Caution! Wells Fargo Home Mortgage

[Kelemvor]

Mortgages are sold all the time. There's nothing unusual about this. They can't sell your mortgage unless they give the buyer all the information along with it. Nothing to worry about.

My mortgage was sold before I even made the first payment on it. Usually they only get sold if you open it with a small mortgage company and then they sell it to a big one like Wells Fargo, Chase, etc...

 

[Thump553]

I've noticed a growing tendency among second mortgages/lines of credit to charge you a prepayment fee if the line is paid off within two years. This is true from major banks, not just the bottom feeders. Worse still, many times these fees are a pecentage of the total line of credit, not necessary how much you actually borrow. So you could end up paying a very substantial prepayment fee on a line of credit you never actually used but got for "unemployment insurance."

People rarely have counsel for these transactions, and many rely upon what the bank officer/loan broker chooses to tell them. Read the papers (at least your mortgage/line of credit note) carefully. If its a consumer transaction, and not to buy the property, you have three business days post closing to change your mind. Re-read the papers then and walk out of the deal if you find any unpleasant surprises.

BTW, Vic's and Networkdad's explanations were right on the mark. Your lender has to have a privacy policy, and you have to have the right to opt out. Look at your paperwork again.

 

[ICantAffordIt]

Really, no bank is going to buy a mortgage from Wells Fargo without knowing who is making the payments and their credit-worthiness. It's not like Julio from down the block is gonna go to Wells Fargo with $20 in hand and ask to buy your SSN.

 

[sat4fun]

Originally posted by: Lestan
Actually this could be a hot deal for me if someone could tell me how to get a 4.625 rate. We just got a house and the best we could do was 5.5 :-( Of course, we're first time home buyers, had no money down, and we used a broker, so I'm not complaining. But if we had skipped the broker and gone directly to lender, could we have gotten a better rate or is that riskier for first-timers?

You can easily get that rate if you want to go ARM, 5/1 or 15 year or with points, but for a 30 year fixed, 5.5% if it is no cost/points is very competitive. Personally I think that anyone that takes an adjustable in this market needs his head examined. Lock in these low fixed rates.

 

[Vic]

Originally posted by: Lestan
Actually this could be a hot deal for me if someone could tell me how to get a 4.625 rate. We just got a house and the best we could do was 5.5 :-(

Of course, we're first time home buyers, had no money down, and we used a broker, so I'm not complaining. But if we had skipped the broker and gone directly to lender, could we have gotten a better rate or is that riskier for first-timers?

5.5% is a very good rate. I would be happy with it if I were you, especially now that mortgage rates have gone up a bit.

 

[DQderrick]

Just refi-ed last month. 5/1 ARM 5.5% no prepayment penalty. I got the ARM to help afford the home we got into. I'd go fixed if I could. I also have a second which is sporting a 6.5% adjustable with no prepayment penalty. This is a zero down loan.

I refi-ed with CountryWide. They have no prepayments, no PMI, and was told they don't resell their loans. We'll see.

I went through a loan agent that sells CountryWide loans. I'd highly recommend them.



DQ

 

[mzkhadir]

From what I found out, Washington Mutual is an exceptional company to work with. If they sell your loan on the second hand market, you can still contact them to find out whats happening on the loan.

 

[Wei]

Originally posted by: Vic

Originally posted by: Lestan
Actually this could be a hot deal for me if someone could tell me how to get a 4.625 rate. We just got a house and the best we could do was 5.5 :-(

Of course, we're first time home buyers, had no money down, and we used a broker, so I'm not complaining. But if we had skipped the broker and gone directly to lender, could we have gotten a better rate or is that riskier for first-timers?

5.5% is a very good rate. I would be happy with it if I were you, especially now that mortgage rates have gone up a bit.

depends on the term. the 4.625 was a 5/1. is your 5.5 rate also 5/1?

My am with HSBC ever since last year with a 5/1 at 5.15 and this year they volunteerly adjusted me to another 5/1 @ 4.15 which saved me about 250 a month.

 

[nebula]

Originally posted by: sat4funPersonally I think that anyone that takes an adjustable in this market needs his head examined.

But if you know you are going to be moving within 5 or 7 years, then why not take advantage of the lower rate of the ARM? I just closed on Monday, 7/1 ARM 4.625% and a 2nd HELOC, variable but at 5.5% now. We're in a townhome and we know that within a few years we will want to move into a single family home, so no point in a 30-year mortgage.

HELOC = Home Equity Line Of Credit

 

[Vic]

Originally posted by: Wei
depends on the term. the 4.625 was a 5/1. is your 5.5 rate also 5/1?

My am with HSBC ever since last year with a 5/1 at 5.15 and this year they volunteerly adjusted me to another 5/1 @ 4.15 which saved me about 250 a month.

As a loan officer for more than 8 years, I can tell you that people put far too much emphasis on rate. Mortgages, while not rocket science, are far more complicated that just "rate".
Everytime you refi'ed with HSBC, did they re-amortize the loan back out to 30 years? If so, you are losing money. Lots of money. Years of mortgage payments thrown out the window.
That $250/mo. savings (or the part of the savings that wasn't from re-amortization) is all interest that you won't be able to deduct from your income taxes next year ($250 * 12 months = $3,000 / 27% tax bracket (guess) = $810 more in taxes that you will pay next year... don't expect a big refund -- didn't your bank tell you?).
That 5/1 ARM will go up in 5 years. We just had the lowest rates in 40+ years and you took out an ARM???? You could have guaranteed yourself 5% for life. You could have used that low interest and monthly savings to shorten the term of your loan, saving tens of thousands in interest.
Mortgages are more than rate. Just food for thought....

edit:

Originally posted by: sat4fun
Personally I think that anyone that takes an adjustable in this market needs his head examined. Lock in these low fixed rates.

I completely agree. Getting an ARM when fixed rates are at (more or less) all-time lows makes no sense whatsoever. And, if you're refinancing out there, lock now because rates are going up and in a hurry. You still have a chance, people...

 

[nebula]

Vic
But the ARM is based on the short term lending rate correct? So yes it will probably go up in 5 years but it doesn't have as much swing as the mortgage rate. At least that's what my lender told me.

 

[ExplodingBoy]

I think a more likely thing to be CAUTIOUS about in this Wells-Fargo deal is the fact that the loan amount you end up with mysteriously seems to be much higher that your current balance on the loan. When I asked them about it they said it was because my current lender included some kind of fees. But I couldn't get more detail than that.

 

[Vic]

Originally posted by: nebula
Vic
But the ARM is based on the short term lending rate correct? So yes it will probably go up in 5 years but it doesn't have as much swing as the mortgage rate. At least that's what my lender told me.

I disagree with your lender. Dig up your loan documents and find the "Federal Truth in Lending Disclosure". Under the APR boxes will be your payments schedule. It probably says 60 months at one payment, 12 months at another, and then 288 at another. Those 2 payment adjustments are based on today's market rates. So if market rates go up, then your rate will go up even further. There are caps to how much your rate can go up though. Usually 2% per year (after the intial 5 year discount), and roughly 7-10% lifetime (above the initial rate).
But then again, I don't like ARMs. I don't think they're a good loan for the customer. And, when rates are low, I try to advise against customers refinancing to another 30 (if possible). The best way that a borrower can save money on their mortgage is not just by lowering their interest rate, but by shortening their term.

 

[Bookie]

Please read vic's first post, this is a stupid thread and not the place to be educating people on mortages.

 

[Vic]

Originally posted by: ExplodingBoy
I think a more likely thing to be CAUTIOUS about in this Wells-Fargo deal is the fact that the loan amount you end up with mysteriously seems to be much higher that your current balance on the loan. When I asked them about it they said it was because my current lender included some kind of fees. But I couldn't get more detail than that.

Surely you received a Good Faith Estimate? Signed loan documents in escrow, including a HUD-1 Settlement Statement that detailed any and all costs and fees?

<- does not work for Wells Fargo

 

[nebula]

Originally posted by: ExplodingBoy
I think a more likely thing to be CAUTIOUS about in this Wells-Fargo deal is the fact that the loan amount you end up with mysteriously seems to be much higher that your current balance on the loan. When I asked them about it they said it was because my current lender included some kind of fees. But I couldn't get more detail than that.

Serious? I'd call them back right now and tell them they need to give you more details. I wouldn't think a big company would be pulling shenanigans but threaten them.

How much did the amout vary by? Was this after a refi or when you check your balance? There will be a difference between the current balance and the payoff amount, but both will be disclosed.

 

[Allaamu]

Originally posted by: Bookie
Please read vic's first post, this is a stupid thread and not the place to be educating people on mortages.

It's a harmless thread dude. Just chill.

 

[nebula]

I here ya Vic and I just looked at my papers, but it doesn't say what that rate is based on, not in that document anyway. But like I mentioned, I know I will be buying another house within 7 years, I have a 7/1, so I got a lower fixed rate for that time frame.

 

[Borealis]

Originally posted by: Vic
I completely agree. Getting an ARM when fixed rates are at (more or less) all-time lows makes no sense whatsoever. And, if you're refinancing out there, lock now because rates are going up and in a hurry. You still have a chance, people...

I used to think like that, but you have to remember that different people need different things. Before I sold my first house I had a 30 year, 30 year refi, and 15 year refi mortgage on it, but from the start I planned to be in it less than 7 years. We sold after 4 years. If I'd had any sort of ARM (a 5/1 or 7/1) we could have been saving hundreds each month. So what if I couldn't deduct that interest-- that's stupid thinking. Keep $1000 more each year, pay $300 in taxes, you are still up $700.

If you expect to move within a shorter period of time, which young professionals do, ARMs can make a lot of sense. Sure I can lock in a fantastic "as low as it will ever go" rate for 30 years, but if I move within 10 years, it does me no good to pay extra money for a fixed mortgage.

Here's a mortgage calculator that shows you the total payment difference between an ARM and a fixed mortgage over time. Among other things, you guess at the shortest and longest time you will stay in your house: Fixed vs ARM Calculator

Is there any risk? Sure. You risk the chance that your situation changes and you stay in your house longer than expected. But remember, even after the interest rate on your ARM rises, you can stay put for several more years and still "break even" on total money spent.

-B

 

[nebula]

Wait a minute. Are you two (Borealis and Vic) saying that you can't deduct the interest from an ARM on your taxes? If so, why? Or am I reading something wrong?

 

[sxr7171]

Originally posted by: Borealis

Originally posted by: Vic I completely agree. Getting an ARM when fixed rates are at (more or less) all-time lows makes no sense whatsoever. And, if you're refinancing out there, lock now because rates are going up and in a hurry. You still have a chance, people...

I used to think like that, but you have to remember that different people need different things. Before I sold my first house I had a 30 year, 30 year refi, and 15 year refi mortgage on it, but from the start I planned to be in it less than 7 years. We sold after 4 years. If I'd had any sort of ARM (a 5/1 or 7/1) we could have been saving hundreds each month. So what if I couldn't deduct that interest-- that's stupid thinking. Keep $1000 more each year, pay $300 in taxes, you are still up $700. If you expect to move within a shorter period of time, which young professionals do, ARMs can make a lot of sense. Sure I can lock in a fantastic "as low as it will ever go" rate for 30 years, but if I move within 10 years, it does me no good to pay extra money for a fixed mortgage. Here's a mortgage calculator that shows you the total payment difference between an ARM and a fixed mortgage over time. Among other things, you guess at the shortest and longest time you will stay in your house: Fixed vs ARM Calculator Is there any risk? Sure. You risk the chance that your situation changes and you stay in your house longer than expected. But remember, even after the interest rate on your ARM rises, you can stay put for several more years and still "break even" on total money spent. -B

I agree.

Also, to aviod reamortization issues, you can always select a shorter term on a refi if you can handle the payments.

 

[Vic]

Originally posted by: nebula
Wait a minute. Are you two (Borealis and Vic) saying that you can't deduct the interest from an ARM on your taxes? If so, why? Or am I reading something wrong?

Not at all. ARMs do, however, tend to have lower interest rates, and that means having less mortgage interest to deduct from your taxes.
As for whether one should get an ARM or a fixed when only planning to stay in the home for a short period of time, the jury's still out on that one. There's simply no "right" answer, it depends on the borrower. First, ARMs have risk. If the borrower is willing to accept the risk, then that's ok. Second, are you a short-term or a long-term financial planner? Do you want to save money now with an ARM, or do you want to have more equity when you sell your house by getting a shorter fixed rate term?
sxr7171, virtually all 1st mortgage ARM products that I am aware of have 30 year amortizations. One thing that a savvy borrower could do, however, is get an ARM and then make 15 year payments. That way they could get the benefit both of the lower rate plus more equity when they sell. Like I said, there is no right answer. With fixed interest rates at all time lows, I simply feel that they are the better bet.