The Situation: My wife and I have conducted a fairly lengthy search for a new home, and we have finally found one which meets most of our needs. Due to a variety of issues, however, we had more or less decided to wait until early 2009 before making an offer. While we have stated that we most likely will not make an offer in 2008, we haven't made a firm declaration to either the buyer's agent or mortgage broker.
The Mortgage Broker: We are not committed to a single mortgage broker or banker. However, we have been speaking a lot with a broker who works with the lending arm of the real estate firm for which our buyer's agent also works. I've tried to educate myself about mortgage products, and understand par rate, YSP, second mortgage products, et cetera. I'm not even an amateur expert, however.
The Pressure: Perhaps as a result of the above, we have been getting subtle, or perhaps, not so subtle pressure from our agent and this particular broker (I have spoken to other brokers, independent of this broker, who have not been as "tightly" involved).
The Offer: The broker and agent have worked out a potential offer which would allow us to purchase the house before 2009 (when additional cash flow would be available to us). There's nothing about the arrangement which appears illegitimate, as it essentially boils down to the seller buying down the mortgage rate on our behalf, and covering all closing costs. However, it's a simple fact that the simpler the transaction, the less the chance that we miss something. When the calculus gets complicated, it's hard to know exactly what we're paying, and what we're paying for. Furthermore, as the arrangement/offer was unsolicited by my wife and I, it raised a few questions.
The Questions:
- Which parties stand to gain most from closing a sale within the calendar year? The sellers, the broker, the agent, or all three? Obviously, it helps any person operating on commission to sell something sooner rather than later, and I understand that the seller has carrying costs which he or she would like to reduce, but is there something unique about the difference between closing Dec 31st instead of Jan 1st, as opposed to closing Jan 1st instead of Jan 2nd? Conversely to the initial question, who stands to lose most from delaying such a close?
- What's the going rate on an origination fee for a two loan package with a par rate conforming 1st loan (at the upper limit) and either a fixed second or HELOC second? Do most mortgage brokers expect to make 1% on a package like this? Our FICO is 800+.
- Does anyone have specific opinions about working with brokers and realtors from the same firm? The answer seems obvious, but since everything must be declared on a GFE, I wasn't too worried about something being "slipped" past me.
- What is the current state of affairs of second mortgages? Are fixed rate products available (in 20 or 30 year terms), balloons, HELOC loans, et cetera? What is the going margin on a $100K HELOC loan these days?
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