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Okay, first you need to know where you stand credit wise, and secondly, find out how much of a home can you afford... The difference between brokers/lenders and banks is that the bank will sell you the only options they have avaliable, as where a broker/lender shops you around with other lenders and bankers and finds you the best options available. Yes brokers charge points, but on the same note Banks do not diclose the L.O.'s compensation. So both have their do's and don'ts... There are many online calculators to help you determine how much of a house can you afford, and will give you an idea of mortgage payments. As for a first timer there are a million products out there for everyone. On personal experience countrywide has great rates right now and they are offering no closing costs and some other incentives on their retail side. In other words going straight to them... Currently the minimum score required for a 6.25% is a 640 and that is only going 95% LTV (5% down payment) (As of Friday) unsure if rates will change on Monday., Ohh IndyMac came back with jumbos (100%LTV) but you would have to use a broker to go with IndyMac. Good Luck
Quote:
Originally Posted by MaryG601
Someone please give me information on a first time buyers loan. I dont have excellent credit but it's not aweful either. I have a great work history but make less than 50k a year. Someone mentioned something to me about a foa loan or something that sounded like that. Also with a first time buyers loan do I have to have a down payment? HELP!
Okay, first you need to know where you stand credit wise, and secondly, find out how much of a home can you afford... The difference between brokers/lenders and banks is that the bank will sell you the only options they have avaliable, as where a broker/lender shops you around with other lenders and bankers and finds you the best options available. Yes brokers charge points, but on the same note Banks do not diclose the L.O.'s compensation. So both have their do's and don'ts... There are many online calculators to help you determine how much of a house can you afford, and will give you an idea of mortgage payments. As for a first timer there are a million products out there for everyone. On personal experience countrywide has great rates right now and they are offering no closing costs and some other incentives on their retail side. In other words going straight to them... Currently the minimum score required for a 6.25% is a 640 and that is only going 95% LTV (5% down payment) (As of Friday) unsure if rates will change on Monday., Ohh IndyMac came back with jumbos (100%LTV) but you would have to use a broker to go with IndyMac. Good Luck
bankers charge loan origination fees . just a nifty name for a point they get ysp also they just dont have to disclose them.
Don't be confused. The scores given directly by the three credit bureaus themselves are fine and in conjunction with the report detail given by them they are exactly what you need/want to see where you stand credit-wise.
I've found of high importance to ask whatever institution you plan to get a loan with what credit bureau or bureaus they check - that way there is no surprise on your end with the score/report they retrieve and ask you about.
This statement is misleading. The scores they credit bureaus give are "useless" in conjunction with the report detail. The report detail is important because it shows exactly what each report. The bureaus do not give you a FICO score.
The scores they issue are their own scoring model, and are not used by 95% of the lenders out there. They are almost always higher than an actual FICO score. So buying them is utterly useless. Imagine building a house... builders here use the measure of a foot to build said house. What if a builder used their own made up measurement called a "garblemont". Well that builder who made up the garblemont could probably build a house correctly, however if the rest of the world doesn't use a garblemont, then what use would it be? A FICO score is just like a "foot"... it's what lenders use, not the silly garblemonts that the bureaus sell you to make a profit.
The newest scoring model will have a significant change as it will take out the AU information for credit scoring.
I have worked with LendingTree one of the largest online lenders, Bank of America..the largest retail bank in the US, and they both used Credco's FICO 04 score model.
and of course their scores are going to be higher with when the borrowers pull it.....it doesnt affect them when they pull their own scores. If they go to a lender they can expect a few points lower because of the creditor pull.
I'm not sure where you're getting this information from......
Quote:
Originally Posted by UseJeff
This statement is misleading. The scores they credit bureaus give are "useless" in conjunction with the report detail. The report detail is important because it shows exactly what each report. The bureaus do not give you a FICO score.
The scores they issue are their own scoring model, and are not used by 95% of the lenders out there. They are almost always higher than an actual FICO score. So buying them is utterly useless. Imagine building a house... builders here use the measure of a foot to build said house. What if a builder used their own made up measurement called a "garblemont". Well that builder who made up the garblemont could probably build a house correctly, however if the rest of the world doesn't use a garblemont, then what use would it be? A FICO score is just like a "foot"... it's what lenders use, not the silly garblemonts that the bureaus sell you to make a profit.
I'd steer clear of all mortgage brokerages and bring your business directly to a federal credit union or to a bank. I recommend this as a first-time buyer so you don't get pushed into obtaining what I would call a creative-mortgage (which are generally creative to make them easier and more profitable for a brokerage to sell to other loan institutions). Brokerages will sell your loan to others who will probably sell your loan to others and indeed as your first mortgage I would suggest to you that you do not want to deal with this ongoing issue but instead with an institution you can form the foundation of a long term banking relationship with.
Brokerages do not sell your loan, they "broker" your loan to a lender. Meaning they access tons of lenders, and generally place you with the one offering the best rates and terms. Almost any loan can be sold on the 2ndary market, regardless of who originates the loan.
We've already gone into this in countless other threads, but to reiterate... brokerages have access to wholesale rates, and more often than not offer lower rates than a bank, unless you're a golden borrower, then banks/credit unions could win out. The intelligent person would explore all of their options, and not limit themselves based on one opinion. They would check a reputable broker, bank, credit union, and possibly a retail lender.
The creative mortgage is pretty much non-existent these days, however the intelligent person would research how mortgages work to be sure they are not misled by any loan officer. Just because they work at a bank/brokerage/credit union does not mean they will not intentionally mislead, or unintentionally mislead do to overall lack of understanding and experience in the industry.
Quote:
Originally Posted by mbuszu
I suspect after talking with a couple institutions in your vicinity which do loan origination (and not brokering), you will have better understanding of what you really can or cannot get approved for. Whatever you do, do not sign for an interest only, balloon payment, or any mortgages which have prepayment penalties assigned. If you see any of those things I submit to you that they are creative financial products which in the end will have cost you more money than something more traditional (even though short-term they may appear to save you some money - perhaps an upfront down payment or closing costs). Lastly, if you need a little longer to save up for a down payment so you can get a traditional loan product, then by all means, rent an additional year and save.
A loan with a prepayment can be a good thing, I presume that he meant to say don't do a short term loan with a prepayment penalty. If I was doing a 30 year fixed at 6.75%, I would take a 3 year prepayment penalty all day long if they gave me a 6.25% for doing so. If you have a fear of the prepay, you shouldn't be doing a 30 year fixed in the first place, as you pay for the extended rate.
A balloon payment is much more dangerous, however it could be beneficial as well. To say it's bad isn't logical. For example, many people do 30 year fixed loans with a 50 year amortization. This allows them a lower more affordable payment which is fixed for 30 years, in which they pay principal. Yes there is a balloon payment at the end of 30 years, but as long as you're aware of it it's fine.
The comment on interest only holds true to a point. You shouldn't be doing any short term loan in this day and age to allow you to afford your payment, unless of course you have no choice (refinancing a current adjustable). However, an interest only ranging from 5-10 years interest only can be very beneficial in many situations. The person who knows they are advancing in a company and will continue to increase their income can use an interest only to keep payments within their income. It can be used by people who prefer to invest their money into liquid investments instead of into their house. A house will go up or down in value regardless of what you owe on it, and you can only access your equity by borrowing or selling.
The advice on waiting until you can afford a house is very sound advice.
Brokerages do not sell your loan, they "broker" your loan to a lender. Meaning they access tons of lenders, and generally place you with the one offering the best rates and terms. Almost any loan can be sold on the 2ndary market, regardless of who originates the loan.
We've already gone into this in countless other threads, but to reiterate... brokerages have access to wholesale rates, and more often than not offer lower rates than a bank, unless you're a golden borrower, then banks/credit unions could win out. The intelligent person would explore all of their options, and not limit themselves based on one opinion. They would check a reputable broker, bank, credit union, and possibly a retail lender.
The creative mortgage is pretty much non-existent these days, however the intelligent person would research how mortgages work to be sure they are not misled by any loan officer. Just because they work at a bank/brokerage/credit union does not mean they will not intentionally mislead, or unintentionally mislead do to overall lack of understanding and experience in the industry.
A loan with a prepayment can be a good thing, I presume that he meant to say don't do a short term loan with a prepayment penalty. If I was doing a 30 year fixed at 6.75%, I would take a 3 year prepayment penalty all day long if they gave me a 6.25% for doing so. If you have a fear of the prepay, you shouldn't be doing a 30 year fixed in the first place, as you pay for the extended rate.
A balloon payment is much more dangerous, however it could be beneficial as well. To say it's bad isn't logical. For example, many people do 30 year fixed loans with a 50 year amortization. This allows them a lower more affordable payment which is fixed for 30 years, in which they pay principal. Yes there is a balloon payment at the end of 30 years, but as long as you're aware of it it's fine.
The comment on interest only holds true to a point. You shouldn't be doing any short term loan in this day and age to allow you to afford your payment, unless of course you have no choice (refinancing a current adjustable). However, an interest only ranging from 5-10 years interest only can be very beneficial in many situations. The person who knows they are advancing in a company and will continue to increase their income can use an interest only to keep payments within their income. It can be used by people who prefer to invest their money into liquid investments instead of into their house. A house will go up or down in value regardless of what you owe on it, and you can only access your equity by borrowing or selling.
The advice on waiting until you can afford a house is very sound advice.
Very good post this is all true every loan has there place. I have worked for both a bank and broker,I have found I can give clients better deals most of the time through the broker. Also IOs are good for people who no they are selling in five years or so and want the lower payment, it is like renting but reaping the benefits of appreciation on the home, These were very good when prices were climbing.you dont pay off much princaple in the first five years anyway.
UseJeff - I know you're a Broker... NY62 are you one as well? I see you both provide advice to visit brokerages contained in a lot of other factual text. I'm totally impressed with the body of knowledge you have, but I'm not impressed with your delivery because you have something to sell, and you're working to sell it on this forum (come on folks, even if you disagree you must admit that you can understand this point of view?).
I'm not in the mortgage business. Nonetheless, nothing I've said is directly wrong. You may pick apart my opinion (or specific words used), but I stand by it with multiple loans and several years of experience behind it. If someone has a different opinion, that is obviously cool, but be forthcoming if indeed you have financial or professional interest in one opinion being supported over another.
For someone looking into obtaining their first mortgage, I advise you to stay away from Mortgage Brokers. If you do opt to visit them, then go with your eyes open (the same way you would visit a used car dealership - looking for a deal you might not find somewhere else, but aware that the fellows doing the selling may try to make something appear like a deal when it isn't). The people at brokerages will most certainly present you with many more options than you would see at a Bank or Credit Union, and indeed there will potentially be more of a "sell" involved. Not all brokers are "bad" but for the layperson who just wants to get a loan for their first house, going the broker route potentially complicates things and developing a long term relationship with a financial institution such as a bank or credit union has benefits that the short term benefit of working with a broker cannot match.
Lastly, I tell you from direct experience, the hassle of keeping up with who currently owns your mortgage, sending them a hardcopy check rather than being able to use electronic banking, and potentially seeing your mortgage bill due dates change as ownership changes is not worth whatever potential benefit you are told you will gain in seeking out a broker. These folks specialize in like I said "creative financial products" (this terminology has been challenged even though I said it was my own). These financial products may decrease your monthly bill and/or required down payment, but you may see higher closing costs, prepayment penalties, interest rates which vary, or a balloon payment structure (or any combination of these). It has been my experience that the brokers I worked with weren't upfront about what these things really mean (everything they told me about implied these were excellent things despite a prestine personal credit record and market conditions which really meant they weren't good financial products).
All that said, I don't wish my experiences written here to be misconstrued nor expanded upon by others. I'm sure others have had and will continue to have excellent experiences working with banks and brokers alike. I just want to share what I experienced as a consumer and my resultant opinion in case it can benefit others. Once you're locked into a mortgage, refinancing with a prepayment/refinance penalty over your head is literally a costly endeavor. It's not like buying a car, it is more expensive and this is likely to be the largest investment of your life. A few thousand here or there really can add up - and unless you are independantly wealthy, then you ought to care.
Last edited by belovenow; 08-27-2007 at 08:38 AM..
I was just stateing my opinion like you did yours. I am not selling anything. you have to remember not everyone has prestine credit either ,so if they walk into washington mutual they could just tell that person no because they dont meet there guidelines. I also stated that those loans you described as creative financial products are good for certain situations, the problem is and you are correct that some loan officers were pushing people into them, not careing about the person and what there financial needs were. You see some of those the LOs got paid very well for those types of loans, but the banks did that offering 3 points in some cases. I also said find someone who is trustworthy. Banker, broker it does not matter. I as a broker and I have worked for both do the rite thing by people maybe you have had bad expieriences I dont know. I will put people where it is best for them, most of the time 30 year fixed with a good bank that does not sell there mortgage. I could go on but I dont want to get in a pissing match with you,not every broker does what you imply and not every banker is straight forward either. You have got prestine credit you can go and do whatever you want , most people can not. anyway peace and I am not here for any other reason but to help people.
NY62 I'm glad you mentioned that you're a broker - that's very straight-forward of you. I am in agreement with most everything you have thus shared.
No hostilities with you at all - peace for sure. Of course it is your choice but I suggest that when you recommend someone to use a broker vs a banker on this forum that you also likewise mention your profession in the same or next sentence because it is directly relevant.
It is just as I would expect a realtor when talking about For Sale By Owner (FSBO) situations versus hiring a licensed realtor to be upfront about their own credentials. I think it adds real value to a forum like this. It also demonstrates professionalism and potentially adds credibility to what you post as an industry insider.
you must've had a bad experience or heard bad things about brokers.
over 60% of the loans in the US are funded by brokers.
I worked at Bank of America, and there's nothing special about obtaining a loan there. BECAUSE they deal with SOO many clients you cant remember every single person who walks in the door. Banks generally have higher rates than brokers because of the overhead. I work for one of the largest brokers in the US, but we dont have million dollar commercials to pay.
We receive 'wholesale' rates which allows us to mark up the price as much as a bank or lower it to be competitive. Brokers also deal with companies like Taylor Bean Whitaker which isnt OPEN to the public.
Taylor Bean Whitaker can give a FHA mortgage, 400 credit score, at a rate of 6.875% or lower. YOU CANT GET THAT ANYWHERE! they dont have hits for lower loan amounts or manual underwriting.
Working at the bank was a nightmare for mortgages. You cant close less than 30days, and processing/underwriting was always in a different state.
If they didnt qualify TRY telling this to a customer of THE BANK with a straight face. They always asked....can you put us in another program? SORRY was my answer...and they would always say...SHOULD'VE WENT WITH THE BROKER.
Quote:
Originally Posted by mbuszu
UseJeff - I know you're a Broker... NY62 are you one as well? I see you both provide advice to visit brokerages contained in a lot of other factual text. I'm totally impressed with the body of knowledge you have, but I'm not impressed with your delivery because you have something to sell, and you're working to sell it on this forum (come on folks, even if you disagree you must admit that you can understand this point of view?).
I'm not in the mortgage business. Nonetheless, nothing I've said is directly wrong. You may pick apart my opinion (or specific words used), but I stand by it with multiple loans and several years of experience behind it. If someone has a different opinion, that is obviously cool, but be forthcoming if indeed you have financial or professional interest in one opinion being supported over another.
For someone looking into obtaining their first mortgage, I advise you to stay away from Mortgage Brokers. If you do opt to visit them, then go with your eyes open (the same way you would visit a used car dealership - looking for a deal you might not find somewhere else, but aware that the fellows doing the selling may try to make something appear like a deal when it isn't). The people at brokerages will most certainly present you with many more options than you would see at a Bank or Credit Union, and indeed there will potentially be more of a "sell" involved. Not all brokers are "bad" but for the layperson who just wants to get a loan for their first house, going the broker route potentially complicates things and developing a long term relationship with a financial institution such as a bank or credit union has benefits that the short term benefit of working with a broker cannot match.
Lastly, I tell you from direct experience, the hassle of keeping up with who currently owns your mortgage, sending them a hardcopy check rather than being able to use electronic banking, and potentially seeing your mortgage bill due dates change as ownership changes is not worth whatever potential benefit you are told you will gain in seeking out a broker. These folks specialize in like I said "creative financial products" (this terminology has been challenged even though I said it was my own). These financial products may decrease your monthly bill and/or required down payment, but you may see higher closing costs, prepayment penalties, interest rates which vary, or a balloon payment structure (or any combination of these). It has been my experience that the brokers I worked with weren't upfront about what these things really mean (everything they told me about implied these were excellent things despite a prestine personal credit record and market conditions which really meant they weren't good financial products).
All that said, I don't wish my experiences written here to be misconstrued nor expanded upon by others. I'm sure others have had and will continue to have excellent experiences working with banks and brokers alike. I just want to share what I experienced as a consumer and my resultant opinion in case it can benefit others. Once you're locked into a mortgage, refinancing with a prepayment/refinance penalty over your head is literally a costly endeavor. It's not like buying a car, it is more expensive and this is likely to be the largest investment of your life. A few thousand here or there really can add up - and unless you are independantly wealthy, then you ought to care.
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