So....how do you shop for mortgage loan?

[BD231]

Find a broker who'll hook you up with an Account Exec of the lender itself.

The higher rate a broker chooses, the higher percentage of the loan amount he gets back. Basically you get fvcked no matter what broker you got through. For the tiny percentage he gets on a higher rate, you're paying 10's of thousands more just so he can make he's sh*tty little few thousand. Crappy system overall.

 

[MrSquished]

yep. And then the broker sells your mortgage to one of the big banks, a week after closing.

Mortgages are bought and sold even before closing

 

[AdamK47]

If you know your are going to get a mortgage then you can shop around and get your credit score pulled as many times that is needed within a 45 day period. It will only count against your credit once no matter how many times it's pulled within that period.

I bought another house in January and shopped around a bit (although I leaned heavily towards USAA). Had the lowest rate locked in (points paid for) with excellent credit before the rates jumped in December.

 

[gorb]

I just did some googling on rates. Didn't see any banks/lenders I recognized with rates lower than what my friend's agent at State Farm offered me so I went with her and State Farm Bank. Rate was locked in April 2016 at 3% for 15 years. Some of the lenders I saw offered 2.875% or whatever but that wasn't counting any potential fees.

 

[IHAVEAQUESTION]

I don't think anyone has explained some important bits, although a few of the posts are fairly long, so I may have skimmed over it... but...

You only need a pre-approval to shop any houses you want, it should not require a hard credit check.

If you know your score is 800 (anything above 740 or 760 will get you the best rates at any bank), just ask / look at different banks and see what their BEST rates are and compare them. I went with PNC at the time because they had the best rates AND lowest fees of the places I checked (and I also have a solid credit score like yourself) and I got the rate they indicated was their best. I used Chase for the pre-approval and to make formal offers, but when the time came for the mortgage process, I used PNC.

In short, the pre-approval lets you shop right away and you get it very fast (same day in my cases). Once you get that, just look at rates at different banks / credit unions, or pay a mortgage broker do it for you. I don't know if they cost anything, but it's pretty easy to do and I would not pay for a service to do it for me.

Good luck!

So you went with a different bank than the one gave you pre-approval? Hmmm, interesting. I guess pre-approval really doesn't mean all that then.

 

[zinfamous]

So you went with a different bank than the one gave you pre-approval? Hmmm, interesting. I guess pre-approval really doesn't mean all that then.

pre-approval doesn't mean anything, really. It's a quick and cheap piece of paper to wave around which, in many cases, isn't really going to command most sellers' respect. If anything, it gives you an idea of where you can target your offer, but it's very vague. It's better to skip it altogether and just shop around for local brokers with good ratings and reviews. They will also do a pre-approval that doesn't take all that long, but do request a bit more information so that they can give you a better idea of where you stand. They'll also give you some estimates on total needed to close, which is quite different from what kind of cash you will need to make an offer.

 

[Tweak155]

pre-approval doesn't mean anything, really. It's a quick and cheap piece of paper to wave around which, in many cases, isn't really going to command most sellers' respect. If anything, it gives you an idea of where you can target your offer, but it's very vague. It's better to skip it altogether and just shop around for local brokers with good ratings and reviews. They will also do a pre-approval that doesn't take all that long, but do request a bit more information so that they can give you a better idea of where you stand. They'll also give you some estimates on total needed to close, which is quite different from what kind of cash you will need to make an offer.

I bought 2 houses with just a pre-approval during initial offer, so I don't know what you mean?

The 2nd house I went back to PNC just because I liked working with them previously, but in both cases I only used a pre-approval to make offers.

EDIT:

I will say, anything in addition to just the pre-approval letter will work in your favor when making the offer. If the pre-approval is indicating you are putting 10% down, show them a statement that says you have the 10%. In either event, the pre-approval is what I had to get before even a real estate agent would work with me. Hardly just a "cheap piece of paper". Possibly market based-bias too though.

 

[zinfamous]

I bought 2 houses with just a pre-approval during initial offer, so I don't know what you mean?

The 2nd house I went back to PNC just because I liked working with them previously, but in both cases I only used a pre-approval to make offers.

EDIT:

I will say, anything in addition to just the pre-approval letter will work in your favor when making the offer. If the pre-approval is indicating you are putting 10% down, show them a statement that says you have the 10%. In either event, the pre-approval is what I had to get before even a real estate agent would work with me. Hardly just a "cheap piece of paper". Possibly market based-bias too though.

yeah, I'd say you're more right than I am. I'm basing stuff on what some agents tell me, and it's not like anyone trusts salespeople. Bunch of lying scum, anyway.

 

[MrSquished]

yeah, I'd say you're more right than I am. I'm basing stuff on what some agents tell me, and it's not like anyone trusts salespeople. Bunch of lying scum, anyway.

I work with people before they have a pre-approval but because I have to being new. But really why should an agent waste their time with someone who may have no clue what their true buying power is. It's just logic.

 

[AdamK47]

There are great lenders who don't go through 3rd parties like brokers. USAA is one of them.

 

[zinfamous]

I work with people before they have a pre-approval but because I have to being new. But really why should an agent waste their time with someone who may have no clue what their true buying power is. It's just logic.

I agree, it's just what my agent told me. I showed him my pre-approval letter at the first sit-down, after telling him over the phone my target purchase price, and he just waved it off as garbage. "No one cares about some nameless person from some big bank forwarding you a piece of paper. Here! Talk to these local people that I totally trust and are friends of mine because they are awesome!"

And, I get it. Part of picking the right lender is picking someone that has a history of closing smoothly. I do have some friends that have had issues dealing with Wells Fargo branches or BoA, where because it is exceedingly rare to deal with an actual broker that can handle things in office, they have to deal with central approval, which can lead to delays. In the end, I ended up getting what I wanted pretty much at the price I was aiming for, and everything went relatively smoothly. So, I can't really say that going with an agent was bad; but I did realize how much more money I lost, essentially supplementing his fee through the seller's and seller's agent listing price, as well as not being able to negotiate closing costs directly. There is a lot of separation that agents inject between the two parties which, I understand to a degree, but a lot of this is aimed at the agents protecting their commission if the deal falls through.

I didn't meet the seller until the final walk-around, and the guy was totally cool, laid-back, and more than willing to work things out. That wasn't really the message I was getting through my agent during the month or so process of making the offer and closing. So, while I ended up pretty much where I wanted and I do give credit for that, realizing that handling all of the papers myself would have been highly stressful and frustrating, I understand that I spent way more money than necessary...but I accepted that going in. And now I know. :\

 

[Scarpozzi]

I am a member of a couple of credit unions. If you go with the brokers, your loans may get sold and re-sold. I feel like with a CU if I need some leeway for something, they're not in it for the money(as much) and are much easier to deal with than banks or loan sharks. My CU's are typically very competitive and I can simply transfer or schedule transfers of cash from savings or checking to make monthly payments.

My primary credit union had a good listing of mortgage options including 5 year ARMs, 10-15 year mortgages, 20, 25, and 30 year mortgages to choose from. The 10-15 years had the same rate and the rest increased with the length of the loan. You can always pay points if you want, but many loans don't. Paying points is just you paying guaranteed interest to the lender to make the rate decrease. If you plan on paying it off sooner than the loan term, it's a waste of money, but doesn't cut in too much because they're typically just 1%.

I recommend getting a mortgage calculator to see the difference in a 15 year and 30 year mortgage cost. You'll be amazed to see how much money you can save (guaranteed) by just paying 20-30% more monthly on the property. It's one of the reasons I always recommend buying a property that you can easily afford, so you can double down and not throw so much money toward financing it.