rates than you might find with a broker.

 

[RhodyGreg14]

Why are you using a broker rather than dealing directly with a mortgage bank?

OK I've heard and read so many things on this and everyone says different.

Go to a bank they get better rates
Go to a mortgage company they are more lenient with loaning
Go to a credit union they know your name
Go online there's no middle man
No, you need to sit and meet with someone

I'm ready to pull my hair out.

 

[cute fuzzy bunny]

Mortgage

2/14/08 - Best Mortgage Rates from Big & Reputable Lenders (30year @ 5.5%, 15year @ 5.75%, ARM's etc)

or just go here
FatWallet Forums - Finance -

Search, read, and ask.

 

[REWahoo]

Two suggestions:

Try multiple options, especially talking directly with CUs and mortgage cos
Buy a hairpiece

 

[RhodyGreg14]

Mortgage

2/14/08 - Best Mortgage Rates from Big & Reputable Lenders (30year @ 5.5%, 15year @ 5.75%, ARM's etc)

Assuming 20% down! That's a good one.

 

[W2R]

I went through a mortgage broker in 2002. She set me up with Chase Mortgage, which listed the exact same rate on their website for what I wanted (a 30-year fixed with 0 points and 20% down), as what I got. The reason I got that rate instead of the higher one that she suggested, is that I told her I could get that rate from several sources on bankrate.com (which I had checked that morning). So, we dickered and she came down half a percentage point to the rate I required. I didn't know you could dicker with them, but you can; I was just not willing to pay more than the going rates I had seen online, and I was checking a number of sources for rates every day. There were no apparent fees or costs related to the mortgage broker then or at closing, and I believe that Chase sent her a finder's fee.

But that was then, and this is now. The lending environment was much easier in 2002 than it is today. Banks were dying to lend money to almost anybody then. Mortage rates were coming down quickly to levels lower than had been seen in many years prior to that time, and it seemed like every week rates were dropping another 0.125% and making headlines in the news media. So, she may have been betting on the trends continuing during the six weeks between our meeting and the designated closing date. Even though this mortgage broker has had a sterling local reputation for many years in New Orleans, I don't know if I would go through them today or not. Luckily, I have paid off my home by now and I prefer to never have another mortgage, so I will never have to make that decision.

I was very pleased with Chase so she got me exactly what I wanted. Her secretary was outstandingly helpful and saved me lots of time and aggravation during the period of time before closing.

 

[RhodyGreg14]

I went through a mortgage broker in 2002. She set me up with Chase Mortgage, which listed the exact same rate on their website for what I wanted (a 30-year fixed with 0 points and 20% down), as what I got. The reason I got that rate instead of the higher one that she suggested, is that I told her I could get that rate from several sources on bankrate.com (which I had checked that morning). So, we dickered and she came down half a percentage point to the rate I required. There were no apparent fees or costs related to the mortgage broker then or at closing, and I believe that Chase sent her a finder's fee.

But that was then, and this is now. The lending environment was much easier in 2002 than it is today. Banks were dying to lend money to almost anybody then. Even though this mortgage broker has had a sterling local reputation for many years in New Orleans, I don't know if I would go through them today or not. Luckily, I have paid off my home by now and I prefer to never have another mortgage, so I will never have to make that decision.

I was very pleased with Chase so she got me exactly what I wanted. Her secretary was outstandingly helpful and saved me lots of time and aggravation during the period of time before closing.

Woah...you paid off an 80% loan in 5 years?

I'll be sure to bring Monday's rates off bankrate and other sites when I go.

 

[W2R]

Woah...you paid off an 80% loan in 5 years?

I'll be sure to bring Monday's rates off bankrate and other sites when I go.

Good idea!!! And bring an attitude that you would honestly be more than willing to work on your own if the broker won't work with you. Good luck!!

Yes, I lived very frugally and put every single cent I had (after maxing out my 401K plus catchup) into the house. Also, the loan was only $128K since housing costs are low here, and my payments including tax and insurance were only 21.4% of my gross salary at the time. So, I paid it off in 48 months (could have done it in 45 except for Katrina which created a desire for a larger emergency fund in 2006).

Paying off a house is exciting - - the first time you send in a lump sum, early in the mortgage, it will shorten the mortgage to a disproportionately great extent. Paying it off got to be almost addictive for me. I would skim off my bank accounts down to a very low amount 2-3 times a year, and send in whatever I had saved.

 

[brewer12345]

One other suggestion: always shop any offer you get vs. www.penfed.org They aren't always the cheapest, but they often beat everyone by a country mile.

 

[RhodyGreg14]

OK can someone explain the logic (if any) behind PMI? I understand what it's for, but if it protects the lender, shouldn't they pay the premium? Also, how does adding $100 to my monthly payment make them more confident that I won't default? If anything, adding expenses would make it more likely that someone can't afford to pay.

 

[brewer12345]

Hmmm, PMI. Well, I know borrowers hate it, but it is increasingly the only way to go if you do not have 20% down.

If you take a loan for, say, 90% LTV, the mortgage insurer is on the hook for the first 10% of the loss rather than the bank. So from the bank's perspective, they are back to 80% LTV (where they want to be). That materially lowers the risk of them actually realizing a loss if you default. As for why you get to pay it, well, the bank doesn't have to make that loan, so why would they go out on a limb for you without some additional assurances? PMI is also baked into the regulatory structure for banks and Fannie/Freddie for loans over 80%.

 

[cute fuzzy bunny]

OK can someone explain the logic (if any) behind PMI? I understand what it's for, but if it protects the lender, shouldn't they pay the premium? Also, how does adding $100 to my monthly payment make them more confident that I won't default? If anything, adding expenses would make it more likely that someone can't afford to pay.

One of my favorite things in the world.

We're uncomfortable with your ability to pay, so we're going to increase your financial burden and the likelihood of creating a situation in which you may not be able to make your payments.

Repeating a story...my wife when I met her had been paying on her mortgage for about 8 years including the PMI. I called her bank and pointed out that in light of the fact that she had about a 60% equity stake in the house and had made her payments like clockwork, would they now remove the PMI. No way they said. So I said they could either take the PMI off or I'd pay off the loan and then they'd be getting bupkus. That'll be fine they said, we're not taking off the PMI.

Now they're yet another bank folding up and fighting for its life. Maybe they oughta have kept some of their well paying non subprime customers and the nice interest rates they were paying, even if it meant dropping the extra profit PMI.

 

[RhodyGreg14]

One of my favorite things in the world.

We're uncomfortable with your ability to pay, so we're going to increase your financial burden and the likelihood of creating a situation in which you may not be able to make your payments.

Repeating a story...my wife when I met her had been paying on her mortgage for about 8 years including the PMI. I called her bank and pointed out that in light of the fact that she had about a 60% equity stake in the house and had made her payments like clockwork, would they now remove the PMI. No way they said. So I said they could either take the PMI off or I'd pay off the loan and then they'd be getting bupkus. That'll be fine they said, we're not taking off the PMI.

Now they're yet another bank folding up and fighting for its life. Maybe they oughta have kept some of their well paying non subprime customers and the nice interest rates they were paying, even if it meant dropping the extra profit PMI.

Wow...so they're not required to remove the PMI upon reaching that 20% magic figure they all talk about? I knew they wouldn't do it automatically and you have to be the one to know when you've reached that plateau, but the can deny you? How is that legal?

 

[brewer12345]

Wow...so they're not required to remove the PMI upon reaching that 20% magic figure they all talk about? I knew they wouldn't do it automatically and you have to be the one to know when you've reached that plateau, but the can deny you? How is that legal?

Go do some research. IIRC, a law was passed laying down ground rules for when the insurer has to drop the insurance.

 

[cute fuzzy bunny]

Wow...so they're not required to remove the PMI upon reaching that 20% magic figure they all talk about? I knew they wouldn't do it automatically and you have to be the one to know when you've reached that plateau, but the can deny you? How is that legal?

You can request it at any time from a lender and if you're >20% they're supposed to take it off. They're supposed to automatically take it off at 78% or at the midpoint of the loan, providing you've remained current throughout the loan.

Of course, none of this takes into account changing values in the property.

Oh, and since half the banks I've dealt with couldnt manage to stop charging me fees for stuff they werent supposed to be charging me for, I'd imagine that "automatic" thing works about as well...

All this only applies to loans taken out after 1998.

 

[MissParker]

Hi RodyGreg14. I just bought a house too! I thought there was no way that I would EVER be able to buy in SoCal but the sub-prime fiasco has been a blessing for me.

I also used a mortgage broker. Her fee was paid by the lender.