Mortgage 101

O.K. I thought I would make a post to cover some of the basics. I wanted to let you know of the rules UPFRONT so you knew how to go into "battle" with us mean ole lenders!

1. You fill out an application OR have your credit pulled and boom, you have the right to have sent to you within THREE days a Good Faith Estimate (from now on called GFE) and if you are purchasing a Truth In Lending(now Called a TIL) If you are refinancing, and your state may differ, but a TIL only has to be given within 1 day of closing.

2. If you write a check for your credit report to be pulled you have the right to have a copy of this credit report given to you. Some lenders that you will go shop with this credit report claim that they can't do anything with it and need to pull another one in order to give you a GFE. The are wrong and you should continue shopping. In some cases a savy broker can actually take the reference number off of a credit report and use this report while running a Automatic approval.

3. If your Lender asks you to pay a loan application fee.....run! I know others may disagree but if you have to spend 300 dollars for each place you shop at how many do you think you will go to? That's right! It is their way of keeping you with them and there is no other excuse for it.

4. If you know your credit score/history and you can't get a GFE from the lender then continue shopping. Again, there are some that will disagree but everything is subject to credit approval so when you are looking for a GFE you want a BALLPARK and not a commitment.

5. When shopping, do NOT go to Lender A on Monday and then Lender B on Friday. Their rate sheets will be different every day and you cannot judge who is giving you the best deal.

6. Always pay for your appraisal directly to the appraiser. This way, if you decide to go with another lender after the appraisal you will be qable to take your appraisal to a different lender and not have to go theough the process all over again. The appraiser may charge an extra 50-100 dollars for a re typing fee to put the appraisal in the new lenders name but this is much better then the time you will have to wait for a new appraisal to be done.

7. If you have VA or FHA keep them if you can when refinancing. You SHOULD be able to refinance (no cash out) most FHA and VA loans with NO COST.

8. If you currently have a loan through a bank or credit union by all means CALL THEM FIRST! Most banks and credit unions have a streemlined refinance that allows you to adjust the rate/terms of your loan for as little as free to 400 dollars. Some mortgage companies offer this as well and I would suggest checking into this as well BEFORE you call a broker.

9. These fees are always negotiable:
Broker Fee
Loan Origination Fee
Processing Fee
These Fees are NOT negotiable and if a lender were to make ANY money off of them they would be in deep trouble:
Title/Escrow Fee
Tax/Insurance Impounds
Wholesale lender/Lender Fees
Underwriting Fees
Tax/Flood/Recording Fees
I would like to note that title/escrow fees vary and if you have refinanced/financed a loan within a few years you MAY be able to get a discount from the title/escrow company that originally did your title/escrow. If your lender calls B.S. on this contact the title/escrow company yourself and ask them....get pro active!

10. I love the UMB (upfront Mortgage Broker's) concept and I am a member myself. With these types of organizations (and there a re a few with different names) you have to remeber that someone who is giving you a bad deal and is still being honest with you is not doing you any service. Lender A offers 5.5% and makes nothing on the loan and is upfront about this fact while lender B offers 5.25% and is making some money in rebate on the back but tells you nothing about it. Don't just trust that an honest lender will be a competant lender and will be able to get you the best mix of turn time, ease, and rate.

11. Always question a lender that only returns ONE option to you. Did they stop at the first program? Did they take the time to work out all of the options? Ask a lender to provide a couple of options so YOU can decide which route to take. There are so many people that I hear about that were offered A...and then when they balked or it didn't work the lender went back and found B. I would like to see the A and the B at the same time BEFORE you get to far into the deal. Ask you lender if he/she has a "backup" Plan. I always have back up myself to bail me out and you should look for this as well.


12. With online lenders such as Eloan and Lending tree make sure that they will only pull your credit ONCE and will not distribute your name to Lead Buying brokers that will pull your credit without your permission. I have heard first hand that this has happened and ruined credit scores. Beware of online "quotes to several lenders" as it may hurt you in the long run.

13. Finally....if you have been wronged you have the responsibility to report it. You may have squeeked by and gotten your loan but you have a responsibility to others that follow behind you to complain. Contact your state's Department of Financial Institutions or Attorney General with your complaints.

I know this doesn't answer everything but I wanted a quick overview for people to go to for a "guide" so to speak. Any added comments are welcomed as it will bump this post up to the top continuously for our new readers to the boards. Take care!

 

Business happens by default..but is not the main purpose..thanks for the comment.

 

And On that note, always remember that SAYING something online in a forum doesnt make a guy any more wualified then yoru local mortgage guy. The fact that I post only gurantees you that I know how to switch on a computer and log on to the net...and have access to answers to your questions...this doesnt mean that I or any other "mortgage guy" that is posting knows a hoot about what they are doing or can gurantee you will get the best deal. I always want to make a point of this because people dont give enough credit to their local bank or mortgage broker.....that guy might still be using an abacus but could probably run circles around a guy like me with his vast experience. Book is out next Spring btw

 

i have a bunch more stuff but lil bites are probably best......got the boot off of cb.....was kind of a blessing as now i have new people i can get the info out to..thanks for the welcome