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Absolutely get multiple estimates!!!
There is now a glut of lenders, appraisers, mortagage brokers and real estate agents who are a dime-a-dozen and will do anything to get your business. So sit back and enjoy the feeding frenzy....it's a "buyers market
Absolutely get multiple estimates!!!
There is now a glut of lenders, appraisers, mortagage brokers and real estate agents who are a dime-a-dozen and will do anything to get your business. So sit back and enjoy the feeding frenzy....it's a "buyers market
No one is saying not to get multiple quotes.....just know they are worthless unless you are prepared to lock in right then and there. It's easy to play liar's poker and that's all you are going to get when you get tons of estimates......how do you know what is real? You don't.
Example round one: You decide to call 3 lenders on Monday, another 2 on Tuesday and 3 on Wednesday. On Thursday you decide the 1st guy on Tuesday had the best rate, so you call him back to lock it in. He tells you sorry, market moved away, rates are now 1/4% higher than when you spoke. You go back and call everyone back again, all have moved higher.
Round two: Same pattern of calls to lenders, only on Wednesday, the last lender you call is 1/4% below everyone else and will waive all fees. You lock and give them a VISA account number to lock the rate. On Thursday, you hear back from the lender you talked to on Monday and hear that on Wednesday there was a record broken in declining rates and you can now get 1/2% below what he quoted you earlier.
I can go on and on, so-called smooth move after the other where the consumer thinks they got the deal of a lifetime. This was the original appeal of Lending Tree, because making all of these calls are exhausting, but ONE SIZE DOES NOT FIT ALL and to go with Lending Tree is really selling yourself short.
I find it semi-curious that everyone is talking about all these millions or dime a dozen mortgage brokers, but I only know of a few I correspond with in other states. I suspect your news is rather dated, almost all the loan officers I know work for banks, the real estate agents and appraisers have been severely trimmed back from market conditions. I suspect feeding frenzy is wishful thinking, but then, most of my market consists of repeat customers and realtor referrals and niche products (loans no other lenders offer). But, ask the other brokers here (note, only a few, not dozens), I dont' think they're playing the feeding frenzy game either. It sounds like they are working the same referral sources I am, as well.
As hard as it is to believe, when we take calls from someone we have not worked with before, we are 4x more likely to give them bad news before we even get to a credit report.
An appraisal is used to establish an estimate of market value for a property. Typical costs for appraisals run between $350 to $800, depending on the complexity. For a cookie cutter conventional in a stable neighborhood I charge $350. For an older FHA Manufactured House on an acreage with an accessory house, barns, stalls, hotwalker etc, we are talking closer to $1500. So the price is not fixed. In my market a 2500 sf 25 year old house in a neighborhood where there are few sales, we are talking closer to $500.
Lets say that house is selling for $275,000. You are getting ready to finance that house at 100% of appraised value. The sellers have already agreed to sell at appraised value. Let's assume a 30 year fixed at 6%
For a $400 appraisal you get the truth. The house is worth $255,000 not $275,000. Payment on $275,000 is $1,648. Payment on $255,000 is $1,529. a difference of $119 per month, or an overall cost of $119,537.
You shop for and get a discount appraiser who does not do the necessary work. Having seen the contract price, he searches for houses about your size that sell for about $275,000. He delivers it the next day without any additional market research. You save $100 on the price of the appraisal.
Lets not get into the fact that chances are the lenders know that discount appraiser and they have every one of his appraisals reviewed. That the review is going to cost you another $300, but even without that, is going to delay closing another month while they resolve appraisal problems.
How much is that cheap job really costing you? Are familiar with the phrase "Penny wise, pound foolish?" Is it worth 0.003% of the sale price to save $100 today and spend another $120,000 over the life of the loan?
This is so far off, but the quick version is borrowers do not get to select appraisers and now, most loan officers don't either. Many banks have gone to 3rd party services that a broker or correspondent or mortgage lender must use for any loan that is submitted to that bank for approval. This is not fantasy. The particulars of the legislation may be boring to many, but new rules and regs are in place or on the way. Another effort to curtail fraud.
If that was true, the entire appraisor work force would be out of work. This is not true. Apps get certified for the lenders and any that are can be used.
It's illegal to mark up or pad any 3rd party fees that are passed along to the consumer.
Brokers and lenders do add extra fees and markups. As I said, stuff like a credit report and such as real costs and not part of the negotiation. However, you are going to have to look at them as some brokers are crooked and will over charge you. You need to go over all those costs and make sure. Just because it is illegal does not mean someone won't do it. ALL other fees are negotiable...and guess what? I have paid for a clients third party before to help them out, somebody making some money on you may do the same.
Loans are now priced according to risk. This is even true of FHA loans. All one has to do is read their guidelines on the internet to see that even our government has limits on risk. Additionally, mortgage insurance cannot even be obtained for the lowest of scores. The more moderate scores are going to pay more than someone that is not high risk. Kind of like auto insurance, why should those w/ good records pay for those w/lousy credit histories?
As far as my cost, as a mortgage broker, to do a loan. It does not cost me one red cent to process a 500 credit score applicant over a 850 score applicant. Not one cent.
The only difference between the two is how low the lender will go with the rate. Most mortgage brokers and lenders see sub primers as an easy lay down to up the rate (for YSP) much more and charge many more orig. points and other fees to do the loan. Shop til you find someone honest. It does not take one more penny to do a subprime loan versus a prime. Not one. Anyone who tells you different is ripping you off.
No, not everyone is dying for business. There are many of us that know what we are doing and do it quite well. We chose not to do it for free. If I do one for free, it's because a long time realtor referral source needs a customer rescored, needs to get the customers points up by 100, so that they can get a loan. Many lenders do not do rescores because we cannot charge the borrower for these services (bet you didn't know that one either).
well, it is nice to know you are not dying for business. I doubt you speak for everybody. There are people out there that need the business. They will help you out cheaper and be happy to feed their kids. All is negotiable. If a realtor wants to charge 6% to sell your house or a mortgage broekr wants to charge you 3 points to get a loan, I guarantee you will find many people out there that are not so expensive. Many out there in fact. And there are many who would never charge such high rates, and they do a good job too. Just because people do not charge high prices does not mean they are not good at what they do.
Demand? I'll give you the name of my competitor. Ask me if I can recommend where you can save you some money, and I will lay out the entire process and show you how and where to shave and save. And not just for this closing, but for as long as you own the property.
Again, a mortgage broker's fees are negotiable. It is stupid for someone to not shop around and see what rate is offered and what the broker will charge. If you are the person's best offer then they should use you. I always give my clients a complete cost sheet, even covering the closing approximations based on what I know. I send it to them and tell them to shop around and ask at least three brokers to send their information.
Most come back, some do not. I cannot always get them the lowest rate.
Again, this opinion is based upon your knowledge of processing government applications?
I do not remember this being an article about governemtn applications only. Govt apps have a cap on what can be charged by parties like brokers and trust me they will always push that cap. But a cap is that, a cap. This means it can go lower.
You can also see how much money a broker gets from a govt loan (it is usually pretty good). Ask him to pay some of your closing costs as a return for your business. Yes, it is completely negotiable.
How can someone call themselves a mortgage broker and a real estate broker and in the same breath advise someone they are crazy for buying a home?
How could someone that is a mtg and re broker allow people to buy a home now without advising against it? Don't you have a heart? Since 2005 I have been talking first time home buyers out of it..or at least trying. And then they talk to others (maybe even you) and were talked into it.
Now every single one of them is upside in a home with a horrid mortgage.
Wether I am crazy or not, I got the high ground on this and I aint budging.
The chances of a small boom followed by a huge real estate crash next year are enormous.
I cannot take someone's life savings, put it into a home, and then watch them go under just so I can make a buck. I would rather struggle with bills than hurt others.
If you buy a home now, you are even dumber than the ones that bought one in 2004-2008. This last re boom of 2009 will be the dumbest boom that never needed to happen. My god, don't you care about your clients???
No one needs a credit report to quote a hypothetical. It's a well known fact no one can accept someone else's credit report, so why even bother. Tell me your score and we can work with that. If my report comes in w/ a different score, my report trumps
Many people shop and brokers will pull their reports. It is a fact. Many people are first time buyers and do not know all this stuff. Getting a copy and your scores and actually going to a broker can help without hurting your score. One broker may not care and one may see that some credit can be fixed. Others just want to pull your credit and hardsell you on a loan.
Once you decide on the broker, then have him/her pull the credit report, but only then.
Back in the 80s they used to charge you hundreds just to apply (remember that bs...wow?)
Also, go to one or two lenders. Use the two lenders and 4 or 5 mtg brokers against themselves to find the best deal. You will be surprised how low the rate and fees go when you are not a lay down client.
Maybe in the last market you were successful in, but this day and age, our job is heartbreaking, it's hard not to feel the tears when you tell someone not only is the equity gone, but their qualifications would no longer get them into the home they have. It's about 45 seconds and then you can see the dawning in their eyes, they are probably going to lose their home. So yeah, go ahead, tell people to play lenders off each other. Now that they are down and out, that's the exact attitude they want to have.
Yes, these lenders had no problems putting people in those situations. Nor did the mortgage brokers. Now it is a buyers market (if you are crazy enough to buy) and a re-fi's market too. Get the best deal you can and there is no reason to apologize to any lender or mortgage broker for trying to do so.
A knowledgable borrower is one that will not pay more than they have too. There is no excuse for what was done to them. A first time homebuyer versus a conglomerate of lenders and brokers talked them into something that is bankrupting them. Now that they are upside down they are trying to get them to do a new loan and make more off them...before they lose the home 'hoping' real estate will turn around.
It will not turn around. It will crash at the end of the year. It is not the right time to buy a home at all.
My opinion only. And up for debate so a person can make a decision and hear all sides. My vote is run from any kind of borrowing right now, especially on something that will be making you upside by years end.
I would like to point out that it depends on loan type as well. FHA/VA appraisals will run more than a conventional appraisal. FHA appraisals in Vegas run about $50-$100 higher than conventional appraisals.
Maybe that's how it is in Chicagoland too. We have an FHA loan, and our appraisal was $500. He was very thorough.
This is so far off, but the quick version is borrowers do not get to select appraisers and now, most loan officers don't either. Many banks have gone to 3rd party services that a broker or correspondent or mortgage lender must use for any loan that is submitted to that bank for approval. This is not fantasy. The particulars of the legislation may be boring to many, but new rules and regs are in place or on the way. Another effort to curtail fraud.
If that was true, the entire appraisor work force would be out of work. This is not true. Apps get certified for the lenders and any that are can be used.
Actually, it is true. The current version of the HVCC is going to be adopted on April 1 (last I heard) where almost all appraisals will be ordered through AMC's.
Actually, it is true. The current version of the HVCC is going to be adopted on April 1 (last I heard) where almost all appraisals will be ordered through AMC's.
banks have been trying to corner the market for a few years now. They wanted to do real estate services a while back too.
I just cannot see, even with the congress totally bought by these guys, that they would allow so many 10s of thousands of people to just become jobless so the banks can really play with appraisals.
I know some charge more to use their management company to review your appraisal...and they are jerks about it. But this cannot happen. It is just wrong. And I do not think banks need anymore power than they have.
it is almost like they planned the whole thing..
Last edited by Thatguywho; 12-31-2008 at 02:44 AM..
banks have been trying to corner the market for a few years now. They wanted to do real estate services a while back too.
I just cannot see, even with the congress totally bought by these guys, that they would allow so many 10s of thousands of people to just become jobless so the banks can really play with appraisals.
I know some charge more to use their management company to review your appraisal...and they are jerks about it. But this cannot happen. It is just wrong. And I do not think banks need anymore power than they have.
it is almost like they planned the whole thing..
You are missing the point. Appraisals will be ordered through AMCs to take that power away from banks. Allegedly. In my viwe, it will make matters worse because now instead of appraisers getting pressure from lenders, they'll get pressure from the AMCs who want to keep their clients, the lenders, happy.
Furthermore, it will damage the transactions for those lenders who do care and have built up relationships with ethical and competent appraisers. By having to go through the AMC lord only knows what kind of crappy reports they are going to get.
Clearly, for someone "in the real estate and mortgage industries" who doesn't know and doesn't understand the new appriasal rules that have been discussed at length says a lot. Ive gotten memos from my corporate office, banks, emails from appraisers, articles in all the industry publications, etc, etc. It is NOT something banks want.... they have been trying to fight it. It was manadated by a settlemen between the NY Attorney General and the GSEs to settle issues with the way appraisals were done.
Also, there is nothing wrong with being in the real estate/lending industries and advising clients. Thats to be applauded. But when you say anyone, without question or regard to situation, is crazy for buying a home.... then why are you in this business? What do you do all day, sit around in your office and charge them to tell them not to buy?
Or basically, do you just advise them against it, tell them they are crazy and you are a good guy for warning them of the dangers.... and then take them out to sign a purchase offer? I don't get it, if you have been advising all your clients out of buying homes since 2005... how are you still in business? Your advice is not helpful, just more confusing.
To the OP, you can usually negotiate any of the lender fees. These are the 800 lines on the good faith estimate. Everything outside of that are 3rd party fees that the lender has no control over. You can always shop for your own inspectors, attorneys, title insurance company, etc.... and negotiate directly with them for their fees if you want. But the lender can not negotiate on your behalf with them.
The lender can negotiate their fees on the 800 line, but not usually the appraisal. They can choose another appraiser that might be cheaper, but it won't get much lower than $400 and sometimes you get what you pay for. Contrary to what "thatguywho" said, lenders CAN NOT charge you more for a credit report, flood zone certificate or other such fee than what it costs. If they charge you $1 more, it is illegal. While someone can do it, you have bigger things to worry about if your lender is willing to break that law than spending $20 extra on a credit report.... as they are likely committing a bigger fraud as well. No reputable lender is going to risk the huge fines and loss of license to upcharge you a few bucks on a credit report.
Focus on the 800 lines and look at origination fees, points, processing, underwriting, application, etc. Compare those AND the interest rate bewtween lenders. There is always a tradeoff between closing costs and interest rate, the lower you want one to be the more you have to pay in the other. The APR on the truth in lending is supposed to help compare apples-to-apples, but I've noticed many lenders mess up on their APR calculations. Some don't include mortgage insurance or the proper interim interest charges in it and it can be off by .25-.5%.
Use that to narrow it down to a very few lenders and then negotiate with them. The important part is to choose honest, reputable lenders that can deliver to start with. A good faith estimate is worthless if the person doing it is a liar, a cheat or incompetent. There are still plenty of those left and they will bait and switch you. Start by asking for referrals and instead of focusing so much on cost, focus on VALUE.
You wouldn't choose a financial planner, CPA, attorney or other professional on cost alone... why choose a mortgage provider? Is it worth saving $100 if you get horrible advice like many people did the last few years? They thought the "when banks compete you win" was great and had an internet lender get them an easy mortgage with little effort and a "great price". Now that bad advice has cost many their homes, credit and a lot of stress. You don't want to overpay, and the most expensive is not the best... but there is a difference between cheap advice and valuable advice.
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