Hi all–
My GF and I are starting the process of buying our first house, and I hope to get some advice. I’m sure I’ll have lots of questions but the first is about mortgage brokers. We got advice to shop around for the best rate, so we’ve talked to two mortgage brokers, both of whom seemed irked that we were talking to other brokers.
One guy, refered by our buyers’ agent, pulled our credit reports, did up a “good faith estimate”, seemed very organized, and is conveniently located; only drawbacks are that he is a bit lacking in the personality department, and his company loans their own money as well as shopping around to other lenders which makes me wonder if we will really be getting the best rate.
Guy#2 was referred by some work contacts of mine, stricktly a broker (none of his own money), obviously disorganized, didn’t want to pull our credit report until we decide who to go with, said he’d be within 1/8 point of anyone else. Very personable, fairly conveniently located but less convient than mr. no personality.
So now we don’t know what to do. Do we need to choose one broker, even though we won’t know their exact rate until we find a house and can lock in a rate? Can we play the two off each other, even though we don’t like playing games? What’s protocol in this situation?
Thanks for any help, and sorry for the length of the post.
Mike
Replies
You run the show, don't let them even think they do. You can talk to whoever you want, whenever you want. BTW everytime your credit report gets pulled, it brings down your 'points'. Be careful with that, I learned it the hard way. When we bought about 5 years ago, we did alot of research on the net, which was very helpful. Look at quicken.com, bankrate.com.,etc.(there are lot's out there). Learn to read between the lines. Advertised percentage rate vs. APR., points, 30 day - 90 day lock, etc. It's a whole new language you've got to learn, and the better versed you are the better position you will be in. Good luck. It's quite exhilarating owning your first house. Go get it!
when we bought .. we checked the bank rates in the local paper for a coupla weeks first. Kept score who had what and for how long ... what catches .. etc.
Then .... realized the little small town back about an hour away where my wife grew up had pretty good rates ... never the lowest ... always very good though. Since it was a small town ... her mom worked at one bank .. her dad a long time cop ... every one in town knows her maiden name.
So we decided to go with "friendly and known" and maybe spend a buck or two more a month. Turned out the lady who handeled the transaction used to have my wife babysit for her. And she found a cousin is in charge of the payment/collections department.
There's been a time or two when we've had to contact the bank for this or that regarding the mortgage ... glad we went small and local. Something to keep in mind.
If U can't walk thru their front door at a branch ... who ya gonna yell at when there's a mistake?
Jeff
Buck Construction
Artistry in Carpentry
Pgh, PA
Both these guys come with personal recommendations, which is about as close to local as we can get. Both our parents live within 1 1/2 hours but they use credit unions we don't have access to. I do like to keep things local when I can though.
Mike
Is the lack of personality really that bad? When it gets to crunch time you will want someone who is paying attention and delivers quickly, and that will be all that matters. On our last buy the lender was somewhat lackadaisical and almost killed the deal. At the last minute she came up with some things that we needed to do to the property to close (correct a few items on the home inspector's report). She could have told us that stuff on Day 1 but didn't and instead told us on Day 26 of 28. So, from 1000 miles away I had to find a handyman and get him to do the work.... today.
Contrast that with the mortgage broker who did our last buy and a couple of refi's. All business, no personality. Got all the info and paper he needed up front and was ready way before the close. Had a rate as low as anyone else and the loan had none of the stuff you don't want.
Escrow can get pretty crazy, and all the players you select need to be top notch... return calls quickly, stay organized, know their business, the works.
And......
Be sure to find a competent & thorough home inspector....no point of paying a
monthly mortgage on a money pit!
Beware the realtor's pets!
..............Iron Helix
Roger that. SOP for home sellers it looks like is to get the wrecking crew in to fix up any problem areas with a cosmetic fix. The thing falls apart on the homebuyers after being in for a few years. Bathroom and kitchen are prime candidates, all those years of hack renovation work.We were told that the sellers had higher offers but wanted to sell to us because we just had our first child etc. What a load of baloney. There were all kinds of problems they hid or outright lied to us about. Buying a house is strictly business, don't get sentimental or you'll be screwed.
Good advice. We'll try to keep the old adage in mind of don't enter into any deal you couldn't walk away from. I have a pretty good idea what I'm looking at in regards to old homes, but we'll have to get an inspector anyway so I hope he'll catch anything I don't. We are looking for houses that need a bit of work, places in perfect shape are out of our price range in this market, but we don't want to get stuck with a lemon.
Mike
BTW, at least some brokers get commissions based on the interest rate and/or points.
So sometime they can do do better if pushed.
It's just a business decision. They don't come by for dinner afterwards. Get the best rate and costs, meaning points, closing costs, etc. It's just money. Once you apply, it doesn't matter who the individual is.
But do not have them pull your credit in the meantime. Too many hits will lower your credit score, no matter what anyone says. It shouldn't, but it does.
And there is always room for a little negotiation. Play one against the other, and they will try to get your business. It is very competitive. So forget the personalities because you will be paying this out for the next 30 years, long after the broker is forgotten.
SHG
For every complex problem, there is a solution that is clear, simple, and wrong.
-H.L. Mencken
Just writing the question out made the right choice more clear. You identified the Catch-22 though. One guy (mr. no personality) already pulled our credit report, so we're leery of having it pulled again. We can't lock in a rate until we have a house under contract, and because of the seller's market we're in we need to present proof of pre-approval to have our offer considered. So, how do we play the brokers against each other, or even decide on one, if they can't tell us their rates until the last minute?
Mike
you don't have to use the mortgage that pre-approved you. your contract of sale will have a mortgage contingency clause, and as long as you can get a mortgage, any mortgage, you'll be fine.
As for local, bear in mind that the mortgage can be sold to any bank anywhere. Once again, this is money, nothing more. nothing should enter your thoughts except what is the best deal for you. there's no love involved.
SHGFor every complex problem, there is a solution that is clear, simple, and wrong.
-H.L. Mencken
Don't sweat having your credit report pulled by several people during a period where you obviously are shopping. People familiar with interpreting these will see you shopping (several entries in a cluster) and then approved for credit, and then, positive notes for meeting payments, and in the end you'll look better than when you started. Here most of what brokers are offering is deal through banks and other financial institutions - all of whom have flexibility on rates. They 'spend' rate reductions using strategies which allow them to attract new business most efficiently. They can give rate reductions to brokers, and real estate agents because then the customers just turn up like magic. They can give the same rate reductions directly to consumers who walk in on their own, when given half an excuse to, and when they feel they have to, to land a good customer. Better rates can come with first-time buyers (who become loyal, and eventually get richer), and who bring the financial institution more business immediately. So go talk to the financial institution managers directly and say you will bring over two chequing accounts, credit cards, retirement investment accounts, etc. You can have extra 'products' which you rarely use, so long as you aren't wasting money on fees. The only personality you should pay for is better service and less hassle with the people you will deal with regularly. Easy payments, flexibility to make accelerated payments, ability to re-negotiate, secured line of credit options, and no worries about fly-by-night operators. If you only make regular mortgage payments on auto-pilot, you might not be speaking to them again for 5 years.
Hi there,
Had the opportunity to use a mortgage broker twice in the last year. Luckily, I found a gal I like, sharp as tacks, and knows her stuff. Here are some of my guidelines for people I do financial business with. In order of importance:
1. Competence
2. Competence
3. Competence
The best reason for using a mortgage broker is not the rate. It is to help YOU (and your specific financial criteria) qualify for the best loan possible for YOU, not Joe down the street. There are many types of loans out there. Most of the differences involve:
a. Assets......stated vrs verified
b. Income......stated vrs verified
c. Down payment......how much.....where from......etc
d. First time buyer?
This is how mine worked. I wanted to buy a three family investment property, but did not want to tap into my primary home for equity.....so....limited funds. She pulled my credit, called me and reccomended.......close this acct#.....transfer X$ from Visa to MC (got to keep any CC's under 30% of avail bal) wait 30 days, crewdit score will improve by X points, which will allow you to qualify for Co. Y who is more leniant on % down for investment properties.
This is the kind of expertise you should have. Anyone can shop rates, a good broker will get you the best deal for your particular situation.
PS. at closing, the gal proved to be sharper than my $250.00/hour attorney, not to mention the realtors.
Bottom line...........I could not have done the deal w/o her....so she got my call again when I refied 4 months later to pay for the work on the rental.
In Maine, the state housing authority runs classes for first time home buyers at very low cost.
It covers the nuts and bolt of homebuying, and explained the issues you could face, such as predatory lending (higher rates for low credit scores etc) as well as hiring an agent etc.
Taking the class also made us eligible for special types of loans, first time home buyers programs, rural development loans etc. We didn't go with the special programs, but it's an option.
Great point about the mortgage being sold to another broker/bank. You may be constantly changing where to send your check- our bank doesn't sell their mortgages so we'll be sending it to the one place all the time.
Lastly, not to pry, but what's the legal arrangement between you and the GF in buying this house. May want to consider that too.
Mike,
You may want to talk to some of the local banks in addition to the brokers. Most of the brokers will just sell your mortgage within a month anyway. There are a number of extra expenses that you need to get a handle on, application fee, points, closing costs, title fee, etc. Sometimes, the advertized interest rate isn't what you will get and with other expenses, you may be better paying a slightly higher rate.
There are a few mortgage companies that will take your application fee and refuse you the loan due to some inconsequential late payment in your past. Everything will be based on your credit history and amount of down payment.
It won't cost you anything to at least investigate, Gorham Savings, Key, Peoples and Norway. They are long established in Portland and loan officers are in the office for free consultations. Don't let the interest rate cloud over the actual total costs.
Beat it to fit / Paint it to match
sorry, I didn't realize that you were right in Portland when I posted my earlier message. Check out Bath Savings on Rt 1 in Falmouth, my understanding is that they won't sell the morgage.
Here's the link to the Maine State housing's first time buyers info and the home ownership classes.
http://www.mainehousing.org/1stbuyer.html
http://www.mainehomeworks.org/
Thanks for the info. We actually have accounts at Key and Gorham Savings, and have heard good things about Bath Savings. Most of what we've read leads us to believe that mortgage brokers are better than banks at providing mortgages, especially to first-time homebuyers like us with modest savings and average credit.
Both brokers we talked to said the FHA and Maine State Housing loans were good ideas when the market is soft, but the requirement for the condition of the property will turn off most sellers who can sell a home in less than pristine condition. Also, they said the reduced loan rate only applies if you don't sell for seven years, which we may do. Of course their opinion may be a bit biased.
We're heading off for a couple of days, but thank you everyone for all the great advice!
Mike
Amasa13,
I'll bump your post to Mike, the original poster, just in case he misses it.Beat it to fit / Paint it to match
I suggest you find yourself a Buyer's Agent (Realtor). That's a realtor who only works with buyers. They spend their whole day looking at properties and talking with mortgage lenders. The best agents will not remind you of car salesmen or sweet Aunt Maude. They'll be professional. They will make the commission on the sale, the same commission that the for sale by owners keep in their pockets. A Real Estate Commission looks over their shoulder. Let them know that they have your business and you'll get the best service out there.
Me, I'm also a builder so I have to be a listing Broker.
Good luck, Joe
Thanks Joe, we actually have a buyer's agent, a friend of ours who is very professional and knowledgable (or so it seems to us!), in fact she recommended one of these brokers (the one with no personality) to us. Last time we talked she just said to talk to brokers; I guess we could ask her what she thinks the next step should be too.
Mike
Update: This past weekend was pretty intense. We saw a house Saturday AM, nice little cape style on a street of older homes, mix of single and multi-family. Big old trees, close to shopping, quiet. House had already been "done over"--new roof, new paint, walls removed, replacement windows, new boiler--all the things I was planning to do to whatever house we end up with, but the potential of moving into a house that was already finished didn't sound so bad. We went back to the realtor's office to write up an offer.
On the way over to the office, our realtor got a call back from a house she'd seen in the paper, in one of the oldest, best sections of town, an area we didn't think we'd be able to afford. Nice 1920's house, could be lived in but everything inside and out could stand to be restored. Corner lot with southwest exposure, great light. With maybe $75k worth of work spread out over the next several years the house could easily gain $100k to $200k in value. We fell in love quickly, and put in an offer for the asking price on that house instead.
Sunday we heard back that although our bid was higher, the owner decided to go with a lower, cash offer. Sucks but oh well. Shows what a good deal it was.
Also on Saturday I found out my grandmother had passed away, so that made for a pretty emotional weekend, but we're staying on track.
Since this was kind of a rush deal, we had to get in touch with the broker we had more or less decided to go with, but couldn't, so we we called the other broker and told him our situation. He said he'd match the terms of the other guy's 80-10-10 offer but fix the APR on the second mortgage, which made us happy. As interest rates inevitably rise it will be nice to not have to watch that second mortgage creep up.
We decided to go with the 80-10-10 over a 90% loan with PMI. The payments on the second mortgage are all interest for the first 10 years, by which time we will probably have sold the house anyway, so might as well take the tax deduction. We think that was the right choice, but it's hard to know for sure.
That's it for now. Thanks everyone for their help and advice!
Mike
Maybe someone already said this. I did not read all the other responses. You should buy the current issue (May) of Consumer Reports. The cover story, on page 12, will answer some of your questions.
Beware of sleazy mortgage brokers who tell you one thing then show up at the closing with another deal. Now they've got you over a barrel and they know it. You've made arraingements to move out and have no where to go if you dont close. Get it in writing, everything, rate, points, term.
I showed up at my first closing with my pick-up loaded like the beverly hillbillys. When something went wrong I asked my attorney what are my options. He said accept it the way it is or we can meet back here in a couple of weeks and do it again. So I got up to leave. It was only then the sellers attorney scrambled into action.
I have been very happy with credit unions when financing a mortgage. They tend to be very personal and competitive on rates. These days it is pretty easy to join one.
Regards,
Ken
"Do as you would be done by." C.S. Lewis
Well, after looking at many houses we're under contract on one we like! Decent house, but smallest/worst condition in the neighborhood which is perfect for us because we can take full advantage of sweat equity. It even has a shop space (technically a garage space, but it will never see a car)! We're very excited. Thanks everyone for their help.
Also, in case anyone is interested, this week was my GF's 30th birthday and I bought her an engagement ring! Quite a week.
Mike
Mike
Let me be the first to congratulate you on all counts. You dealt with the birthday, the house and got a fiancee to boot. Lots of luck to you. Now, can she swing a hammer...?
Thanks Hammer--she is comfortable with sandpaper and with a paintbrush, which is perfect because those are two tasks I'm not crazy about. Just one example of our complimentary qualities!
Mike
Mike, you are making stuff happen! Way to go!
I was reading your post above and the part about the house that had already been done and you could just move in. Man do I wish that described our current house... but this is a fixer. As it stands I've done the foundation and the exterior, but it needs kitchen and bath remodeling, a few walls moved, floors done, walls done, lighting, and it goes on and on. I'm in the middle of several things and none of them are getting done quickly because I have so much other work (and need it to pay the mortgage). If you see another house that's already done, don't write it off!
Congratulations on both the house and the engagement!"But I say to you who hear, love your enemies, do good to those who hate you, bless those who curse you, pray for those who mistreat you.... and just as you want people to treat you, treat them in the same way."