Home Loan HELP!!

Discussion in 'Credit Talk' started by godaddyo, Oct 15, 2001.

  1. godaddyo

    godaddyo Well-Known Member

    Hey Folks!!
    I am currently in the market for a first time home loan. I have looked at Bankrate.com and thelendingtree.com. Both great sites with a wealth of information. I am asking anyone out there opinion on who the best lendors and sources are. I am looking for a non-documented loan because of my self employment status. If anyone has good input on what are fair closing costs I would appreciate that also. This home buying stuff is nice, but it gets a little complicated. Any suggestion welcome.

  2. Momof3

    Momof3 Well-Known Member

    For great info you may want to post this question at MotleyFools.com, they have very knowledgable people over there and several brokers. I am sure dave will answer in great detail:)
  3. godaddyo

    godaddyo Well-Known Member

    Thanks MoMof!! I should have did that a long time ago. I always associate Motley fool with STOCKs....
  4. supershawn

    supershawn Well-Known Member

    If you still want to do some more research on your own, you can try www.onmoney.com , money.msn.com, or www.eloan.com .

    There is also a 'Motley-Fool type' discussion community at the money.msn.com site.

    I know some of these have been mentioned here before, but it's easy to forget.

    Hope this helps...

  5. KristyW

    KristyW Well-Known Member

    It depends on what your credit situation is before we can answer that. (Sorry, I don't remember).

    If you have excellent credit, you can just go to your local bank and get a screamin' deal, with not many closing costs. This is because the loan is a "rubber stamp" loan (my term) with the loan following the same rules every time. With these kinds of loans, you only have to put 3% down (97% Loan to value, or LTV).

    But since you are going for a "no doc" loan, I am not sure that your bank would have a rubber stamp type program for you. In addition, automatically, you are starting at putting more money down since it is not a "conforming loan", though I have heard some no income verification loans starting at 95% LTV (though I would like to know who carries them).

    If your credit is less than perfect, you will have to put more money down, most likely the maximum LTV you will find will be 85%.

    I would say to go to your local mortgage brokers (I'm sure there are lots of them, whereever you live, ) and start getting quotes, along with some on the net. Don't pay any more in fees than 1% orgination fee and 1 point plus your standard costs. Standard costs are doc fees, appraisals, title fees, inspections, etc.

    Here is an article I wrote all about this kind of thing:

  6. godaddyo

    godaddyo Well-Known Member

    Thanks for the valuable information. Just to let you know, I am a totally rehabilitated credit guy. With the help of those on this board, I have cleared up all of my reports. I now have scores all above 700 on the Big 3. I think that I would qualify as an A rating. I have 10% percent to put down. I have to do a non-documentation loan, only because of my Self employed status. The link you posted, stated that you should pay no more than 2 points. In my situation, I would only be looking at homes that are around $100,000. This would mean that I shouldnt pay more than $1800 dollars (minus $10,000 for DP).
    Anyways, I have been offered one loan at 6.875% with 10% down. I could take the extra half point and cancel the PMI or I could just pay the PMI. The closing costs are about $1700+$500 for some type of pre-pay escrow costs for Insurance. That is $2200, a little more than what I was planning on spending for a $90,000 mortgage. Is this stuff negotiable? Just wondering.... Thanks Again!!
  7. KristyW

    KristyW Well-Known Member


    Congrats on your rehab! :)

    Quite common, I would have to do the same.

    2 points is the maximum you should pay. And to answer your other question below, yes, this is all negotiable.

    I don't believe you can do this, you need PMI on loans higher than 80% LTV. So you will be stuck paying it until your house appreciates or the loan balance drops.

    As I mentioned above, ALL points are negotiable. I would call around and find out who will do it for the cheapest. Also watch the interest rates as they could be getting points on the back (I believe the link I gave you discussed this), but charging you few points up front. The rest of the fees are not negotiable. The $2200 closing costs for a $90,000 mortgage, though are completely in line with the average cost of doing that kind of loan.
  8. godaddyo

    godaddyo Well-Known Member

    Thanks again Kristy!!

    What do you think is fair in negotiating the costs? How do I know if they are getting points on the backhalf, if I cant see the information? All that I have to go by is the current rates being offered out there. THe 6.875% rate seemed fair compared to what other lendors are advertising. The lowest Ive seen is 5.9 I think.
  9. KristyW

    KristyW Well-Known Member

    It really depends on how hard the loan officer has to work - if he is going to do alot extra as far as extra documentation, writing letters, convincing underwriters, they will know this upfront, usually and in this case, 2 points might be fair. But if it is just a slam dunk, 1 point is plenty.

    How do you know if they are getting points on the back? You can't really know for sure unless you see the original lock rate from the mortgage company. You can call the title company the day before the loan closes to find out for sure, as this is required to go on your Uniform Settlement Statement. (Typically, they don't know this figure before then).

    Not much help, huh? The best way to tell is to shop around and get a feel for it yourself. Then I would lock the rate, and request them to fax you the lock confirmation. These guys really have you by the you know whats, but this is supposed to be changing in the form of new regulations.
  10. godaddyo

    godaddyo Well-Known Member

    You are saying that this extra point should cover closing costs?
  11. KristyW

    KristyW Well-Known Member

    No, no. Most companies just tell you 1 point + 1 origination. The origination fee is just 1 extra point, making the loan officer's profit 2 points (which he splits with the company he works for). The points are all pure profit. The rest of the closing costs the loan officer has no control over, they are all paid to other people:
    1. the mortgage company actually providing you with the loan from whom the loan officer is purchasing the money has costs like document fees, processing fees, etc.
    2. the appraisal
    3. the credit report
    4. the title company
    5. inspection fees etc.

    So the only bargaining room you have is the closing costs and the interest rate. The interest rate can be a source of profit for the loan officer. The points definitely are.

    From my experience doing loans, if I knew I was going to work 20 hours on a loan, I wanted to be paid a minimum of $1000 ($50/hour), which is what my boss kept telling me I should make. So, I would make sure that there would be enough points in the deal so I could make this kind of money (about $2000, since I had to split the profits with the mortgage broker). $50/hour is reasonable when you consider that I spent probably $100 in marketing costs to get this loan, and another 40-80 hours of my time alone making contacts and sales calls on realtors and other bankers who couldn't or didn't want to do the loan. So when it came down to it, I was really making about $16 - $17 an hour, especially when I was just starting up.

    If I knew that a loan would take me about 5 hours, meaning the person was a slam dunk, because of excellent credit and the person provided me with everything I needed documentation wise, well, then I would be willing to take less money.

    Some loan officers like to do volume and only do easy loans, some will take on the tough ones, and if they are hungry enough, they will do it for cheap. Others are thieves and will try to take advantage of you, especially if they think you are desperate. Just keep in mind that the profit made off of a loan is totally controlled by the loan officer. That gives you some bargaining power.
  12. doodyhead

    doodyhead Well-Known Member

    What kind of fees could be expected on a subprime loan?
  13. KristyW

    KristyW Well-Known Member

    I still say anything above 2 points is highway robbery. There are exceptions, as always. Let me tell you about a situation in which I thought more fees were warranted:

    Marginal credit, no job (the idiot quit right before the loan was approved), 20% down. The guy's girlfriend (she wasn't even on the loan) called me every day for a week and literally screamed in my ear and called me names about how they were living in a motel room with all of their stuff in a van parked outside AND their huge dog with them in the motel, like this was somehow my fault. I drove all over town, met with a number of local underwriters, called in some other favors by phoning non-local underwriters. I got them a loan with a decent rate (1 point above the going rate) and closed them within one week after they had been turned down by everyone else in town. The title company told me they would not be alone in the same room with these people, and insisted I be present (I had never before or since gone to a title company to sign papers with clients). They were charged 3 points.
  14. doodyhead

    doodyhead Well-Known Member

    want to do my loan? LOL
    Last time we looked at doing a mortgage, they wanted to charge us 6% AND two months later, they hadn't even sent out verifications of employment or ANYTHING. They sat down with us to review the credit report, and they were reading off of SOMEONE ELSES-- talk about incompetence. I ripped their head off and shoved it up their... well you know. LOL
  15. KristyW

    KristyW Well-Known Member

    Typically, there are lots of loan officers in every town. You just have to shop around, kinda like everything else and be skeptical of what everyone tells you. In the mortgage business, there are just so many incompetents and thieves. That's why I am not doing it any more. The real person to suck up to (excuse my language) is the loan processor. She typically is the one who will package up your loan in the prettiest way possible and send it to the underwriters, although, like in the case I mentioned, I did the loan packaging myself sometimes.

    I used to tip my processor extra, just because they were the difference in most loan packages, and made terrible money. If you can get the number of these valuable employees, I wouldn't bother calling the loan officer, I would call the processor; they are the ones that know the status.

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