Home Silly Mortgage Question

[NewEnglandLady]

This may seem like a naive question from a first-time home-buyer...because I am ...but how did you decide who to get a mortgage through?

D and I have gone to over a dozen open houses in the past several months, but have sort of been non-commital about buying a house, so we never went through the pre-approval process. We figured that at some point we''d feel stronger about buying a house and would take it from there.

That happened today when we finally found a house we really loved. We''re not itching to put in an offer, but right now that''s not even an option because we have no pre-approval, so we realize we need to get that done.

I always figured that I''d go through a local credit union for a home loan, but I''ve been perusing interest rates and the local credit unions seem a smidge high. I''m not sure what the best option is? Since we haven''t worked with a realtor (and this particular home is for sale by owner), I''m not sure who to ask and was just hoping to get some insight from the lovely and intelligent PS ladies. Thank you!

 

[packrat]

When we got our house, I''d called the Credit Union first, b/c that''s where we''ve always banked. The loan person I talked to was rude, so we never met with her, and I was too ticked to ask to talk to one of the other 2 loan officers. I called around to different banks to see what the interest rates were and really, to ask how to go about getting a loan-never having done it before, I was at a total loss.

I would maybe just start with wherever you do your banking. Set up an appt with a loan officer and see what they say!

 

[DiamanteBlu]

I have never done the pre-approval thing so I can't comment on that. However, I can tell you what I did when I bought my second house [rates were low when I bought the 1st one which was a ski house so I just went to the local bank]. Rates were killer and increasing [1980]. I called all the banks in the yellow pages [it was before the internet] and asked them what their rates were, how long their commitment would be, etc., etc., etc. The one that offered the best terms got my business [it was for a conforming loan at the time with 10% down]. If you can believe it, the best rate I could find was 13% fixed!

When I bought my next house I had to get a jumbo loan. Again, I called around [1984] and found the best rate. I became a private client of the merchant bank [they only did mortgages for private banking clients] and got a very good variable interest loan [don't remember how much below "market", though].

For my current house I was an idiot. I had just gotten divorced and relied on the recommendations of the real estate agent [I know, I should hide my face in shame - I also relied on the recommendations of my ex-lawyer which cost me about $3.8MM - that's a whole other story - I may write a book yet . . . that's how my sig file quote came about]. I was sent to a mortgage broker, relied on her and got the crappiest mortgage on the planet - variable rate with a FLOOR! on the interest rate - don't get me started . . .

In any case, I would call around [after doing an initial search on the internet] and would go with the best rate and terms out there [you will want to do a NPV calculation].

Good luck in your quest! Can't wait to see where you wind up! BTW, being local, I would love to know in which towns you are looking if you would like to share!

 

[neatfreak]

We used a mortgage broker. She shopped around for us and was able to negotiate the best rate. I then double checked with our local CU just because I like supporting them and they wouldn''t beat it.

 

[NewEnglandLady]

Fantastic, I should have some time later this week to call around and see what local rates are. Thank you all so much for your help!

BTW, in my various google searches I notice that online companies like quicken or lending tree keep popping up--are these sites a complete waste of time?

Diamante, I''m am so sorry to hear about what happened with your current house--it''s so hard to know how to trust! I feel like I should be able to rely on somebody who considers themselves an expert in this whether it be a real estate agent or lawyer (or both, most likely), but I keep hearing these horror stories about how people got screwed over and I think that''s a big fear of mine. I absolutely love your quote, I couldn''t agree more!

We were looking in the Hingham/Cohasset/Scituate area (we''ve lived in both Hingham and Scituate and were married in Cohasset), but lately we''ve really been targeting Cohasset. I like the proximity to the ocean coupled with large lot sizes and the doable commute downtown (less than an hour). This particular house is farther from the ocean than I''d like (a little over a half mile), but the house sits on 5 fenced-in acres, which would be ideal for the future doggy-daycare business.

 

[Allison D.]

NEL, I used a mortgage broker that came well-recommended to us from friends. She shopped all the products for us and came up with the best deal for us.

I have her contact info if it would be useful to you.

 

[DiamanteBlu]

Date: 8/23/2009 4:42:26 PM
Author: NewEnglandLady
Fantastic, I should have some time later this week to call around and see what local rates are. Thank you all so much for your help!


BTW, in my various google searches I notice that online companies like quicken or lending tree keep popping up--are these sites a complete waste of time?


Diamante, I'm am so sorry to hear about what happened with your current house--it's so hard to know how to trust! I feel like I should be able to rely on somebody who considers themselves an expert in this whether it be a real estate agent or lawyer (or both, most likely), but I keep hearing these horror stories about how people got screwed over and I think that's a big fear of mine. I absolutely love your quote, I couldn't agree more!


We were looking in the Hingham/Cohasset/Scituate area (we've lived in both Hingham and Scituate and were married in Cohasset), but lately we've really been targeting Cohasset. I like the proximity to the ocean coupled with large lot sizes and the doable commute downtown (less than an hour). This particular house is farther from the ocean than I'd like (a little over a half mile), but the house sits on 5 fenced-in acres, which would be ideal for the future doggy-daycare business.

Yeah, it was a particularly vulnerable time for me and people took advantage - I GUARANTEE that it will NOT happen again! LOL! Yeah, they were supposed to be fiducuaries - but . . .

That area is soooo gorgeous. You know, half a mile from the ocean on 5 acres is not bad! If you are not overlooking the ocean [don't know if that is an option] whether you are a few blocks or .5 miles away does not much matter. You can still walk to to the beach when you want. And you will still get the tempering of the ocean on the temperatures.

Is this an old house or something new? With 5 acres you can always modify it eventually to be what you want! It sounds wonderful!

Lending Tree et al do pay-per-click and google ad-words so they pay for positioning. It does not mean that they are good [I have no idea whether or not they are] it means that they have deep pockets. You could certainly talk to them to see what they can do as part of your research but I would not go with them based on their search engine positioning alone. Get on the phone and start calling people and keep asking until you learn everything you need.

 

[Haven]

My first time around I called a woman on a recommendation from a realtor friend of mine, and was preapproved with her. When I found a condo I wanted to buy, I called the mortgage broker with some questions about the loan product she recommended, and after a few questions she said something along the lines of
"If you don''t understand all this, you could just have your father call me and I''ll give him the information."

I went through these emotions:

And then I called someone else.
(I was buying the condo on my own, by the way. No help from daddy. I had never even mentioned that I had a father to her. She apparently just thought: single woman, financial deal, I should speak with a man. Ugh.

DH and I used a family friend of his for our home mortgage, but it was a bad experience. If I were you, I''d talk to friends and get a ref from someone who had a positive experience with their broker.

YAY on finding a place you may want to buy!

 

[NewEnglandLady]

Allison, that would be very, very helpful if you don't mind. PSers are the best

Diamante, I can't tell you how many stupid decisions (many financial) that I will not do again--I hate that learning a lesson sometimes means making costly mistakes. I have no doubt you are such a smart lady today because of those lessons.

My DH said the same thing about proximity to the water. The reason that Scituate is still on the list is that it's the only town in which we can afford oceanfront (though only 1 property made the short list in that town). The commute is really tough, though, that's the one thing about Scituate we don't miss. In Hingham/Cohasset we can only afford water view--oceanfront is out of our budget. With waterview, though, we can't afford much land. When you want to be on the water, a half of a mile feels far, but the privacy and beautiful surroundings the additional acreage provides is very enticing. I feel like we're constantly weighing our priorities because we don't have the budget to have absolutely everything we want, but that's okay.

ETA: The house itself is newer, which I actually don't prefer. We would definitely be making some changes in the house--D and I agree on the parts we don't love, but they are fixable. I love character in older homes, so that's a factor, though this home is very family-friendly.

 

[D&T]

I would call a mortgage broker, several infact, as they too have their fees, and one maybe a better option rate wise than another. If you want to do the shopping around ie: credit unions vs banks, you can try that as well - you have 14 days grace period from your first credit inquiry so you will only get "ding" once on your credit report even if you shopped several mortgage broker, banks, credit unions etc but must do so within 14 days.

 

[Italiahaircolor]

My husband works for BoA so it was a no brainer for him. But for me, I went to my bank. I met with a rep from the department that handled mortages, and got all my ducks in a row. I had done some research on interest rates, types of mortages, and all that good stuff so I knew going in what my ideal situation would be. After meeting with my bank, I went to my realtor and asked for her recommendation...she offered one, and again I went through the whole thing. Finally, I met with an actual mortgage broker who handled only mortgages and offers from various lenders who may not have been on my radar. In the end, I crunched numbers and found the right one for me.

I think the most important thing to do right now is your homework. You''ll never regret research, this is a **huge** purchase. Being informed will let you know if you''re being "taken"...although right now mortgages are pretty black and white, no more nonsense.

Congratulations on getting started...and happy hunting!!!

 

[NewEnglandLady]

Again, thank you all so much! This has been very helpful and I feel like I have a great place to start on a long journey

 

[neatfreak]

Date: 8/23/2009 7:52:31 PM
Author: D&T
I would call a mortgage broker, several infact, as they too have their fees, and one maybe a better option rate wise than another. If you want to do the shopping around ie: credit unions vs banks, you can try that as well - you have 14 days grace period from your first credit inquiry so you will only get ''ding'' once on your credit report even if you shopped several mortgage broker, banks, credit unions etc but must do so within 14 days.

I think they made this period longer recently didn''t they? I thought it was 2-3 months or something...

 

[DiamanteBlu]

Date: 8/23/2009 6:05:03 PM
Author: NewEnglandLady
Diamante, I can't tell you how many stupid decisions (many financial) that I will not do again--I hate that learning a lesson sometimes means making costly mistakes. I have no doubt you are such a smart lady today because of those lessons.

My DH said the same thing about proximity to the water. The reason that Scituate is still on the list is that it's the only town in which we can afford oceanfront (though only 1 property made the short list in that town). The commute is really tough, though, that's the one thing about Scituate we don't miss. In Hingham/Cohasset we can only afford water view--oceanfront is out of our budget. With waterview, though, we can't afford much land. When you want to be on the water, a half of a mile feels far, but the privacy and beautiful surroundings the additional acreage provides is very enticing. I feel like we're constantly weighing our priorities because we don't have the budget to have absolutely everything we want, but that's okay.

ETA: The house itself is newer, which I actually don't prefer. We would definitely be making some changes in the house--D and I agree on the parts we don't love, but they are fixable. I love character in older homes, so that's a factor, though this home is very family-friendly.

No kidding about the costly mistakes! I find that with the proper perspective you will make back all the money you lost and then some [lots more]. The thing that is difficult for most to come to terms with is that the money will come form someplace unrelated to the source that deprived you of it. That is the way the universe works.

As far as getting everything you want. I find that as your budget increases to accomodate what you want, what you want expands beyond your budget, whatever it is. [I now need that 12,000 waterfront estate in Point Shares in Bermuda . . .]

Pick something that is right for you now. You can always move or get an additional place later.

 

[D&T]

Date: 8/23/2009 9:44:36 PM
Author: neatfreak

Date: 8/23/2009 7:52:31 PM
Author: D&T
I would call a mortgage broker, several infact, as they too have their fees, and one maybe a better option rate wise than another. If you want to do the shopping around ie: credit unions vs banks, you can try that as well - you have 14 days grace period from your first credit inquiry so you will only get ''ding'' once on your credit report even if you shopped several mortgage broker, banks, credit unions etc but must do so within 14 days.

I think they made this period longer recently didn''t they? I thought it was 2-3 months or something...

My mortgage broker friend of mine stated if I was going to shop around to get all the credit inquiry all within the 14 days period whether it was from one or 10 different mortgage companies, but it has to be within the same industry (it can''t be one Auto loan inquiry, and next Mortgage inquiry). that was about a month ago when I last spoke to him about mortgage questions. I can sure ask him if the inquiries have been extended though.

 

[mimzy]

hey NEL!

we are right there with you! we put an offer in and it was accepted, so now we are scrambling a bit to find the best mortgage company. We got preapproved through our CU, pretty much just so that we could say we were preapproved - now that we have a house/budget in mind, we are calling up different people that we got via recommendations from friends and family, giving them our financial info, and asking for good faith estimates on what they could offer us - this includes not only mortgage rates but closing costs, etc as well. This way, when we sit down to decide, we have ALL the info we need, because mortgage rates are going to be pretty much the same regardless of where you go - it's the fees and stuff that will make a price difference. Also, our realtor told us that you can negotiate with CUs re: rates and fees if you find another lender that is cheaper.

If you are interested in going through a place like quicken or lending tree, look up some online reviews - they scared us away! I would ask around to people you trust to see if they would recommend anyone in particular or an institution in your area, we got plenty of names that way. good luck!

 

[swimmer]

Good luck NEL, what a gorgeous area!

Oh man, with five acres, by MA law you could keep 2 goats for lawn "mowing" purposes (town laws do vary, and you could possibly also keep bees). Not sure if you are interested, but that was my first excited thought. How much would your boys love goats! I am insanely jealous over here on the red line.
Good luck finding someone smart and honest for your mortgage.

 

[DiamanteBlu]

Date: 8/24/2009 4:42:56 PM
Author: swimmer
Good luck NEL, what a gorgeous area!


Oh man, with five acres, by MA law you could keep 2 goats for lawn ''mowing'' purposes (town laws do vary, and you could possibly also keep bees). Not sure if you are interested, but that was my first excited thought. How much would your boys love goats! I am insanely jealous over here on the red line.

Good luck finding someone smart and honest for your mortgage.

Goats? My sister had goats. They are so cool - and you can make great cheese if you get the correct ones!

 

[MichelleCarmen]

We used the same mortgage broker for all of our homes. Years back, he was recommended by a family member and after the first sale, he became a friend of ours and we continued to do business with him

I think he figured out all the rates for us.

 

[neatfreak]

Date: 8/23/2009 10:51:53 PM
Author: D&T

Date: 8/23/2009 9:44:36 PM

Author: neatfreak

Date: 8/23/2009 7:52:31 PM

Author: D&T

I would call a mortgage broker, several infact, as they too have their fees, and one maybe a better option rate wise than another. If you want to do the shopping around ie: credit unions vs banks, you can try that as well - you have 14 days grace period from your first credit inquiry so you will only get 'ding' once on your credit report even if you shopped several mortgage broker, banks, credit unions etc but must do so within 14 days.

I think they made this period longer recently didn't they? I thought it was 2-3 months or something...

My mortgage broker friend of mine stated if I was going to shop around to get all the credit inquiry all within the 14 days period whether it was from one or 10 different mortgage companies, but it has to be within the same industry (it can't be one Auto loan inquiry, and next Mortgage inquiry). that was about a month ago when I last spoke to him about mortgage questions. I can sure ask him if the inquiries have been extended though.

I looked it up-FYI it's a 30 day period now but it was 14 days under the "old" scoring mechanism. No idea how long ago it switched.

 

[D&T]

Date: 8/24/2009 7:09:30 PM
Author: neatfreak

Date: 8/23/2009 10:51:53 PM
Author: D&T
My mortgage broker friend of mine stated if I was going to shop around to get all the credit inquiry all within the 14 days period whether it was from one or 10 different mortgage companies, but it has to be within the same industry (it can''t be one Auto loan inquiry, and next Mortgage inquiry). that was about a month ago when I last spoke to him about mortgage questions. I can sure ask him if the inquiries have been extended though.

I looked it up-FYI it''s a 30 day period now but it was 14 days under the ''old'' scoring mechanism. No idea how long ago it switched.

thanks Neat! I haven''t had a chance to ask him, but its good to know now that its 30 days ( less of a rush to get all those loan inquiries)

 

[asscherisme]

I had such a bad experience with a mortgage broker, I don''t trust them and would not use one again.

When my ex and I were first married, we decided to stop renting and buy our first home. We lived in a small town at the time and we were renting a townhouse fro ma private person. He also was a mortgage broker. This was 1996 and the market was a total sellers market so we decided to get preapproved.

We were naive and decided to use our landlord as our mortage broker. We were friendly with im and his wife and thought it made sense. Our one year lease was about to end.

Once he got our paperwork, income etc, not only did he approve us (at a LOUSY non competative rate) BUT he also raised our rent 50% from $1000 to $1,500. We were SO mad. It was very clear he raised our rent because he saw our financials and figured that either 1. He wanted us to buy so he could make a profit off us and that 2. If we did not buy he knew at that poiint that we could afford the higher rent. We had in fact been paying a very low percent of our income for rent because we wanted to save for a house.

We pulled our credit scores and found out that we both ranged between 790 and 815 on all 3 scores and had no outstanding debt and perfect payment history and paid in full on our credit cards each month. Plus a paid off car loan. He rate was horrible.

We called local banks and ended up getting preapproved at 2% less than what he offered.

We obviously did not use him

In the end, we decided not to buy and save more and we moved out of that guys house and rented another home. A large home for $1,100 a month and left the guy with no tenant and no new mortage sold.

When we did buy our first home, I acted as our mortage broker. I just called about 10-15 places each time and found the best rate I could and felt good about our rates.

I don''t trust mortage brokers. I feel they are trying to push whats best for them.

 

[NewEnglandLady]

I reached out to Allison''s mortgage broker yesterday and really liked her. I''m still doing a lot of research on my own, so I don''t feel like I''m relying on any one person. We''re just trying to be smart about this, weigh our options, etc. and since we''ve never done this before having somebody who knows this stuff inside and out is very valuable. I''m definitely taking in all of your experiences and advice!

Mimzy, it''s always good to know somebody else going through the same experience! I saw in a newlywed thread that you guys has put an offer in a house and am so excited for you! I feel like D and I have talked about this for a long time, but now that it''s in front of us it''s scary. Exciting , but scary! Also, I''ve discovered you''re right about the rates being very similar, but the fees being different.

Swimmer, I grew up with goats and would love to have a couple of nannies--the billies can be a bit territorial. I can''t tell you how many times I''d be cleaning out a stall and a billy would come up and ram me just for the heck of it. The nannies are super sweet, though. My first thought was horses! I know exactly where I''d put the barn and there are a ton of horse trails right down the street.

Asscher, I''m so sorry you had a miserable experience with your mortgage broker. It''s so frustrating when you feel that you can trust somebody, but then you feel taken advantage of. I agree that because the mortgage brokers are paid by the banks, it is advantageous for them to go with a bank that will give them the best deal. I think this is why it''s important for me to do as much homework as I can.

 

[D&T]

Date: 8/25/2009 9:56:30 AM
Author: asscherisme
I had such a bad experience with a mortgage broker, I don''t trust them and would not use one again.

When my ex and I were first married, we decided to stop renting and buy our first home. We lived in a small town at the time and we were renting a townhouse fro ma private person. He also was a mortgage broker. This was 1996 and the market was a total sellers market so we decided to get preapproved.

We were naive and decided to use our landlord as our mortage broker. We were friendly with im and his wife and thought it made sense. Our one year lease was about to end.

Once he got our paperwork, income etc, not only did he approve us (at a LOUSY non competative rate) BUT he also raised our rent 50% from $1000 to $1,500. We were SO mad. It was very clear he raised our rent because he saw our financials and figured that either 1. He wanted us to buy so he could make a profit off us and that 2. If we did not buy he knew at that poiint that we could afford the higher rent. We had in fact been paying a very low percent of our income for rent because we wanted to save for a house.

We pulled our credit scores and found out that we both ranged between 790 and 815 on all 3 scores and had no outstanding debt and perfect payment history and paid in full on our credit cards each month. Plus a paid off car loan. He rate was horrible.

We called local banks and ended up getting preapproved at 2% less than what he offered.

We obviously did not use him

In the end, we decided not to buy and save more and we moved out of that guys house and rented another home. A large home for $1,100 a month and left the guy with no tenant and no new mortage sold.

When we did buy our first home, I acted as our mortage broker. I just called about 10-15 places each time and found the best rate I could and felt good about our rates.

I don''t trust mortage brokers. I feel they are trying to push whats best for them.

aww, Asscher- I''''m sorry for your experience with this one, especially if this was your first experience and can leave a bad taste in your mouth. But I think this guy had a "conflict of interest" in doing your paperwork so he could benefit on either side really. Hopefully you can give someone else a try in the future, again shopping is the best in this situation and try to find someone that doesn''t have a "conflict of interest" so to speak.

 

[Beacon]

To go direct or through a broker is a challenging choice.

In the "old" real estate market, I would say they are pretty equal, provided you have a great person representing you, no matter which way you go.

In the new, difficult market, and especially if you are trying to get a jumbo loan, I would say go direct. Many lenders have cut back their wholesale origination business and for jumbos some have curtailed it altogether. Anything that originates from a broker is going to get a very, very hard look by underwriting.

If you have a very vanilla conforming loan and are well qualified you could use a broker provided that the person doing your loan is a total pro.

 

[NewEnglandLady]

Date: 8/25/2009 12:12:23 PM
Author: Beacon
To go direct or through a broker is a challenging choice.

In the ''old'' real estate market, I would say they are pretty equal, provided you have a great person representing you, no matter which way you go.

In the new, difficult market, and especially if you are trying to get a jumbo loan, I would say go direct. Many lenders have cut back their wholesale origination business and for jumbos some have curtailed it altogether. Anything that originates from a broker is going to get a very, very hard look by underwriting.

If you have a very vanilla conforming loan and are well qualified you could use a broker provided that the person doing your loan is a total pro.

Thanks, Beacon, we''re putting a hefty chunk of change down and are trying to stay out of jumbo loan territory, but anybody on either coast can probably attest to the fact that a jumbo loan ain''t all that jumbo, so we could easily find ourselves venturing into that territory if we creep towards the other end of our budget.

I can see why underwriters are scrutinizing anything that comes from a broker, so that''s good to know.

 

[Allison D.]

NEL, SO glad she was able to be helpful and that you liked her. I had a feeling you would - she''s super smart, thoroughly well versed at what she does, and most important she has EXCELLENT listening skills.

YAY for you - can''t wait to see what you come up with!

 

[purrfectpear]

Pentagon Federal CU if you''re eligible. I''ve yet to see anyone beat their rates, and they''re rock solid.