Mortgage Question

[Johnnie]

With rates going down.. I want to refinance.. do i have to use a mortgage lender in my state (GA) or can I use one of the online lenders (better rates) ??

 

[urbantechie]

You can go on-line. But with the lower rates, you might be getting a plan with a variable rate. My parent's bought this house at 7% $0 down for $144,000. These Government auction houses are cool . And it's not in a millitary neighborhood!

 

[Ornery]

Just asked my wife, who works in a bank, and she doesn't know anything about it. Sounds like a hassle to try for an on-line one, but who knows? Guess you will if you give it a shot. I'll see what I can dig up and keep poking around this topic to see what pops up. Sounds interesting. Not sure how they would handle the appraisals and stuff, but I guess it's not impossible.

Good Luck!

E-LOAN Inc. With no hidden lender fees!

 

[Anyone2u]

<< ...or can I use one of the online lenders (better rates) ?? >>


Don't believe everything you read online. Getting a good rate on a mortgage is a lot different than getting the best price on a 19&quot; monitor. Having been in the mortgage business for 14 years, I just laugh at what I see online. Unfortunately no one regulates mortgage companies that are on the internet because frankly no one cares-each state has their own problems regulating the lenders in their own state. But even if they did, so what?

True Story #1: My father was buying a house in Arizona. His wife (stepmonster #4) searched the internet and found the best rates with a California mortgage company. His estimated closing costs were ~$2000 (I reviewed the &quot;Good Faith Estimate&quot; via fax). Actual closing costs were ~$5000 (I reviewed the settlement sheet the day AFTER the closing). They had locked their rate in at a ridiculously low rate, but at the closing they received an even more ridiculously higher rate. I advised them to complain to the Arizona Division of Banks. They did and the Arizona DOB's response, &quot;they aren't licensed here so we can't do anything&quot;.

True Story #2: I had a borrower approved for a mortgage who called me with about three weeks to go until the mortgage closing and told me they had found a better rate on the internet with a Pennsylvania mortgage company. The rate they quoted was (again) ridiculously low. The realtor (the person who had referred them to me) called me after the closing stating that the borrower refused to sign the closing documents (for the other Pennsylvania mortgage company) because the adjustable rate was .75% higher than what the borrower had been promised (it was .50% higher than the fixed rate I had offered her). After spending four hours on the phone with the mortgage company and not getting anywhere, she got up and walked away from the closing table, forfeiting her $10,000 deposit on the property.

True Story #3: A borrower I had done a previous mortgage (about two years earlier) called me because he was buying a new condo in Boston. I gave him a rate of 7.75% and 0 points (this was ~two months ago) with total closing costs of ~$2000. He said I was &quot;way off&quot; because he had found a lender in NJ with a rate of 7.5% and 0 points. When I asked him about closing costs he said (rather annoyed) &quot;they're actually about $500 less&quot;. I finally decided to call the lender with the borrower's scenario and, after about a half hour of pinning them down, found out their rate couldn't be guaranteed (ie &quot;locked&quot; in), it was actually the same as ours, and their closing costs were actually $8600!

The above stories are true. I have absolutely no reason to lie. None of the above mortgage companies were licensed in MA (where I live) but they did the mortgages anyway. Again the Division of Banks really doesn't appear to care.

Here's some tips for you:

1) Everyone's rates, with few exceptions, are going to be within 1/8%-1/4% of each other as mortgage rates are based on mortgage backed securities (which change daily). No one is going to have a &quot;sale&quot; on mortgage rates-it doesn't happen.

2) ALWAYS ask for a breakdown on ALL closing costs (have them faxed or emailed to you BEFORE you apply) and compare those with each company. Some companies state that they have 0 Points but in fact they have a $995 processing/marketing/garbage fee and/or a $500 closing/admin./etc. fee that THEY collect at the closing in addition to the normal closing fees. It's a shell game. On the other hand the post above this one shows a link for E-LOAN/Inc.-With no lender hidden fees!. If you go to that site you will see a program &quot;With No Lender Hidden Fees&quot;. Well at least it's a step in the right direction because they don't collect any &quot;garbage&quot; fees for themselves, but it's still misleading because they still have all the same fees as everyone else that is being honest have. How much? A $100,000 loan @ 7.125% with them will still cost you $1415 in closing fees, plus they stipulate near the bottom that the lender they sell the loan to may have additional fees (ALL lenders have fees that usually run about $300 plus or minus). Ornery probably didn't even realize this when he posted the link and it's not his fault-that's they way it's supposed to work. If you don't know what to look for, you won't find it. That is the problem I have found with most companies that solicit business on the internet.

3)Try to find a &quot;0 Points/0 Closing cost&quot; loan In a true &quot;no cost&quot; loan, the mortgage company pays all of your closing costs (ie points, origination fee, title company/attorney/closing fee, recording fees, title insurance, survey, flood check, Fedex, etc.) by increasing your rate slightly (usually .25%-.375%). Just be wary of companies that promote &quot;No out of pocket expenses&quot; or something similiar. In that case all the mortgage company is doing is rolling the closing costs into the loan amount. You are still paying closing costs. Also be aware that this loan is usually limited to loan amounts greater than ~$125,000 and may not be available in all states.

4) Get a recommendation from your friends and coworkers. If the mortgage company you get your mortgage from is in California, who are you going to complain to when you realize that you got taken at the closing? If someone is referred to me there is accountability. If I screw them on the mortgage they're going to complain to the person that referred them and I would look like an idiot, not to mention burn my bridge on any future business. Everyone in the mortgage business is cognizant of where rates are and knows what the market will bear.

5) Three Day Right of Rescission. If you are still smarter than most people and go with the lowest rate you can find, only to realize at the closing (if you can pick it up) that you got screwed, what can you do? Rescind on the loan. If you close on Monday the loan does not become effective (recorded) until Friday (three business days). This is only on refinances and only on your primary home. This law was created to protect you and if the terms of the loan (ie closing costs excessively higher than estimated, rate higher than you what you locked in, etc.) you have a right to cancel the mortgage AND get everything you paid up front (ie application fee, rate lock fee,etc.) back. The law was not created to rectify your mistake of not correctly predicting the bottom of the rate cycle. It was created to protect against (real) fraud. Unfortunately most people just accept the fact that they got taken (again if they realize it) or don't want to start the whole process over again. Everyone in the mortgage industry knows this!

Well, I could go on, but that would take up too much space. I hope this has answered your question. The bottom line is the mortgage companies in your state will have the same, if not better rates, than the online companies.