Mortgage questions, first time home buyer.

Neilk · 05-30-2006, 05:35 PM

Hi,

In my opinion, except for matters of politics, the PPOT board is the best place in the world to get information. That said, can anyone give me advice on mortgages? I just bought a house and am now comparing various offers. I have read that I can negotiate with the mortgage broker, but what is negotiable? Are there any strategies to getting the best rate? And what about points vs no points?

Also, there is a line for Hazard Insurance Premiums, can I get my own insurance or is that required? I haven't had a chance to talk to the mortgage broker about all the terms, I just got the GFE by e-mail to review.

What site would you recommend I visit to get the inside scoop? Lastly, I am going in this with my girlfriend. She knows a lot more than I do, but I'd like to educate myself on this as well and this is the place to do it.

Thanks,
Neil

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Jims5543 · 05-30-2006, 05:44 PM

I my past experience it is good to explore financing through the local bank you do all your banking with. Hopefully you have a good relationship with the branch manager.

Every time I have used a mortgage broker I have been screwed over while they smile in my face.

ben parrish · 05-30-2006, 06:08 PM

How have you "bought a home" without having financing arranged? You have to have financing arranged prior tio closing and it can take weeks to months to get approved. If you put down earnest money but cannot get financing by the closing date, you lose the earnest money and can be charged for other legal bills from the seller as well as the real estate agent.
Look into Fannie May first time home buyer program. Great rates and attractive deals. Bankers are O.K. but you can find better rates than from your local bank. Wells Fargo gives good rates. Brokers are fine and if you have a good one, they WILL find you the best deal. Ask your real estate agent who they recommend.

Congrats and good luck.

Ben

turbo6bar · 05-30-2006, 06:13 PM

RANDY P can give you the summary of broker fees. Some fees are fluff and some are legit.

If you are self-employed or have special circumstances, a good broker can make the process easier. If, instead, you have a regular job and good credit, you might be able to do well/better with a local lender.

Rates and points go together. You might get a great rate with one lender, but pay through extra lender fees. Do the math on points. Points only pay back if you plan to stay in the mortgage longer than x months.

You may obtain your own insurance. If you escrow the taxes and insurance, the lender will pay the insurance directly.

Unless your time spectrum is short, I would opt for a 30 or 15 yr fixed. At the very least, though, price out the 5 and 7 yr ARM. If the fees are not ridiculous, you might be able to make a financial case for going with the ARM.

Steve Carlton · 05-30-2006, 06:42 PM

Even though it may be the first home you've bought, you may not need a "first time buyer" loan. Some info needed to sharpen the focus:

- how's your FICO score? You can pull a free credit report once/year through this site sponsored by the three major bureaus. Pay a few dollars extra to see what your score is at https://www.annualcreditreport.com/cra/index.jsp

- what's your loan amount? Rates are better up to $417,000

- what percentage of the purchase price are you putting down?

- how long do you plan on staying there? Don't pay 30-year rates if you're going to be gone in 5 years.

- how long in your line of work? Lenders want to see 2 years, and it doesn't have to be with the same company. If you're self-employed, self-employment usually needs to be for 2 full years.

- do you have your cash documented in your accounts for the last 60 days?

Neilk · 05-30-2006, 08:06 PM

Ok, well we haven't actually bought a house, but our offer was accepted and we are looking for financing. Both of our credit scores are excellent (770+) and we'll put 20% down to avoid PMI. I was mainly wondering which fees are negotiable and which are non-negotiable.

I briefly glanced at ARMs, and the difference doesn'tseem that great. I am also reluctant to commit to a short term loan as I was supposed to leave Dallasw 7 years ago and I am still here.

Thanks again,
Neil

RANDY P · RANDY P's Garage

Quote:

Originally posted by Neilk
Hi,

In my opinion, except for matters of politics, the PPOT board is the best place in the world to get information. That said, can anyone give me advice on mortgages? I just bought a house and am now comparing various offers. I have read that I can negotiate with the mortgage broker, but what is negotiable? Are there any strategies to getting the best rate? And what about points vs no points?

Also, there is a line for Hazard Insurance Premiums, can I get my own insurance or is that required? I haven't had a chance to talk to the mortgage broker about all the terms, I just got the GFE by e-mail to review.

What site would you recommend I visit to get the inside scoopLastly, I am going in this with my girlfriend. She knows a lot more than I do, but I'd like to educate myself on this as well and this is the place to do it.

Thanks,
Neil

_____

In summary, the Hazard insurance line is to notify you that it's required that you have homeowners insurance - if the home is burned down someone has to pay for it. To be specific, you get to choose who provides your homeowners insurance. So, you shop for the best deal and the coverage is provided.

If you have homeowners insurance / property taxes included in your monthly payments (impounded) be aware that they always collect a few months in advance, so at the time of signing you will have to cough up as much as a year in advance on each. Remember, that they simply don't collect one month from your payment and forward it to the tax man / insurance agent - they collect in advance so you're always ahead. It's nice since you'll never fall behind, but also very bad since you are basically financing your insurance / taxes and therefore paying interest on it.

And, the link to the pelican thread where I was on a drunken rampage:

Real Estate questions - seeking guidance

chuckw951 · 05-31-2006, 03:25 AM

Quote:

Originally posted by Neilk

What site would you recommend I visit to get the inside scoop? Lastly, I am going in this with my girlfriend. She knows a lot more than I do, but I'd like to educate myself on this as well and this is the place to do it.
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My wife and I built our house before we were married. We had an attorney write up an agreement before we started the project. The agreement outlined who was bringing what to the deal (in my case, I brought $25K and my fiance the lot to build on) and also what would happen if we parted ways before we were married. When obligating yourself to a 15 -30 year mortgage you have to consider and plan for worst case senarios. In our case the attorney drafted the agreement for $250 and we both signed it. In our case everything has worked out so far.

Rot 911 · 05-31-2006, 05:50 AM

Good advice from Chuck.

Neilk · 05-31-2006, 08:20 AM

Randy,

Thanks for the link. That was really helpful and answered most if not all my questions.

Wayne,
Let's just say that there is a a third party on the way... woohoo...so things will get formalized before too long. Neither of us is a hurry. We are doing the Euro thing.

As for the legal agreement, I do agree that we need one in case something goes seriously wrong. Need to get that going too.

Thanks again,