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Jaber

join:2007-07-07
Mount Prospect, IL
reply to Dodge

Re: Mortgages

Best of luck with the process and hunt!

Just be sure to stick with your guns and do your own research. We closed on our new townhome in September 2012. While looking for lenders, there's a few who are quick to push and shove, while trying to sound like your best friend. Read all papers and double check what you're signing and understand it. People can give great recommendations, but sometimes things happen.

Unfortunately, I always seem to have bad luck, even sometimes with the best recommended provider. Make sure to hound them and double check all their paperwork. Our closing was somewhat of a nightmare, as papers were not ready and it took 3 hours to close on a BRAND NEW property. In the end, we brought a lot more cash than needed in our closing and got back more than $2k afterwards.

What helped me was getting everything in writing or e-mail and bringing it in during closing. Everybody in the end wants to get paid, if something goes wrong, you'll be ready to prove your case. People unfortunately tend to forget and will try to plead innocence. In my case, there was a lot of escrow missing, my guess is they rushed the HUD and didn't double check the numbers. My face turned red when I was told how much the total was at closing. Luckily we had our lawyer guide us through everything.

When contacting the lender, just be prepared to have all documents ready, every dollar has to be accounted for in your checking/savings.

Also make sure to check your credit history, for no surprises. If you're married, check both credits.

One site I found quite helpful was, »www.thetruthaboutmortgage.com/


MrFixit1

join:1999-11-26
Madison, WI

"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 !


TheSMJ

join:2009-08-19
Farmington, MI

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.



cowboyro
Premium
join:2000-10-11
Shelton, CT
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.


robbin
Premium,MVM
join:2000-09-21
Leander, TX
kudos:1

1 recommendation

reply to TheSMJ

said by TheSMJ:

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.

I have a real estate lawyer that I have used on every transaction I have done over the last 35 years. Doesn't cost much for the piece of mind it gives. I'll take my lawyer's advice over a realtor's any day.

alana

join:2009-10-20
Crystal Lake, IL

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


Bob4
Account deleted

join:2012-07-22
New Jersey
Reviews:
·Optimum Online
reply to TheSMJ

said by TheSMJ:

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.

In New Jersey, everyone uses a lawyer when buying a house.

Badonkadonk
Premium
join:2000-12-17
Naperville, IL
kudos:5
Reviews:
·Dish Network
reply to alana

said by alana:

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

A lawyer is not required in Illinois. I personally feel it's better to have one, but there's no requirement.
--
How nice. This country is being run by a broken record repeating the same two words over and over. Cretin.

Jaber

join:2007-07-07
Mount Prospect, IL
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.



Archivis
Your Daddy
Premium
join:2001-11-26
Earth
kudos:19
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



Draiman
Let me see those devil horns in the sky

join:2012-06-01
Kill Devil Hills, NC
Reviews:
·Verizon FiOS
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!



Draiman
Let me see those devil horns in the sky

join:2012-06-01
Kill Devil Hills, NC
Reviews:
·Verizon FiOS
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!



Draiman
Let me see those devil horns in the sky

join:2012-06-01
Kill Devil Hills, NC
Reviews:
·Verizon FiOS
reply to Dodge

said by Dodge:

I've narrowed down the area where I would like to buy a house, now I just have to get pre-approval for mortgage in order to know for a fact what I can get as far as a loan.

There are two things you'll get in the mortgage process. There is a pre-qualification which is when they take basic info and give you a letter giving you the max they would lend you. That's OK but really not that great since you can still be denied a loan depending on the paperwork that comes later. If you continue into the process providing them all the paperwork like W-2's, bank statements, credit check, pay check stubs, employment verification, etc. and get to underwriting then you get pre-approved. With a pre-approval all you need to do is pick the house you want and have it appraised then you close. There's no pre-requisite for mortgage approval required so as far as a seller goes a pre-approval is as good as cash. The only contingency is the appraisal and home inspection. That gives the buyer a lot of leverage. A pre-qualification is still subject to all that paperwork so you can still be denied the mortgage so your a risk to a seller. The seller has the advantage there.
--
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!


Draiman
Let me see those devil horns in the sky

join:2012-06-01
Kill Devil Hills, NC
Reviews:
·Verizon FiOS
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!


Dodge
Premium
join:2002-11-27
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?


Dodge
Premium
join:2002-11-27
reply to Draiman

said by Draiman:

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.

How do you identify a portfolio lender? I don't think I came accross that term at all in my research.


Draiman
Let me see those devil horns in the sky

join:2012-06-01
Kill Devil Hills, NC
Reviews:
·Verizon FiOS

said by Dodge:

said by Draiman:

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.

How do you identify a portfolio lender? I don't think I came accross that term at all in my research.

Not sure how you find them. I joined my parents credit union as a kid and they happened to be a portfolio lender. I've been with them for decades now. Another advantage is portfolio lenders don't make their money off the closing costs so they are typically less. They make it off servicing the loan.

»www.investopedia.com/terms/p/por···IKsv79nd
--
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!


Archivis
Your Daddy
Premium
join:2001-11-26
Earth
kudos:19
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



dennismurphy
Put me on hold? I'll put YOU on hold
Premium
join:2002-11-19
Parsippany, NJ
kudos:3
Reviews:
·Verizon FiOS
reply to Draiman

said by Draiman:

Not sure how you find them. I joined my parents credit union as a kid and they happened to be a portfolio lender. I've been with them for decades now. Another advantage is portfolio lenders don't make their money off the closing costs so they are typically less. They make it off servicing the loan.

»www.investopedia.com/terms/p/por···IKsv79nd

Not sure how to find them either, but I used DCU (www.dcu.org) for my last mortgage and couldn't be happier. They will ALWAYS be the loan servicer and are very easy to work with. Had a great experience and would do it again in a heartbeat.

Also, I concur with everyone who suggested using a lawyer. I wouldn't imagine buying or selling a home without one. Best money you're going to spend -- they charge a lot less than the RE Agent's commission but are worth about 100x more if you ask me.


Draiman
Let me see those devil horns in the sky

join:2012-06-01
Kill Devil Hills, NC
Reviews:
·Verizon FiOS
reply to Dodge

said by 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?

Fees vary but they are regulated. A lawyer might be $750 or $1,250 but the lender cannot add any fees to that expense. It's regulated to be a pass through fee. The same with inspections. On one mortgage it was $300 but on another it was $450 for me. Then there is escrow differences. One mortgage only wanted 1 month escrow for insurance and property taxes so they collected $500-550 while another wanted 3 months of both so they collected $1,500-1,650.
--
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!

Bob4
Account deleted

join:2012-07-22
New Jersey
Reviews:
·Optimum Online
reply to Dodge

At closing, you'll also have to pay property taxes in advance and up to one month's interest. (Hint: Schedule the closing for near the end of the month.)

Here are the fees I had to pay when I refinanced in 2008:

$275 Appraisal Fee
$15 Credit report
$200 Application fee
$10 Flood cert fee
$200 Bank attorney review
$22 Express mail fee
$100 Doc prep fee
$20 Wire transfer fee
$300 Settlement or closing fee
$25 Notary fee
$736 Title insurance binder
$30 Wire fee
$60 Overnight fee
$50 Down load / copy fee
$335 Recording fees
$5 Recording processing fee

Total is $2383. A new purchase will probably have more costs (lawyer, additional title insurance).


Dodge
Premium
join:2002-11-27
reply to Archivis

said by Archivis:

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.

Why would I want to go for FHA over a regular mortgage? Rates are higher, it has a built in insurance which you can't get rid off. Am I missing an advantage of it? I thought FHA was designed for people with not enough of a downpayment and/or not so great credit scores.


Archivis
Your Daddy
Premium
join:2001-11-26
Earth
kudos:19

Are you lacking the kinds of funds needed for a down payment?

Is 3.25% a high interest rate?


TheSMJ

join:2009-08-19
Farmington, MI
reply to Dodge

When I looked at mortgages 2 months ago, the rate for FHA was .25% lower than it was for a standard mortgage. Furthermore, unless you can put down 20% or more at closing, you'll be paying insurance for either type of loan.

After crunching the numbers, FHA was the cheapest option.


guppy_fish
Premium
join:2003-12-09
Lakeland, FL
kudos:2
Reviews:
·Verizon FiOS
reply to Dodge

said by Dodge:

Why would I want to go for FHA over a regular mortgage?

Lower down payment is the only reason. They are the only ones that allow less than 5% and under 20% down you need PMI insurance which is a different thing


Draiman
Let me see those devil horns in the sky

join:2012-06-01
Kill Devil Hills, NC
Reviews:
·Verizon FiOS

2 edits
reply to Dodge

I'd always go for a conventional myself but here's the basics on them both.

"FHA Loan Advantages:
Lower down payment requirements
Lower credit score requirements
May be easier to qualify for than a conventional loan
No prepayment penalty
Streamlined FHA refinances are fast and easy

FHA Loan Disadvantages:
Subject to mortgage insurance
Fewer loan options than conventional loans
Not available on all property types
Loan limit of $729,750
Generally only allowed to have one FHA loan

Conventional Loan Advantages:
No mortgage insurance requirement
Can be used on all property types
More loan program options
Can hold numerous conventional loans
No maximum loan limit

Conventional Loan Disadvantages:
Higher down payment requirements
Higher credit score requirements
May be more difficult to qualify than FHA loan
Mortgage insurance still required for loans above 80% LTV
Possible prepayment penalty"

»www.thetruthaboutmortgage.com/fh···al-loan/



Draiman
Let me see those devil horns in the sky

join:2012-06-01
Kill Devil Hills, NC
Reviews:
·Verizon FiOS
reply to guppy_fish

said by guppy_fish:

said by Dodge:

Why would I want to go for FHA over a regular mortgage?

Lower down payment is the only reason. They are the only ones that allow less than 5% and under 20% down you need PMI insurance which is a different thing

All loans require PMI under 20% LTV.
--
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!


Archivis
Your Daddy
Premium
join:2001-11-26
Earth
kudos:19

That LTV, according to my bank, is 21-22%, not 20.

Conventional requires 5% down. FHA requires 3.5% down. That would be total money committed to the purchase of the home at the end of the day. You may have closing costs that exceed 3.5%, but seller help allows you to tack that onto the mortgage as long as you're still coming up with 3.5% out of pocket.

The only reason why my payment is higher on FHA vs. Conventional is because I'm financing an extra 1.5%. My interest rate was lower via FHA.
--
A government big enough to give you everything you want, is strong enough to take everything you have. -MLK



Draiman
Let me see those devil horns in the sky

join:2012-06-01
Kill Devil Hills, NC
Reviews:
·Verizon FiOS

said by Archivis:

That LTV, according to my bank, is 21-22%, not 20.

Conventional requires 5% down. FHA requires 3.5% down. That would be total money committed to the purchase of the home at the end of the day. You may have closing costs that exceed 3.5%, but seller help allows you to tack that onto the mortgage as long as you're still coming up with 3.5% out of pocket.

The only reason why my payment is higher on FHA vs. Conventional is because I'm financing an extra 1.5%. My interest rate was lower via FHA.

They are required to drop MI at 22% LTV by law but can drop it at 20%. It's up to the bank to decide between 20-21.9999%. Another reason why a portfolio lender is king. My portfolio lender drops MI at 20% LTV based on the original appraisal automatically. Most other lenders will drop MI at 20% if you get a NEW appraisal and come in at or below 80% LTV so you pay $300-450 and pray it doesn't come in lower. Even worse yet you can get FHA and have no option to get it removed until 22%. That's thousands of dollars between lenders right there.
--
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!


Archivis
Your Daddy
Premium
join:2001-11-26
Earth
kudos:19

Makes sense. My mortgage will get sold around like a ping pong ball anyways.