On a non-financial note, do yourself a big favor; if you find a house you MUST have, wait to make an offer on it until you’ve driven past it at night and on a weekend to see what the neighborhood’s really like when the sun goes down and most of the people are home. It would have saved my fiancee and I a ton of headaches here.
Good call… really good call.
Hi Dudley;
I bought my first house about two months ago. In the Atlanta area. The following is only my novice opinion and I might be wrong, but here are some points:
75/25 loans have been traditionally a money maker for the bank and broker. Until recently they were figured at different interest rates, but I’m told that now you can get them at the same rate.
I got a no-money-down, 30 yr fixed. In a buyer’s market, you can get the seller to pay the closing costs. Beware of any schemes to have the buyer agree to a higher selling price, with a higher mortgage loan, to be turned over to you for down payment. These are illegal in some (most) states.
AFAIK, there are no “Advisers (sic)” at Lending Tree. It is a referral service, your name cost your broker about $70. My broker insinuated that he worked for a bank, but on questioning, he acknowledged that he was merely “associated” with a certain bank, and they never appeared in the picture.
Your broker may or may not have to bust his a$$ for you. Mine did. What he was paid was clearly stated all through the process, and at closing. Watch out on your disclosure form, you might see a simple number (like “3”, and this is supposed to be %) as his compensation, and this is slippery. I paid my broker $3,000. for a $250,000. loan. Most times your broker is making a bonus from the mortgage company, they will also try to slip you into a higher rate. I started at 6.25, but ended up @ 6.5 as things hit the fan.
You can work with one or more brokers, to get your best deal, I had a friend who is a mortgage broker in another state, and he watched my paper work, and I used him to confirm my best deal.
As far as taxes and insurance are concerned, that has to be worked out, and you have to confirm the numbers, but your broker should be capable of doing all the math for you and providing you with good faith estimates or at least an itemized email.
O- and I’m told that you have to allow for an early payoff of the loan. This is in case you want to sell it before 30 yrs, you don’t want to pay a penalty. All this has to be checked over carefully, right before, and again at, the closing.
good luck, I am very happy with my home!
Also, I might mention, if you’re looking for “gotchas”, I never caught my mortgage broker in a lie. If I had, I would have brought in another broker and worked them against each other until one of them showed themselves to be more reasonable and smarter than the other.
Before I bought my house, I talked to everybody I could find who had anything to do with the house. I talked to the town, I found out what the seller had paid for it and how much it had been bought for before that, I found out the taxes going back several years, and I found out all the utility expenses.
I knocked on the neighbor’s doors and met them all. I found out that someone had been shot in the house, but had survived. I was given a contact for a family that once lived there and I talked to them. Several times. They told me a lot of stuff that I passed on to my inspector and he gave it a thorough checking out.
The other realtor confided that they were shocked at how much information I was able to get on the house. I might have known it better than they did, they were flipping it.
But I’m happy, and I got a really good price by just dropping out of negotiations for a few days and biting my nails, hoping no one else would come along.
It was a trying process, but really mostly pushing papers. I just did what my mortgage broker said and relied on him to pull it off.
so he did, good luck!
DO NOT be afraid to be a dick. It’s a business and you’ve got the cash, not them. If you don’t like a TV at Best Buy, you go to Circuit City. Don’t be afraid to ditch the losers for another broker/agent/house.
Houses have traditionally increased in value by about 3% per year.
Up until 2000 or so that was true.
Houses have, in some places, tripled in value since then, while supply has increased. 5% decreases off of that peak do not make it a buyers market. Might be a buyers market compared to 2 years ago, but this isn’t a buyer’s market.
The Japanese, as has been widely reported (here’s a blog but you can find ti other places) have basically been in a 15 year housing slump.
The resets in adjustable rate mortgages have barely even started.
Have a look at the Shiller Housing Index for an indication of how out of control this bubble was against historic norms. The early 90’s housing market downturn was considered prety significant at the time. That’s not even a tit on that graph.
So here’s the rate from the bank I would like to work with:
Product Description …Interest Rate…Points…Max APR …Payment per $1000
Fixed Rate - 30 year …6.625 …0 …6.661 …6.40
based upon a $100,000 loan including points
What are points? Does Max APR mean this product wouldn’t exceed that? Ever??? What is “Payment per $1000”?
Let me know if this is too much like “helping me with my homework” :o
Here’s a good description of points.
Essentially, you pay some “extra” money at closing and they’ll give you a better interest rate. It’s a way of saying “give me cash now, and I’ll save you money in the long run.”
Depending on your assumptions, they can be a good use of your money, but they don’t usually make a HUGE difference over the course of the loan.
But, if you have a few extra thousand at closing, and you’re just going to spend the money on gummi bears if you don’t use it, buy the points.
So, it looks like they’re not offering points to buy. The loan is what it is.
THe “max APR” might be them giving you information about what’s out there. That’s teh max rate that they’ve seen. Just a WAG, though.
“payment per $1000” is jsut what your monthly payment is per $1000 that you’re borrow. If you’re borrowing $250,000, your monthly payment is 6.4*250 = 1600.
A point is 1% of your loan and it is a fee they tack on besides the crapload of interest your going to pay them over the next 30 years. 0 points basically means they won’t be charging you extra money to get a loan from them.
Max APR is their stated max amount they will give a 30-year fixed loan to somebody. If you have good credit you get their 6.625% rate. If you have lousy credit but they still feel you are worth lending to you get their 6.661% rate. They won’t go any higher than that, instead they will just deny the loan.
Payment per $1000 is as Trunk stated. Take your loan amount, divide by 1000, multiply by 6.4 = your monthly payment to them.
This will sound cold, but please try to remember that none of the real estate people with whom you’ll come in contact with during any transaction is your frend. They will be friendly, for sure, and appear to care about you and your needs, but their bottom line is THE bottom line. They need to get rid of houses or put money in their pocket and that is their only real agenda.
They’ll try to get under your skin and lull you into wanting to please them - don’t fall for it. My huge mistake was using a co-worker as my agent; I felt bad anytime I needed her to do something and wound up doing **every ** bit of work myself and she got the commission check. It was her first and last sale, as it was a ‘hobby’ for her.
Caring what your realtor or real estate agent thinks about you will cost you time and money.
You’re right, the agents are not doing it for the fun of it, but they are there to serve you. Their job is to make you happy and get you the house you want. As long as you stay in charge, know your limits, and stick with what is acceptable to you on the deal, you should be fine. Don’t let the agent talk you into something you don’t want or won’t accept.
Many agents will go above and beyond to get a sale to go through, they will cover some costs out of their own pocket, like paying to have the house cleaned or offering a warranty (for what that’s worth.) One agent I knew would clean up dirty houses herself to satisfy the buyer and get the sale to go through. That’s not costing you anything more, the agent’s commission is a percentage of the sale price.
I would expect more screwing from the mortgage company, although it seems you can argue with all the couple dozen separate charges it takes to get a mortgage and basically get nowhere.
One big thing to remember is if you are financing more than 85% of the home’s value, they are going to want you to pay for mortgage insurance. This is a huge ripoff IMHO, the insurance doesn’t cover you, it covers THEM in case you don’t pay your mortgage. But YOU have to pay for it. It can be a couple hundred dollars a month on your payment.
This is also called a “low down payment fee”, not sure why there are 2 different names but I bet it’s to get around some rule or regulation.
Thank you for mentioning this. Maybe I will have to wait until my parents feel like gifting me again since the places I would want are $180-200K.
Make sure you get one with a nice garage. If your neighbors turn out to be asses you can crank up your Ibanez and treat them to a LOUD concert.
It may be just my personal preference but if you’re buying a house in an area where it snows think twice (make that think 3 or 4 times) before buying a house with an unattached garage.
I grew up in a house with an unattached garage and besides trying to unload groceries/etc. in the rain, running to and from the garage in the rain, it also sucked when it would snow overnight you’d get set for work with your nice shoes on and then have to trudge through snow to get to your car. Then track snow into your car.
It’s also easier in the winter to step into the garage in your slippers and start your car so it warms up. A lot harder to to when the garage is 50 feet away.
A garage at all is a dream right now. Not having to brush off/dig out the car? Priceless.
I am hoping for a washer and dryer in the house, and trash pickup. Those two items would improve life exponentially.
And with the way I play, they’d be in for a real treat!!!