[NA] Mortgage shopping

Discussion in 'Hangar Talk' started by CJones, May 8, 2012.

  1. CJones

    CJones En-Route

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    My wife recently worked with a mortgage company to get an idea of what type of mortgage we could be approved for. In the spreadsheet they sent, they did a pretty good idea of itemizing the costs.

    My question is - when 'shopping' for a mortgage, what do the companies compete on? Is it closing fees, mortgage rates, etc.? How much difference could one company potentially vary from another? What's the best way to compare one company to another - do we need to go through the pre-approval process for each company we want a rate from?

    We're trying to decide how much effort should be put towards shopping around for a potentially better deal.
     
  2. wsuffa

    wsuffa Touchdown! Greaser!

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    Total price. Rate. Reputation. Honesty.

    The ones that tend to do the best job are ones that have been around for a while and want your repeat business. Almost all (including your local bank) sell them to another company for packaging/servicing. I saw something recently that the single largest servicer of loans made in the last year in the US is Wells Fargo, and the vast majority of loans are actually owned by government-backed entities (Freddie/Fannie).

    In the end, you care about who will service the loan, how they will treat you, and whether or not you have to escrow (and whether you'll get hosed on escrows). At today's rates, it's not worth saving a couple of tenths of a percent to get a bad servicer or one that will take excess escrow to boost their profits.

    A good mortgage broker will shop the rate for you with several companies & give you some choice. They will get paid either by you or the mortgage company.
     
  3. denverpilot

    denverpilot Taxi to Parking

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    They'll compete on everything, if you make them.

    Perhaps a better analysis to ask oneself is "which ones are the most important to me?"

    If they're playing games trying to hide fees, etc... walk away. Everything in writing up-front. No BS.
     
  4. rpadula

    rpadula En-Route

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    Chris,

    Take a look at Georgia's Own Credit Union.

    My brother and another friend re-fi'ed through them. Their online app process was easy and their cost estimates on the web page were pretty darn accurate.
     
  5. Ted DuPuis

    Ted DuPuis Super Moderator Management Council Member

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    We refinanced with the bank that we use for most of our banking needs. The reason was that we knew the people in there and were happy with them, they offered a rate that was 1.5% lower than our current rate, and the closing costs were immaterial, something like $500. In the end, we lowered our payments significantly without extending the time on the mortgage any. Win win.

    I'd look for something that makes a payoff in a short amount of time on closing costs. If you save $100/month with $2400 closing costs, it takes you 2 years to pay off the refinance. Are you sure you'll be in that house in 2 years?
     
  6. steingar

    steingar Touchdown! Greaser!

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    I don't recall what I did, but folks have been trying to refinance my loan for years and haven't been able to save me a dime. Given the fact that the government is just about paying folks to borrow money, I doubt I did all that poorly. Good luck, and don't let anyone charge you PMI.
     
  7. CJones

    CJones En-Route

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    This will be our first 'owned' house. We always rented in Iowa and have rented since we moved to Georgia so we could figure out where we wanted to 'buy' - which was a good idea since we DEFINITELY don't want to buy where we are right now.
     
  8. CJones

    CJones En-Route

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    Thanks for the tips, folks. We'll put out feelers to a few other mortgage places that have been suggested by a local realtor friend.
     
  9. DaleB

    DaleB Pattern Altitude

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    Wow. We just signed the FOURTH mortgage on this place in 11 years, and we didn't do too badly to begin with. We've never refinanced a house before this one, but we've had offers we couldn't refuse...

    The first refi dropped our interest rate by 1.5%, AND we got rid of PMI. Fees were low and the break even was less than 12 months. I don't remember how much interest it would have saved over the life of the loan, but it was significant.

    The second refi dropped another point or two, plus we went from a the remainder of a 30 year to a 15 year. I figure that saved us $96K in interest, had we paid it on schedule to the end. There were zero fees for this one -- didn't cost me a dime.

    The latest one actually did cost us for an appraisal along with some other fees. But -- we got the rate well under 3%. I'll keep making the same payment I have been, we should have the house paid off within 5-7 years. If it goes as it should, it will save another $46K in interest.

    Lenders are getting desperate enough that there have been some smokin' deals out there. After the last refi I figured I'd have the house paid off the same year I retire. Now it looks like I'll have 10 years working with no house payment.

    CJones -- on a new mortgage, it wont hurt to shop around some. I agree with Steingar that PMI is a horrible deal, but it's going to be required if the loan to value ratio is not good enough to avoid it. My biggest advice is - never, ever let the realtor or lender tell you how much you can afford to pay. Figure that out for yourself. They don't really care if you can make the payments or not; they'll probably sell your loan within a few months anyway.
     
  10. tonycondon

    tonycondon Gastons CRO (Chief Dinner Reservation Officer)

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    i just went to my local credit union, decided their rate was good enough for me based on the national average etc. and applied for the loan. then after a year the rate dropped enough that we were able to refinance, our payment dropped $15 a month, and we shortened the term to 20 years. Our credit union doesn't sell their loans although that really didn't matter to me. I happily pay PMI since we didn't have 20% to put down and that is the price we pay for wanting to buy our awesome garage and house now instead of waiting. We also do our best to pay as much principal ahead as we comfortably can to get out of paying PMI asap.

    Whatever you do make sure you have a big enough garage for the biggest airplane you can imagine building and Rachel's car.
     
  11. jesse

    jesse Administrator Management Council Member

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    I've thought about looking into refinancing. I don't plan on going anywhere anytime soon. My mortgage is currently with Wells Fargo. My interest rate is 5.25%. I probably only have about 5% of the mortgage paid for so I'm not sure what I can do.

    How does one like me -- whom doesn't have much spare time -- look into getting a better deal?
     
  12. tonycondon

    tonycondon Gastons CRO (Chief Dinner Reservation Officer)

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    we just stopped by the bank on our way home from work. "we see your rates are now at 3.75, we'd like to refinance". it was surprisingly simple. filled out paperwork, wrote a check, got appraisal done, more paperwork, another check, bam.
     
  13. DaleB

    DaleB Pattern Altitude

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    Go to www.wellsfargo.com. Look about mid-screen for the "Time to refinance?" link. Fill out your info and get a call from a mortgage specialist. They can tell you in short order what your options are and if it will pay off. Their estimate of closing costs were pretty close, too.
     
  14. mikea

    mikea Touchdown! Greaser!

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    Yes, but no matter what you have to be reasdy with your documents and proof of income, etc. (tax returns)

    Consider that going from 5% to 3% saves you $2000 a year in interest on each $100,000 of your principal!

    I contacted my credit union but the rep p'd me off talking about help for being underwater (no way I am) and other routine crap, when I make more than 2 of their usual applicants, and nonsense like "Are you SURE you're not required to have escrow?" Yes. I speaka the English.

    I may just stay with the current bank who has been treating me well.

    I'm going to take a few months to fix my credit score and each will pay down the principal more.

    I'm thinking I'll replace my 15 year fixed with a 10 year. The payments will be the same but I get done in a year to 2 sooner!
     
    Last edited: May 8, 2012
  15. EppyGA

    EppyGA Final Approach

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  16. steingar

    steingar Touchdown! Greaser!

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    We didn't have PMI to start, and like I said, folks have been trying to offer me deals ever since. Haven't been able to save me a dime. The most ironic are the guys purporting to call me from my bank. I tell them that if they really are from my bank, they should already know my mortgage details, and they should already know whether they can save me money. Gets rid of the scammers quickly, and irks the genuine bank employees.
     
    Last edited: May 9, 2012
  17. Clark1961

    Clark1961 Touchdown! Greaser!

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    Wells is not a bad option on refi. They can offer a no-fee refi with a rate about 0.25% of so above the lowest published rates. Paperwork is easy, just need to visit a notary. Sort of a pain in the butt dealing with all the hand-holding they want to do...
     
  18. mikea

    mikea Touchdown! Greaser!

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    I was wondering about that. I've never used a mortgage broker and assumed that they make their money by adding a few grand to the fees. If there are other ways I may call a broker.

    Check http://bankrate.com to see some rates. One nationwide mortgage company clearly says they add a $1500 fee.
     
    Last edited: May 10, 2012
  19. wsuffa

    wsuffa Touchdown! Greaser!

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    Mike, some do charge you, as I noted. Others don't.

    When I refied, I used the local bank at which I have a relationship. The rate was OK - maybe not the best, but the local relationship made origination easy & I expect to not have the mortgage all that long. They sold the loan (it's now serviced by Wells, who in turn thinks I'm their customer) within days.

    I'd have no problem paying a broker to do the work if they could get me a better rate than I could on my own and I saved more than their fee short-term. IME, and I know it's changed in the last couple of years, the net will probably be the same (they get a lower rate than you can get, but you have to pay them for it - as opposed to their commission being wrapped into the origination fee/loan rate). Some will even arrange no-cash-at-close refis, but the costs get wrapped somewhere else. It can be a big game of "hide the weenie".
     
  20. denverpilot

    denverpilot Taxi to Parking

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    ROFL! Yep.