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Old 10-20-2008, 04:27 PM
 
222 posts, read 778,508 times
Reputation: 64

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I am new to this forum and there is so much I can't read through it all so I hope I am not repeating too much.

We are looking at homes to buy and I want to start getting all of my stuff ready on the mortgage end but I want to know what I am talking about when I shop for mortgages. I know that you should compare rates (which should be about the same) and my brother said to also compare the differences in the origination and other fees for closing costs. I am wondering what else I should compare. Something about a "point spread" was mentioned but I have no idea what that is. I have 4 referrals and I want to make sure I am working with someone that is giving me "standard" fees/rates. Also, once one person pulls our credit score can the rest verbally use that to do estimates or do they each need to pull it? I don't want my credit hit with multiple inquiries (last year our credit scores were in the mid 700s). Any help would be appreciated.

Side note: We lived in a house about 12 years, sold it last year and bought. We sold that one this year because it ended up being farther away from work and family than we wanted. We will only have about 10% to put down because of the decline in home values w/in that year.
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Old 10-20-2008, 05:20 PM
 
Location: Plano, Texas
1,676 posts, read 6,337,485 times
Reputation: 684
Quote:
Originally Posted by Bridget View Post
I am new to this forum and there is so much I can't read through it all so I hope I am not repeating too much.

We are looking at homes to buy and I want to start getting all of my stuff ready on the mortgage end but I want to know what I am talking about when I shop for mortgages. I know that you should compare rates (which should be about the same) and my brother said to also compare the differences in the origination and other fees for closing costs.
You should compare at least 2 offers, or get one offer and post on this site and we can let you know if it is a good deal or not.




I am wondering what else I should compare. Something about a "point spread" was mentioned but I have no idea what that is. I have 4 referrals and I want to make sure I am working with someone that is giving me "standard" fees/rates.
If you are planning on keeping this house for at least 3 years, when you get a price quote let the loan officer know you want to pay closing costs and 1 point origination only. Not sure what you mean about point spread. Keep in mind, getting an interest rate is like buying a new car, you can pay more and get a better car.


Also, once one person pulls our credit score can the rest verbally use that to do estimates or do they each need to pull it? I don't want my credit hit with multiple inquiries (last year our credit scores were in the mid 700s). Any help would be appreciated.
Yes, the next loan officer you speak to can base their quote on the information your provide but keep in mind they must eventually pull credit and will use the score they pull.

Side note: We lived in a house about 12 years, sold it last year and bought. We sold that one this year because it ended up being farther away from work and family than we wanted. We will only have about 10% to put down because of the decline in home values w/in that year.
You can put down as little as 3% going FHA or 5% going conventional. So, if you plan on doing a 10% down payment i would suggest you set up the loan as an 80/10/10. That is a first mortgage to 80% of purchase price, a 2nd lien to 90% of the purchase price, and you put down 10%. This will be much better then doing 1 loan unless your scores are under 680.

Hope this info helped and if you have other questions, keep posting and asking. There are several very knowledgeable mortgage pros on this site.
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Old 10-20-2008, 10:21 PM
 
Location: Dallas, TX
243 posts, read 1,039,319 times
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Not to jump on someone elses thread - but are 80/10/10's still allowed? I asked my broker about that a few weeks ago when I was trying to buy a home (with 10% down) and was told no way -that all I could do was 90% down and pay PMI which was going to work out to $149 a month (the PMI that is), or I could buy it out for a little less than 4K (we were going to go that route til our rate lock was mishandled and I backed out of the deal, I wasn't about to pay more per month due to the brokers mistake). This was with a credit score of high 700's and a home priced in the high 300's.
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Old 10-21-2008, 08:19 AM
 
Location: MID ATLANTIC
7,603 posts, read 17,648,062 times
Reputation: 8099
Like anyone else, it depends on the lender. The seconds are still allowed, but most of the banks stopped giving the HELOCs or the fixed seconds that went with them. Then the banks that are left doing the HELOCs or 2nds won't do the 2nds (with someone else's 1st) unless they get the 1st trust.

To answer your question, yes, they are still allowed, we are doing them every day. Only portfolio lenders are still offering these.
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Old 10-21-2008, 05:09 PM
 
222 posts, read 778,508 times
Reputation: 64
Here is one good faith... I can't get the info to copy/paste, for some reason, so I have retyped the info sent to me


90% PMI
Contract sales price $260,000
Down payment $26,000
proposed loan amount $234,000
Conventional loan @ 30 years 5.750%
loan origination 1% $2340.00
tax service fee $78
title insurance $752
recording fees $65
endorsements $65
application fee $495
loan processing $495
flood cert $19
title doc prep $50
closing fee $125
-------
est. total closing costs $4,484
______________

prepaid interest (15 days) $553
First Years Haz Ins. Premium $520
Hazard ins. reserve (2 mo.) $87
PMI Insurance Reserve (1 mo.) $121
Property tax reserve (2 mo.) $260
-----------
Total Prepaids $1541.00
____________
total prepaids & closing costs $6,025

Estimated total needed to close $32,025

I should have another one in a day or so. Let me know what you think of the fees so far.

Last edited by Bridget; 10-21-2008 at 05:22 PM..
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Old 10-21-2008, 05:16 PM
 
Location: Plano, Texas
1,676 posts, read 6,337,485 times
Reputation: 684
Quote:
Originally Posted by Smokipenelope View Post
Not to jump on someone elses thread - but are 80/10/10's still allowed? I asked my broker about that a few weeks ago when I was trying to buy a home (with 10% down) and was told no way -that all I could do was 90% down and pay PMI which was going to work out to $149 a month (the PMI that is), or I could buy it out for a little less than 4K (we were going to go that route til our rate lock was mishandled and I backed out of the deal, I wasn't about to pay more per month due to the brokers mistake). This was with a credit score of high 700's and a home priced in the high 300's.

2nd liens are still available to 95% CLTV. It appears your broker gave you bad information. It is harder to qualify for a 2nd, you must have a 680 score in most cases.
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Old 10-21-2008, 05:17 PM
 
Location: Plano, Texas
1,676 posts, read 6,337,485 times
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Quote:
Originally Posted by Bridget View Post
Here is one good faith.... I couldn't figure out how to copy paste it so
just type what each line is and the corresponding cost.
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Old 10-21-2008, 07:22 PM
 
Location: MID ATLANTIC
7,603 posts, read 17,648,062 times
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Most good faith estimates mirror the final settlement statement, or HUD I. The HUD I is nothing more than a final accounting of the transaction. The first section of the HUD is lettered A - J, each containing key information about the closing (buyer, seller, date, etc). Then it's a rather boring (and intimidating) balance sheet, broken into different sections. The sections range from 100 - 1300, with each section devoted to different areas of the transaction. The 800's are the lender's fees. If your good faith has the corresponding numbers, it's just the 800's needed.

If your good faith does not have the corresponding numbers, then the only items to concentrate on comparing are:

loan origination, loan discount, appraisal fee, credit report fee, application fee, processing fee, underwriting fee, tax service fee, flood cert, mortgage insurance and any fee that you don't think fits the tax and escrow categories.

The rest of the numbers will be the same, whichever lender you use - they can really confuse the issue.

And if you really want more info or need to induce sleep---->>>

How lenders can make you think they are lower in costs:

Lender #1 may show collecting 2 months of taxes at closing and lender #2 collecting 4 months. 9 out of 10 lenders will collect the same at closing, it really depends on when the taxes are due and what time of year you close.

Prepaid interest: If you are closing on the 15th, you are paying 15 to 16 days interest at settlement. (from the day of closing to the end of the month) Lender #1 may show 2 days and lender #2 shows 15 days. Where it can get tricky is if you close in the first 5 days of the month, there is a way to get the prepaid interest to $0, but your first payment will be due one month earlier.

Title insurance: Many lenders just show the minimum requirement, which is for Lender's Title Insurance and omit Owner's Title coverage. I know very few industry professionals that will tell you to skip owner's coverage.....it's good for as long as you own the home......even if you have 10 different loans during your ownership. OTHER POSSIBLE OPTIONAL ITEMS: Home Inspection, Home Warranty, survey, termite.

Once you get comfortable with the nuances and how the forms can be manipulated, you can shop a little sharper.

.
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Old 10-21-2008, 07:49 PM
 
222 posts, read 778,508 times
Reputation: 64
The good faith that I typed out does not have numbered sections like a HUD. It pretty much looks the same as what I typed but I omitted the items that had "0" cost and theirs was tabbed over better.
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Old 10-21-2008, 08:26 PM
 
Location: MID ATLANTIC
7,603 posts, read 17,648,062 times
Reputation: 8099
Quote:
Originally Posted by Bridget View Post
The good faith that I typed out does not have numbered sections like a HUD. It pretty much looks the same as what I typed but I omitted the items that had "0" cost and theirs was tabbed over better.
Okay, the fees you want to compare with other lenders are:

Loan origination
Loan discount
Credit report fee
Flood certification
Appraisal fee
*Application fee
*Processing fee
*Tax Service
*Underwriting (not present on your estimate)

The lender fees (what I and others call lender junk fees) are just over $1000. (I have placed an asterisk on these). As others have stated before, it really depends on the rate associated with the loan. In my world, just over $1000 is on the high side. Right now in a very slow market, everyone is getting blown away by a very big bank that resembles PacMan with killer rates and their total junk fees are $619. But as long as your rate is in line, it's not terrible.

That said, I would call around to a couple other lenders, but don't let them pull credit (but give them the score), and get a couple more estimates to keep lender #1 honest.
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