Technical > Home Improvement > Mortgages

reply to Dodge

Re: Mortgages

"Luckily we had our lawyer guide us through everything."
This may be the best advice in your post
It may cost a few bucks , but having your own lawyer at the closing is well worth the money !

Unless you're buying a new property (either custom built or otherwise purchased from the builder) it's extremely rare to need a lawyer when purchasing a house.

But of course, you should always take your realtor's advice for this kind of thing.

reply to Dodge
Preapproval doesn't mean anything. It doesn't mean your loan will get approved [for a specific property] or that you can afford the house.
For house affordability do a simple test: see how much you put in the bank in the last year and get a monthly average. Add 1/2 of what you pay now in rent. That's the most you can realistically afford, mortgage and taxes total. There *will* be associated costs with owning a home which you absolutely must budget for (roofs and sidings don't last forever for example, faucets start leaking, dishwashers need to be replaced, outlets break... you pay for everything out of your own pocket if you can't DIY). Utilities will likely be higher, you will have new costs you didn't think about.
As far as a place to get your mortgage goes - look at reviews. You can have a horrible experience with a local CU or a great experience with an online broker. Or vice-versa. I used a local broker found through Zillow for a refi and it was a super-smooth experience, rate was much lower than anyone else.

reply to TheSMJ

I believe the lawyer *requirement* depends on the state. In Maryland and Illinois, I think they are required. In Wisconsin, they are not.

I guess you can see where i have purchased houses...

But as robbin said, you should get a lawyer even if you do not have too.

/alan

reply to TheSMJ

reply to alana

reply to Dodge
+1 on Lawyer.

Glad we didn't follow the advice of some, because it was new property. Our lawyer went through every paper work from the lender, HOA, builder and closing docs. When something didn't seem right, he consulted with the closing officer and corrections were made.

My father in-law has told me horror stories on closings, without lawyers, from shady lenders. Then when the owner argues, they're reminded about the piece of paper they signed, agreeing to the terms.

reply to Dodge
Dodge,

I just closed on my home on the 15th. I would recommend going through someone who your agent works with regularly. There was a ton of communication and back and forth that took place through my agent because they all knew each other.

They all work together and just cycle everything around. The title company, the agent, the mortgage company. It's one giant circle jerk, but it is one that works in your favor.
--
A government big enough to give you everything you want, is strong enough to take everything you have. -MLK

reply to Dodge
Just shop around for mortgages like you would on anything else. Check out the local credit unions, local banks, online places, and shop with a mortgage broker. Really the only difference is the interest rate and closing fees. Everything else is pretty much standard.

A lawyer is required by law here. I'd hire a lawyer even if it wasn't required. They are the glue that holds the deal together. They make sure you are protected in the transaction. Without one you might get hosed in the P&S with almost no way to back out. A lawyer would catch that and make them change it before you sign it. Without a lawyer you just need to assume everyone is out to get you.....BECAUSE THEY ARE!

I've purchased 4 properties and refi'ed 3 times so far in my life. I got taken to the cleaners on my first mortgage to the tune of about $10,000 because I didn't know any better. No lawyer on that deal so they added points and rolled them in which I had no idea what they were at the time. They added a pre-payment penalty. Their closing fees were ridiculous. They added on a home warranty without me understanding they add it as well. It was a brand new condo so it didn't need a warranty. They also didn't offer me a decent interest rate and also put me into an 80/20 loan to avoid PMI which actually cost more but looked better with a lower monthly price. All those things have their place in a mortgage as long as you know how to use them properly. We bought 4 points on our current place since if we ever want to move it will become a rental like our other 3 properties. Those 4 points lowered the interest rate by 1% and take 6 years to break even.
--
IF YOU FIND ANY MISTAKES IN MY WORK...Please consider that they are there for a purpose. I try to please everyone and there is always someone looking for mistakes!

reply to Dodge
Another thing to watch out for is the 'dual/double agent'. That when the same person represents the seller and buyer. You don't want that! Find your own buyer's agent who only represents buyers. You can even find what they call a 'discount buyer's agent' who is someone that will rebate you a part of their commission at closing. Most sellers pay like 3-6% to the seller's agent. If there's a buyer's agent then the majority of the time they split the commission. The seller's agent gets 1.5-3% and the buyer's agent gets 1.5-3%. The rebate is normally like 25-50% of the buyer's agent commission so you get a nice chunk back at closing for doing nothing basically.
--
IF YOU FIND ANY MISTAKES IN MY WORK...Please consider that they are there for a purpose. I try to please everyone and there is always someone looking for mistakes!

reply to Dodge

reply to Dodge
One other thing to think about is what type of lender do you want? I prefer a portfolio lender. The downside is because they fund and service their own loans their requirements are far higher then other banks. The upside is they service their own loans so you don't have to deal with Wells Fargo this year Chase next year and Stearns the year after that. Another upside is most portfolio lenders offer better services on mortgages like mine allows me to drop my rate anytime I want for .5% of the outstanding principle balance on the loan. They allow me to skip paying principle in December each year if I want as well. It's a way people can save a few hundred for the holiday's. You wouldn't get those types of services normally.
--
IF YOU FIND ANY MISTAKES IN MY WORK...Please consider that they are there for a purpose. I try to please everyone and there is always someone looking for mistakes!

reply to Dodge
after speaking to a few mortgage professionals I am a little confused on the closing costs with no straight answer. All of them are saying that most of the closing costs are regulated - title insurance, taxes, etc... and the only thing that they have control over is origination fee and application fee (or something along those lines). If that's true, all of their closing costs would be in the same exact price range, give or take a few bucks, so what would I be shopping around for if the rates are the same?

The way I see it the out of pocket expenses boil down to this:
- down payment
- closing costs (including all pre-paids)
- lawyer
- inspection

Am I missing something?

reply to Draiman

reply to Dodge
Closing costs are extremely difficult to predict with great accuracy. It also depends on the type of loan you have. Are you a first time home buyer, or have you bought/owned a home in the last seven years?

If not, you could qualify for FHA, which means you need 3.5% down. Your actual closing costs may be a little higher than that, but that's what seller help is for and it can help bring those costs down to exactly 3.5% of the total home purchase.

Basically, if you can qualify for FHA, you're going to need $3500 for every $100k the home is going to be purchased for.
--
A government big enough to give you everything you want, is strong enough to take everything you have. -MLK

reply to Draiman

reply to Dodge