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Old 08-21-2007, 09:20 PM
 
Location: Missouri
6,044 posts, read 21,135,535 times
Reputation: 5033

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Credit Union?
Local bank?
A mortage broker?

I have been a long time member of my credit union and used them for a variety of purposes over the years (car loan, personal loan, CDs, etc.) but they are out of state and I am wondering if that could cause problems with a mortgage (although their website says they do out of state mortgages). Also the mortage interest rates they have posted on their website seem a little higher than what I have seen advertised.

We could go to a local bank, but which one? A big chain bank or a small, local establishment?

Or a mortgage broker? If so, how to chose one? I had a mortgage briefly once before and used a mortgage broker. Towards the end of the process I noticed on the paperwork, the broker put down my ethnicity as "Eskimo" and my then-partner as "Black." We were clearly white/caucasian. I should have called him on it but I didn't, and it left a bad taste in my mouth.

Any advice would be appreciated.
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Old 08-21-2007, 09:43 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,097,622 times
Reputation: 1007
Sometimes it depends on what you're putting down, what's your credit score, are you looking for a 30yr fixed? etc.

Ever lender has their 'niche' and this is how we mortgage brokers can place you into a program. If you were looking for 0down then it would be fair to put you in a FHA or MyCommunity Mortgage. Not many lenders offer this program so you're leaving yourself optionless when going to one institution.

I worked at BofA, LendingTree, and now one of the largest brokers in the US.
It used to really bother me when we couldnt offer FHA or other products to service my clients. Many banks only deal with 'A' Paper. There are great lenders that only deal with 'wholesale' not retail. Meaning they will also offer their mortgages through brokers.

Also, you stated the 'rates' were kind of high? What are you comparing your rates to? Remember that websites like bankrate.com offers 'vague' info on REAL RATES. After calling the 3-4th lender on the list, you will see that it is more than just a rate. It works like the gasoline theory.

You see Shell offer 2.99 per gallon, and Chevron places theirs at 2.98.
El Cheapo gas station sees it and offers 2.97.
Many ppl will offer the 'lowest' which may not even be available.
"Always make sure to check the price at the pump with the price on the sign"

What rate did you see? Make sure to compare it to a credible source like Freddie Mac's Homepage. These rates are with ACTUAL closings, and as you know only borrowers with good credit are appearing.


Quote:
Originally Posted by christina0001 View Post
Credit Union?
Local bank?
A mortage broker?

I have been a long time member of my credit union and used them for a variety of purposes over the years (car loan, personal loan, CDs, etc.) but they are out of state and I am wondering if that could cause problems with a mortgage (although their website says they do out of state mortgages). Also the mortage interest rates they have posted on their website seem a little higher than what I have seen advertised.

We could go to a local bank, but which one? A big chain bank or a small, local establishment?

Or a mortgage broker? If so, how to chose one? I had a mortgage briefly once before and used a mortgage broker. Towards the end of the process I noticed on the paperwork, the broker put down my ethnicity as "Eskimo" and my then-partner as "Black." We were clearly white/caucasian. I should have called him on it but I didn't, and it left a bad taste in my mouth.

Any advice would be appreciated.
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Old 08-21-2007, 10:57 PM
 
Location: WA
5,293 posts, read 20,709,725 times
Reputation: 5622
I started inquires with my credit union, a local bank, and three brokers. Was able to pare down to the best deal with one broker pretty quickly. I found the three brokers on the internet based upon references and can PM the contact if you are interested.
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Old 08-22-2007, 09:42 AM
 
Location: Missouri
6,044 posts, read 21,135,535 times
Reputation: 5033
Thanks for the tips. We want a 30 yr fixed interest rate loan, we'll be putting 20% down, prefer to not pay points. You were right; my credit union's rates are pretty close to what Freddie Mac has posted (0.5% higher). I think when the time comes (we're shooting for October) I'll compare options between a broker and my credit union.
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Old 08-22-2007, 11:13 AM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,097,622 times
Reputation: 1007
20% is very good! you should be getting the best rate with that.

Quote:
Originally Posted by christina0001 View Post
Thanks for the tips. We want a 30 yr fixed interest rate loan, we'll be putting 20% down, prefer to not pay points. You were right; my credit union's rates are pretty close to what Freddie Mac has posted (0.5% higher). I think when the time comes (we're shooting for October) I'll compare options between a broker and my credit union.
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Old 08-22-2007, 12:11 PM
 
4,543 posts, read 11,549,619 times
Reputation: 3063
Quote:
Originally Posted by christina0001 View Post
Thanks for the tips. We want a 30 yr fixed interest rate loan, we'll be putting 20% down, prefer to not pay points. You were right; my credit union's rates are pretty close to what Freddie Mac has posted (0.5% higher). I think when the time comes (we're shooting for October) I'll compare options between a broker and my credit union.
Based on today's pricing, 20% down, decent to good credit and 0 points, you should be shooting for 6.5%. 6.25% wouldn't be bad, but if you "work" them you should be able to get the 6.5%
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Old 08-22-2007, 12:13 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,097,622 times
Reputation: 1007
Depends also on the loan amount, and what fees she will be paying on the front as well. 6.25% is almost at PAR, and highly doubt anyone is getting that.

Quote:
Originally Posted by TimtheGuy View Post
Based on today's pricing, 20% down, decent to good credit and 0 points, you should be shooting for 6.5%. 6.25% wouldn't be bad, but if you "work" them you should be able to get the 6.5%
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Old 08-22-2007, 01:17 PM
 
4,543 posts, read 11,549,619 times
Reputation: 3063
Quote:
Originally Posted by banker0679 View Post
Depends also on the loan amount, and what fees she will be paying on the front as well. 6.25% is almost at PAR, and highly doubt anyone is getting that.
Sorry, I missed the "6" in their. Should read 6.625% which goes with my commentary of shoot for 6.5, but 6.625 would not be bad.
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Old 08-22-2007, 01:25 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,097,622 times
Reputation: 1007
TIM I WAS ABOUT TO SAY! you almost gave me a heart attack lol
i almost thought you were one of those bait/switch guys lolol

Quote:
Originally Posted by TimtheGuy View Post
Sorry, I missed the "6" in their. Should read 6.625% which goes with my commentary of shoot for 6.5, but 6.625 would not be bad.
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Old 08-22-2007, 04:13 PM
 
Location: California
510 posts, read 2,968,916 times
Reputation: 383
Quote:
Originally Posted by christina0001 View Post
Thanks for the tips. We want a 30 yr fixed interest rate loan, we'll be putting 20% down, prefer to not pay points. You were right; my credit union's rates are pretty close to what Freddie Mac has posted (0.5% higher). I think when the time comes (we're shooting for October) I'll compare options between a broker and my credit union.
You mentioned not paying any points, and generally this is a good thing. One thing to note though, is that you're after a 30 year fixed. I assume you want this loan because you don't plan to refinance anytime in the near future. Here's a couple things to consider though.

There are two types of "points"... one type is origination points, in which the retail lender/broker is charging you to make their money. If they charge no points, you will get a higher rate, and they will make money in the form of a rebate. The other type is a discount point. This is actually used to buy your rate down lower than it would be with no points. Banks tend to lend their own money, so their origination point could be called a discount point, and you'd really have no way to know.

So, with that being said...here is what you might want to consider. Typically 1 point (1% of the loan amount) gets you a lower rate by .375%-.5%, to a certain point. Once the rate gets too low, it gets way overpriced to buy down the rate. Essentially they create a floor rate, without actually having one.

I'm not by any means telling you to go pay points, I just want to show how they could benefit you. If you do a $500,000 loan at 6.75% you pay $2812 a month in interest. If you pay 1 point ($5,000) and you lower your rate by .375% you would now pay $2656 in interest per month. You will be paying $155 less a month in interest. If I divide the additional $5,000 by the $155 a month savings, it takes you just over 32 months to break even. From here on out you'll be saving $155 a month in interest, that no longer gets paid to the bank. Granted, the savings drops over time as your balance gets paid down, because you pay less in interest on a lower balance... but, even if it averages out to $100 over 360 payments... that's a pretty decent savings... Of course the other end of the argument would be to invest the $5,000 and figure out what it would be at the end of 30 years as well... I'll leave that math to WallStreetWarrior

I'm out of the office currently so I don't have access to the calculator I'd prefer to use... but you could apply that $155 a month savings to a principal payment and pay off your house much more quickly than 30 years. Or you could simply invest it... If you can get a full .5% for 1 point, then it's really worth the investment. Basically, as long as you plan to be in the loan longer than 5 years, and you can afford the extra chunk down, you will save money in the long run.

Just a thought...
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