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Am contemplating buying a home and would like to learn of experiences you have had dealing in the mortgage shopping/application process.
I plan to sell my current home and move instate (MD) nearer to my daughter.
I have an 830 FICO score, no current mortgage and no debt. My income is from a lifetime pension and social security. I am looking for a 250k conventional mortgage, which I would payoff when I sell my present home hopefully in the next year.
After reading through this forum and reading about some problematic big box banks and incompetent mortgage brokers , I would greatly appreciate insight from those of you who have recently gone through the process, or people knowledgeable in underwriting.
What were your experiences in obtaining a mortgage? If you had to do it all over again, would you have used you lender, mortgage broker, online mortgage provider???
What do you plan to do with your current home after buying the new home?
With great scores and an intention of paying off the mortgage in a year, don't get caught up in a 30 year fixed, but find the best long -term ARM. Why pay as much as 3/4% more if you are fairly certain of your plans? You can get a 7/1 ARM ~ 3.375%. Most people that are afraid of ARMs do not understand them. Those that understand them typically know how to use them to their advantage. A 7/1 is fixed for 7 years. Learn the mechanics of an ARM, how it adjusts, the caps and the basis (Index) of the ARM. A little knowledge can save you thousands. Almost all lenders will allow you to have your payment recast should you make a significant prepayment to principal. So, if you plunk down 200K on your balance 10 months after you close, you can have your payments reduced without refinancing.
Knowing how to shop for a loan is quite important. But to give you an idea how easy it is to sway someone, knowing you are not ready to lock in sets you up to receive false information. We typically see this abuse when someone is buying new construction. Knowing you aren't closing for 4+ months, I could quote you 3.875%, while everyone else you call gives you 4.25%. So after finding out it cost too much to buy a ,4+ month lock, you apply with me because you believe I am the lowest now, so I must be the lowest when it's time to lock.
There's much on this site about shopping for a mortgage. Take advantage of this material - the rates may change over time, but the advice is the same.
We are moving from Florida to Tennessee and signed a contract on a house to close March first. Went to a local bank last Thursday that I had talked to earlier on the phone. Walked in with bank statements, brokerage account statements, social security documentation and documentation of the sale of our house in Florida. Ninety minutes later were approved, finished and on our way to lunch. No complaints whatsoever from us about the process.
My problems had nothing to do with the bank. In fact, my loan officer and underwriter were very pleasant to deal with. All of the headache I've had is with the sellers, who are selling their Mom's home and want to penny pinch and drag their feet on required repairs. For instance. There was a rotten tree hanging over a fence into another neighbors property. The neighbor had advised the homeowner that it needed to be corrected, but they didn't do it. So during the inspection, it was listed as having to be corrected before the bank would close. The sellers decided that they would just "take care" of it themselves, and they dropped the tree on the fence and into the neighbors yard. Well guess what, closing got delayed because now they had to replace a section of the fence. The well test also failed inspection, and it took us to threaten to walk for them to agree to install a whole home filtration system, after our loan officer explained to them that no bank would approve a $203,000.00 mortgage on a home that doesn't have useable water.
I wouldn't have done anything differently. It worked out well. The only snag was that my previous FHA application was not cancelled when the appraisal fell thru for another home, but it was a different bank and there was no way for me to know that there was an open application that could have help up this one going thru. luckily it did not delay closing but the two weeks before closing were tense.
I'm neither a real estate agent nor a lender/underwriter, but I've worked in a real estate office for 15 years, so I've seen a lot of buyers and sellers. The people I've seen who were the most unhappy about the process almost all went with online lenders, so I'd avoid that.
As for who to use, do you have someone you trust in the area you are moving to who could refer you to someone? We send everyone we work with to one particular mortgage broker because we know she is honest, easy to work with, competent, and always meets her deadlines. She also knows practically every loan program out there, and if she can't do a particular kind, she is honest enough to say "you need to go work with lender x instead of me for this loan." I consider her our secret weapon.
That being said, when I refinanced my house, I ended up going with my credit union, who had a lower rate, no cost, no appraisal refi for those with great credit. In fact, they even took .5% off my rate because my score was over 800. And they had more duration choices available. Most lenders can do a 30 year, 15 year, and maybe a couple ARMs. My credit union could also do a 10 or 12 year. I ended up doing a 12 year.
So my advice is shop around with a few local credit unions as well before making the decision.
Thanks Lacerta. Sometimes you can't see the forest for the trees. My son's thinking about buying a house, but he hasn't shopped for a loan. Cart, horse. He belongs to two credit unions, and I don't know why I didn't think of them.
No mistakes in getting a mortgage. But we made a BIG mistake by paying off a mortgage which eliminated the possibilities of HARP, short sale, etc when the Phoenix market tanked in 2008-2009. We sold in 2012, taking a low 6 figure loss. The value of what we paid in 2007 still hasn't returned.
Mortgage rates being so low now - I'm delighted to be paying my 30 year 3.5% while we're retired. I'll be dead or in assisted living long before that sucker is paid off. Fine by me.
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