Tell me about home loans...

[icebrat001]

I need to know everything there is to know about home loans.

Where do I start? What loan companies are there? Do we talk to a consultant? What if we want to get a loan here in California but purchase property in Florida?

How about zero down loans, or low down payment home loans?

We know nothing, although, I suppose we will look into speaking to someone formally after the holidays.

Thanks,

 

[Am_I_There_Yet]

You best bet first, would be your own banker, or credit union. There are tons of lenders out there - some good, some horrible.

If you're looking to purchase a house, you'll probably be using a real estate agent (I'm one, myself) and they usually have great resources. Our goal is to get our buyers into houses, so we tend to gravitate to lenders who get the job done, with the least amount of troubles.

Just remember, the lenders that promise low fees, or offers of any sort, are usually making the money on the back end. One tip - you want to compare A.P.R.'s, not interest rates. Your A.P.R. is the interest rate for everything, including the cost of the loan. This way you see the big picture.

The lower the A.P.R. and the lower the lender's fees, the better the loan package, although this doesn't necessarily mean you're getting the best loan officer. A good lender will try to match you up with a loan program that best suits you. For instance an interest only loan here in Houston, would be beyond stupid, but there are people who take them out.

A good lender is going to go over the fine points of different loan programs out there, such as your no docs, interest only, 80/20's... there's far too many to type about on here. Do some good online research, starting with HUD's website. They have some great info for both home buyers and sellers.

Do you know anyone who's recently bought a house? They could possibly give you a referral.

 

[Toby'sFriend]

I would start by going to the library and checking out some books on First Time Home Buying. Real Estate in the hot markets of California or Florida isn't something that you want to jump into without learning about the process FIRST.

 

[staci]

Yeah, I would get a book just to familiarize yourself with the process. Unfortuately, sometimes in the loan process and in the actual home purchasing process, people can get bad deals if they dont know better. Our first realtor really tried to take advantage of us on a few things, thankfully we knew better.

I would go to your local bank or credit union, a reputable organization that you can trust. Then, after getting an idea about what they offer, you can check around with a few other places. There are special programs for first time homebuyers, ask what they can do for you. Since you wont have 20%, you will have to pay something called PMI, but I know some friends whose loan officers have somehow got around paying that? I really dont know much about it, as we had 20%, but make sure to compare things like this as it can cost you. I have heard interest rates are suppose to continue to rise, so getting in now would probably not be a bad idea. Of course, my saying interest rates are continuing to rise is based loosly on information from my MIL, who works at a bank, but can still be a little LOONEY

Im glad your other thread led you to looking into it a little more closely! Hey, that offer of affordable housing in Iowa still stands JK, if I didnt live here I know I wouldnt choose to move here

Even if you dont do anything immediately, it is really good to familiarize yourself with the house market in your area, the process of buying a home, and getting some opinions of good reputable realtors. As a buyer, you wont pay any realtor fees, so you will likely want to use one.

Hope this helps you!

 

[MrsPete]

I would start by going to the library and checking out some books on First Time Home Buying. Real Estate in the hot markets of California or Florida isn't something that you want to jump into without learning about the process FIRST.

Good advice. A book will give you UNBIASED information, unlike your real estate agent and your loan agent, who are looking to make a commission from your sale. When we bought our first house I had a great book called Tips and Traps when Buying a Home. I highly recommend it or something simliar.

Pieces of random advice:

Don't buy as much as you can afford. Once you're out looking at houses, it's very easy for "eyes to be bigger than your stomach", and it's easy to be seduced by all the nice amenities. If you buy everything you can afford, you'll be stretched financially every month, and that's not going to be fun. Unscrupulous sellers will show you houses that are above your price range in an attempt to get a larger commission; you're free to dump them like the dogs they are and find a seller who'll listen to you. Don't be pushed into somethign that doesn't seem right to you.

Don't even dream about zero down type deals. There's always a catch: either the total price is higher, or the interest rate is higher, or there are extra fees attached. Common sense tells us that people aren't going to give away something for which people will pay.

For every dollar you borrow, on average, you will pay back three. Conversely, every downpayment dollar you spend is two dollars saved.

If you can, avoid escrowing your taxes and insurance. This means you have to save each month to pay these large bills, but you'll collect the interst on them all year long and you'll be more in control of your own finances.

If you have less than 20% downpayment /equity, you'll have to pay PMI insurance, which is a total rip-off. If you don't pay the mortgage, the bank will throw you out of the house and PMI will pay them the unpaid mortgage. They'll have the house AND the money. You'll have nothing. Great deal -- for them. It's an insult that you have to pay it. So dump PMI as soon as you reach the 20% mark.

When you put in an offer on a house, expect to put down at least $500 earnest money. If the offer is accepted, the buyer keeps the $500 and it's credited towards the price of the house. If the offer is rejected, it's returned to you. If you back out of the deal, the buyer keeps the money.

You can write into the contract that your offer is contingent upon the house passing inspection, the house being certified bug-free, and your financing going through. You can also write in that the applicances, washer/dryer, curtains, dining room table . . . whatever . . . are to stay.

When you make the final deal, you should have a lawyer do a title search, etc. Your real estate agent will make sure this happens. Your closing should take place in a real estate lawyer's office.

 

[The Mystery Machine]

Of course it is all about the FICO score, isn't it???

http://www.myfico.com/CreditEducation/CreditScores.aspx?fire=5

The first thing you do is request your credit history from the big 3 (Equifax, Transunion & Experian) and then work on cleaning up any mess. It is always messy. People sneak into your stuff alot.

Then you can focus on your FICO score. When it comes down to it this is your guide on how much house you can get for the most part. It is what determines what the bank/mortgage lender will give you.

We use a mortgage broker and are happy going that route.

 

[safetymom]

Any tips for refinancing? My 2 year fixed rate goes to an adjustable in several months and really don't want to go through this all over again.

I heard from the broker that handled the mortgage when I bought the house but not sure I want to use him again.

I imagine the same thing goes, to look at the APR and not the interest rate? Thanks.

 

[thelionqueen]

hopefully I can add to the list of tips. I am a mortgage broker, and can wholeheartedly agree with one of the previous posters. There are mortgage brokers that will take you for everything you've got.

However, I must disagree wholeheartedly with the Real estate agent. I am sure she/he does business with reputable mortgage brokers, but for the most part, I would NEVER suggest going with the lender that the real estate agent recommends. I would estimate that at least 90% of the time (being generous, I personally think about 99%) the broker will "kick back" a fee to the real estate agent for referring them. In order to kick back funds, the mortgage broker will make more money somehow to cover it.

Again, to stress, DO NOT go with a broker recommended by a real estate agent. UNLESS you know your agent personally and trust them implicitly (sp?)

If you would like a referral to a reputable broker that services multiple states, just send me a PM, I've worked with brokers all over the US and may know someone that can fit your situation. Otherwise, personal recommendations are always the way to go.

A reputable broker will usually charge you a 1% orginiation fee. Our company charges this fee because we quote all rates at "Par" (no money paid from lender to broker) which is the absolute lowest rate available. If a lender is not charging any fees up front, they are giving you a higher rate to make money on the back. This can cost thousands and thousands of dollars over time rather than being charged a one time fee at closing.

Always compare mortgage brokers if you can.

Good luck!! This is a very exciting and stressful time, I hope all goes well!!

 

[summerrluvv]

When you put in an offer on a house, expect to put down at least $500 earnest money. If the offer is accepted, the buyer keeps the $500 and it's credited towards the price of the house. If the offer is rejected, it's returned to you. If you back out of the deal, the buyer keeps the money.

This varies by state/county/etc. Where I live the purchaser puts down a good faith deposit of around $100 or so when they sign the binder with the real estate agent. When the purchaser signs the actual contracts to purchase the house, they return their downpayment check to the seller's attorney with the signed contracts (usually 10-20%) and that money is held in escrow and applied at closing.

 

[Am_I_There_Yet]

However, I must disagree wholeheartedly with the Real estate agent. I am sure she/he does business with reputable mortgage brokers, but for the most part, I would NEVER suggest going with the lender that the real estate agent recommends. I would estimate that at least 90% of the time (being generous, I personally think about 99%) the broker will "kick back" a fee to the real estate agent for referring them. In order to kick back funds, the mortgage broker will make more money somehow to cover it.

That's not only untrue in my case, but illegal in Texas. BTW, I'm also a mortgage loan officer, but choose not to do both because I feel it is a conflict.

To those that have made comments about not trusting who the agent recommends, then I suggest they get another agent, because that will be the least of their problems.

Let's just say it all depends on who you associate yourself with and generalizations do nothing to help people.

 

[icebrat001]

bumping for the weekday crowd

 

[thelionqueen]

That's not only untrue in my case, but illegal in Texas. BTW, I'm also a mortgage loan officer, but choose not to do both because I feel it is a conflict.

To those that have made comments about not trusting who the agent recommends, then I suggest they get another agent, because that will be the least of their problems.

Let's just say it all depends on who you associate yourself with and generalizations do nothing to help people.

If you will read in my post, I purposely singled out that I am sure you are a reputable agent and work with reputable agencies.

That being said, I think though that you are being a bit naive. If you have been in the business for any length of time, you will understand right away that lenders & agents are always giving kickbacks. Just like every other business in the world, if you are recommended someone, they are usually "giving back" to eachother. Sometimes not monetarily, but in some way, it's "you scratch my back, I'll scratch yours" type mentality.

If it is illegal in Texas, then obviously it seems that it is not happening there. However, in states where it is not illegal, you can bet your bottom dollar, it's happening. Unfortunately, it's the way most companies do business.


Other examples, you hire a designer for a kitchen remodel. He/she refers you a painter, flooring person, remodeler, plumber, etc. You don't think they are getting paid for referring? Believe me, they are. Planning a wedding using a wedding planner?? You guessed it, halls, florists, rental companies, etc. they're all giving "incentives" back to the person they referred.

I am not trying to stir up debate, nor personally attack anyone or anything, as stated in every aspect of this post, this is my knowledge I am sharing for readers of this post of my professional observations and nothing more.

 

[Am_I_There_Yet]

If you will read in my post, I purposely singled out that I am sure you are a reputable agent and work with reputable agencies.

I did see that and I was pretty much responding to others as well, who singled out real estate agents. I certainly wasn't flaming anyone, just defending my position.

I'm not sure if you realize this or not (said tongue in cheek) but real estate agents get a bad rap quite often and most of the time it's unjustified. It just gets very old.

That being said, I think though that you are being a bit naive. If you have been in the business for any length of time, you will understand right away that lenders & agents are always giving kickbacks. Just like every other business in the world, if you are recommended someone, they are usually "giving back" to eachother. Sometimes not monetarily, but in some way, it's "you scratch my back, I'll scratch yours" type mentality.

If being naive means that I believe that there are good agents out there, who care about their clients, then yes, I am naive. I've been involved in the mortgage business in one way or another since I was 16. First as a mortgage loan processor, as an officer and as a realtor.

Furthermore, my husband is a licensed real estate inspector and kickbacks have never been an issue for him either. Maybe it's because I choose to surround myself with quality people, be it agents, loan officers, or whatever, but no, I don't hear about a lot of kickbacks going on.

The "you scratch my back, I'll scratch yours" definitely applies to those who aren't ethical and aren't looking out for the best interests of those that they are working for. If you go back and read my original post, I did mention that just because it sounds like a good deal, doesn't mean that it's a good officer behind it.

I think it goes without saying, that you could easily put any profession into that same negative view, with the same results. I mentioned agents simply because we work with lenders, and I am one - an ethical one at that. I also mentioned her best bet being a personal referral from someone she knows.

I can also say, that I've NEVER had a loan officer refer a client to me and I continually give some of the same ones business. Their back may be getting scratched, but the only way mine is, is by them getting loans for my clients. Frankly, I've never expected a lender to refer anyone to me, or to give me anything.

If it is illegal in Texas, then obviously it seems that it is not happening there. However, in states where it is not illegal, you can bet your bottom dollar, it's happening. Unfortunately, it's the way most companies do business.

I never said it didn't happen. Everyone knows about kickbacks, but no, it's not something that is rampant here. The closest thing I can think of, is the issue of title companies giving free advertising to agents. The State of Texas put a halt to that too and the fines are very, very high if you're caught.

Other examples, you hire a designer for a kitchen remodel. He/she refers you a painter, flooring person, remodeler, plumber, etc. You don't think they are getting paid for referring? Believe me, they are. Planning a wedding using a wedding planner?? You guessed it, halls, florists, rental companies, etc. they're all giving "incentives" back to the person they referred.

I think that's very different. They aren't licensed and don't have a Standards of Practice that they have to abide by, like agents, lenders and inspectors do in Texas. #1 is your client. You get caught doing otherwise, you lose your license. And that's not a comment based off of inexperience - rather one based off of my business ethics.

I am not trying to stir up debate, nor personally attack anyone or anything, as stated in every aspect of this post, this is my knowledge I am sharing for readers of this post of my professional observations and nothing more.

Same here. I'm not a new agent by any means. I've been around the block and am good at what I do. What you've just read are my personal observations as well, and in all honesty if I were seeing what you're seeing, as frequently as you say you see it, I'd be looking for another line of work.

Bottom line, it's up to the consumer to research the best people to hire. I gave OP several different avenues. Only one was personal to me and that was my career. I'm sure you can appreciate me trying to set the record straight. My experiences may not be everyone elses. YMMV.

Okay - off-topic enough. Carry on!

 

[thelionqueen]

I see your points, believe me, I do. One thing that may help others better understand my side, is that in Colorado, you do not need to be licensed in any way to be a mortgage broker. Honestly, anyone, with experience or not, could start up an LLC and start doing mortgages.

I happen to have several years experience in Mortgage Loans and am a very ethical person/business person.

I agree with most everything the previous poster stated, and understand many comments. However, to state that someone should change professions for the actions of others makes absolutely no sense to me.

I have high morals and ethics but I also have common understanding of business practices. To quit because of actions of others in their line of business is kind of like saying professional baseball players should quit their professions because of all the use of steroids going around. Just doesn't seem logical.

To each his own. I am not trying to stir anything up, just give people a heads up. It does happen, and it happens all the time (at least in the state where I work) be careful when choosing a mortgage lender, do your homework. That's really all I wanted to say

 

[Am_I_There_Yet]

I see your points, believe me, I do. One thing that may help others better understand my side, is that in Colorado, you do not need to be licensed in any way to be a mortgage broker. Honestly, anyone, with experience or not, could start up an LLC and start doing mortgages.

As scary as it is, in order to get your loan officer's license, it's only a short one day course. The test was a booger though. (My step-mother-in-law is an agent in Littleton, btw)

Real Estate on the other hand was over 200 classroom hours. Go figure.

I agree with most everything the previous poster stated, and understand many comments. However, to state that someone should change professions for the actions of others makes absolutely no sense to me.

Bad, or not well-thought out wording on my part. I just know I would hate being in an industry where there was so much, for the lack of a better word, crud, going on.

Not to say that there aren't unethical real estate agents in Houston and I'm still going at it! So... I guess you could say, "Put your money where your mouth is!", right back at me!

I have high morals and ethics but I also have common understanding of business practices. To quit because of actions of others in their line of business is kind of like saying professional baseball players should quit their professions because of all the use of steroids going around. Just doesn't seem logical.

You're absolutely right! Again, bad wording on my part. I've been spending far too much time at the computer today and unfortunately that post was the only thing that was real estate-related! My brain is totally Disneyfried right now.

I hope you didn't think I was questioning your morals. Here is a peace offering...

To each his own. I am not trying to stir anything up, just give people a heads up. It does happen, and it happens all the time (at least in the state where I work) be careful when choosing a mortgage lender, do your homework. That's really all I wanted to say

Ah, the pitfalls of trying to answer questions on a public forum. Especially when you're talking about anything involving real estate! It just varies so widely from state to state. Anyway, it's always nice to hear how things work in other states. Maybe through our posts someone will learn something. Stranger things have happened.