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Old 08-27-2008, 12:48 PM
 
120 posts, read 645,451 times
Reputation: 75

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We are looking to buy a house in 250K range and have more than 30K for Down Payment. So, we prefer to do a 80/10/10 . We would like to pay-off the 2nd 10% LTV at the earliest, possibly within 2 years.

With that back ground, here are my 'dumb' questions.

Does the pre-approval from a Bank (BoA, Chase..etc) has more 'value' than a Pre-approval from a Broker (Sorry, someone told me so citing that Banks are more familiar than Brokers)

Will the second mortgage have a significant effect on the closing costs ? If yes, how much ?

Is it possible to do a 80/10/10 with No-Cost (No-cost due to Negative points, not the one that rolls in closing costs to the mortgage amount) ? If yes, how difficult is to find a lender who does that without a prepayment penalty (PPP)?

Is there any minimum time period required before refinance? IOW, Can I take a no-cost loan with no PPP and refinance it after, say, 2 months ?

If we take an 80/10, would it be possible to refinance only the 80% loan and keep the 10% with the first lender ?


I would wish to shop at 2 lenders and 2 brokers. I have been told to apply the same day. But my question is, Will they provide GFEs on the same day / can I Insist on a GFE on the same day of application? Is it asking for too much?

Since we know the location and almost narrowed down the house we are planning to buy, I am planning to use a discount realtor who would cashback some portion of his commission. My question is, if the cashback from Realtor is more than the closing costs, what happens to the extra money ? Can it be used for paying the reserves and Taxes for more than what is required, say for 2 months of Taxes and Reserves ?

TIA
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Old 08-27-2008, 01:12 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,093,116 times
Reputation: 1007
I worked at Bofa, and know the process pretty well.
Their preapproval isn't sufficient to what you may be looking for.
We would take down information, and run it through our system for a preapproval. If it came back preapproved, then you would get a preapproval letter. Most of these loans never made it to the closing table.
The underwriter would actually look at the file 1-1.5 weeks before the closing date. Whether the loan closed or not, I would still get paid.

Brokers normally would look over your documents before issuing a preapproval. I always do this as I don't like to waste the borrower's time or my time.

2nd loans may have recording fees & points. This will vary by lender.
I would recommend that you look for a lender that does LPMI loans (lender paid PMI). This will give you 1 loan at 90% LTV. The rates are slightly higher than 80/10/10, but the payments can be lower.

Quote:
Originally Posted by HereItIs View Post
We are looking to buy a house in 250K range and have more than 30K for Down Payment. So, we prefer to do a 80/10/10 . We would like to pay-off the 2nd 10% LTV at the earliest, possibly within 2 years.

With that back ground, here are my 'dumb' questions.

Does the pre-approval from a Bank (BoA, Chase..etc) has more 'value' than a Pre-approval from a Broker (Sorry, someone told me so citing that Banks are more familiar than Brokers)

Will the second mortgage have a significant effect on the closing costs ? If yes, how much ?

Is it possible to do a 80/10/10 with No-Cost (No-cost due to Negative points, not the one that rolls in closing costs to the mortgage amount) ? If yes, how difficult is to find a lender who does that without a prepayment penalty (PPP)?

Is there any minimum time period required before refinance? IOW, Can I take a no-cost loan with no PPP and refinance it after, say, 2 months ?

If we take an 80/10, would it be possible to refinance only the 80% loan and keep the 10% with the first lender ?


I would wish to shop at 2 lenders and 2 brokers. I have been told to apply the same day. But my question is, Will they provide GFEs on the same day / can I Insist on a GFE on the same day of application? Is it asking for too much?

Since we know the location and almost narrowed down the house we are planning to buy, I am planning to use a discount realtor who would cashback some portion of his commission. My question is, if the cashback from Realtor is more than the closing costs, what happens to the extra money ? Can it be used for paying the reserves and Taxes for more than what is required, say for 2 months of Taxes and Reserves ?

TIA
Quick reply to this message
 
Old 08-27-2008, 05:37 PM
 
Location: Plano, Texas
1,676 posts, read 6,332,679 times
Reputation: 684
Quote:
Originally Posted by HereItIs View Post
We are looking to buy a house in 250K range and have more than 30K for Down Payment. So, we prefer to do a 80/10/10 . We would like to pay-off the 2nd 10% LTV at the earliest, possibly within 2 years.

With that back ground, here are my 'dumb' questions.

Does the pre-approval from a Bank (BoA, Chase..etc) has more 'value' than a Pre-approval from a Broker (Sorry, someone told me so citing that Banks are more familiar than Brokers)

Will the second mortgage have a significant effect on the closing costs ? If yes, how much ?

Is it possible to do a 80/10/10 with No-Cost (No-cost due to Negative points, not the one that rolls in closing costs to the mortgage amount) ? If yes, how difficult is to find a lender who does that without a prepayment penalty (PPP)?

Is there any minimum time period required before refinance? IOW, Can I take a no-cost loan with no PPP and refinance it after, say, 2 months ?

If we take an 80/10, would it be possible to refinance only the 80% loan and keep the 10% with the first lender ?


I would wish to shop at 2 lenders and 2 brokers. I have been told to apply the same day. But my question is, Will they provide GFEs on the same day / can I Insist on a GFE on the same day of application? Is it asking for too much?

Since we know the location and almost narrowed down the house we are planning to buy, I am planning to use a discount realtor who would cashback some portion of his commission. My question is, if the cashback from Realtor is more than the closing costs, what happens to the extra money ? Can it be used for paying the reserves and Taxes for more than what is required, say for 2 months of Taxes and Reserves ?

TIA
First question, the pre approval from either would be worth the same.
Second, 2nd liens generally cost $350 total. there will be significantly more fees on the 1st lien.
Third, You can definitely do a no cost loan, but remember, there are closing costs. When you do a no cost loan that basically means the lender is paying them for you. And they do that by giving you a higher interest rate. As of today, paying closing costs with 1 point origination should get you a 30 year fixed around 6.25%(assuming good credit, ie 700 scores or better) or you can take a rate around 6.875 and pay no costs. And you should definitely have no pre pay penalty regardless of whether you pay costs or the lender pays costs.
Fourth, yes you can. You can refinance 1 day after closing but a lender wouldnt approve the loan unless it made sense.
Fifth, yes you can. But if you refi the 1st lien without refi'ing the 2nd lien, the 2nd lien holder has to agree to resubordinate to the new mortgage. As long as the new mortgage is better, they will almost always allow this.
Sixth, most people want to do what you are saying but basically you want 4 different people to do work but you only want 1 of them to get compensated. Find a good loan professional in your area and let them do the loan. Most professionals look to make about 1 to 1.5% of the loan as profit.
Seventh, that is a better question for a realtor.

Do keep this in mind, it seems like you are trying to find whoever will do the loan for the cheapest and the realtor who will do it for the cheapest. I think that is a bad strategy. if you were ill, are you going to call around and have several doctors bid on what they will charge then go to the cheapest. I doubt it. Your home is the biggest investment you will probably ever make and you want to trust that the cheapest people will give you the best advice and make sure you have no problems, again i find this to be a recipe for disaster. Work with a professional and you will get professional service and results. Just my 2 cents.
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Old 08-28-2008, 03:30 PM
 
Location: New York
2,251 posts, read 4,160,232 times
Reputation: 1607
Let me give you my opinion on the loans your discussing.

By having a 1st and 2nd mortgage, you will eliminate paying PMI, but it will take longer to develop any equity because the second mortgage interest rate is at a higher percentage.

Your question about refinancing the first mortgage only and keeping the first, this is called subordination. It's a pain to do, but it can be done.

I believe the best type of loan you could do is a FHA. These type of loans allow a low down payment, a low fixed rate, and low PMI.

...
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Old 08-28-2008, 03:44 PM
 
Location: Plano, Texas
1,676 posts, read 6,332,679 times
Reputation: 684
Quote:
Originally Posted by Modification Specialist View Post
Let me give you my opinion on the loans your discussing.

By having a 1st and 2nd mortgage, you will eliminate paying PMI, but it will take longer to develop any equity because the second mortgage interest rate is at a higher percentage.

Your question about refinancing the first mortgage only and keeping the first, this is called subordination. It's a pain to do, but it can be done.

I believe the best type of loan you could do is a FHA. These type of loans allow a low down payment, a low fixed rate, and low PMI.

...
FHA are great loans but they charge a upfront mortgage insurance fee of up to 2.25% of the loan amount. But with credit over 680 the fee is 1.25%, which on a $200,000 loan is a upfront fee of $2500. The advise i give to my clients is if your score is above a 680 go conventional, if under FHA starts to become more appealing and if under 660 FHA is the way to go.
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Old 08-28-2008, 10:21 PM
 
Location: Fort Myers, FL
1,286 posts, read 2,594,435 times
Reputation: 249
regardless of who does your loan or what type you get, you will not be allowed anymore than 6% sellers concessions. You dont need a "discounted realtor" to get this either, the seller can contribute it in the contract.
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Old 08-29-2008, 09:43 AM
 
120 posts, read 645,451 times
Reputation: 75
Credit score in in the 780s.

Does FHA have an income limit ?
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Old 08-29-2008, 10:42 AM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,093,116 times
Reputation: 1007
they do not...only a loan limit which varies per county

Quote:
Originally Posted by HereItIs View Post
Credit score in in the 780s.

Does FHA have an income limit ?
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