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

[IHAVEAQUESTION]

Hey, so I am new to real estate and just last week, I called a couple of mortgage brokers to see the type of mortgage and rate I could qualify for. I wanted to do this without incurring a credit pull since I haven't decided whether this is a good time to buy a house (residential, for myself...not looking to make a profit or turn it into a rental property). Anyway, so one of the brokers will be starting out with a new bank next week and was kind enough to tell me as much details without incurring a credit pull. Another broker (not sure whether he works for any particular bank) simply asked to provide all the info and he will give me a pre-approval letter.

My FICO is right around 800 but I am sensitive to having multiple credit pulls. Ultimately, I want to compare rates from different sources/brokers without incurring too many credit pulls. So below are some of my questions:

1) Will a broker working for one particular bank be at a disadvantage compared to one who can pull mortgage offer from multiple financial institution?

2) Does a broker has to offer the rate on pre-approval letter? And can the rate change between pre-approval date and the date of purchase?

3) Any tip to shop around?

Thanks!

 

[Ken g6]

I really don't know, but the first thing that occurred to me when I saw your post was "LendingTree". I guess their commercials are working.

Second, it seems like it would be nice if you could get a loan from someplace that wouldn't sell your mortgage as a security. That makes it easier to negotiate if anything goes wrong.

 

[IHAVEAQUESTION]

a place that wouldn't sell my mortgage...you mean the mortgage servicing right? I see what you mean but I don't know any place good at not selling it.

 

[pcgeek11]

I really don't know, but the first thing that occurred to me when I saw your post was "LendingTree". I guess their commercials are working.

Second, it seems like it would be nice if you could get a loan from someplace that wouldn't sell your mortgage as a security. That makes it easier to negotiate if anything goes wrong.

My first mortgage was passed around like a family tub of popcorn at the theater. Pissed me off and we refinanced through the Navy Federal Credit Union who doesn't sell your mortgage. Big plus in my opinion.

Are you a member of a credit union?

 

[IHAVEAQUESTION]

nope, I am not. But i thought a mortgage broker can pull offers from multiple sources, including credit unions.

 

[Red Squirrel]

I didn't really shop for mine, just went with my existing bank. Convenient to have all your financials in one place and often you get better deals that way too as far as interest rate goes. I guess it does not hurt to shop around though, I just never bothered. Generally you'll get a decent interest rate at the bank you've been dealing with, as if you already have lot of services there they can usually work something out.

I eventually switched banks when they decided to lay off a bunch of people to replace them with TFWs, now I'm with a credit union. 3.75% interest I think? I'd have to login and check. I think they're even lower now days but at the time that was a really good rate.

I'm still impressed with my credit union, I walked in there with nothing, walked out with a regular bank account, a 10k credit line, a credit card, and started the mortgage transfer process. They paid like $1,000 of the transfer fee too. I swear by credit unions now. Well mine is called a "caisse" but it's basically the same idea I think.

 

[MrSquished]

It's better to go with a good mortgage broker vs straight to a main bank. Mortgages straight from most of the big banks are more likely to fail. For example around here Chase is known as the worst. I had a deal where my buyer won a bidding war for a condo - we used her Chase bank pre-approval with the offer. We won the bidding war but under the condition we don't use chase for her mortgage. They were willing to take thousands less to avoid Chase and its shenanigans.

The thing is you need to find a good mortgage broker. Either get recommendations from friends or co-workers or get a good real estate agent who has a list of the best in the biz at the moment. Just make sure it's a good agent.

 

[boomerang]

AFAIK, there is nobody out there that is actually going to hold the paper anymore. No lender is going to stick his neck out these days. The mortgage will be processed, fees will be collected and the paper will be turned over to whomever works out best for them. Mortgages are processed to meet the requirements of the .gov as they are the ones that will ultimately back your loan. The OP can satisfy his curiosity by looking at rates online. No need to get the professionals involved and therefore no credit pulls.

Small processors (who are going to sell the paper also) are having a tough go of it right now because the requirements of Freddie and Fannie are onerous, ever-changing and costly to the processor. This means less choice for the consumer. If you've ever seen an estimate of closing costs regarding a mortgage you will know that a whole lot of people will get their hands in your pockets. The creative names they have come up for the slew of fees is actually rather impressive.

If you're curious what you would qualify for, take up the offer of the pre-approval letter. The rates on any given mortgage (10 yr. fixed, 15 yr. fixed, etc.) are going to be so close as to not amount to a whole hell of a lot. Plus, shopping now when you are on the fence makes zero sense. Once you decide it's a good time to buy is the time to get serious. Interest rates can and will change between now and then. In the meantime, mortgage calculators abound online.

We are having a new home built. Uncertain what our first home would bring, (the second home having already been sold) we applied for a mortgage. The requirements are daunting, invasive, maddening and the processors come across as numbskulls because they are attempting to satisfy ever-changing requirements. Plus, they are planning on selling the mortgage and are meeting varying requirements from each potential buyer. Changes to Dodd-Frank are in the works. Waiting until those changes are made could make your life much, much simpler. I can't stress this enough.

By way of example, we are drawing on an IRA account that is handled through T.D. Ameritrade. I provided the processor (remember, they are not the lender) the following;

Statements from T.D. showing the balance in the account and the disbursements being made from it.
Bank statements showing the money coming into our bank account.
Two years of tax returns that clearly showed those same funds as income.
1099-R's for those two years that came directly from T.D.

This was not enough. The processor required a letter from T.D. confirming that I was in fact drawing from my account with them. I shit you not. I asked them if they would require a letter from a higher authority than T.D. confirming that the letter from T.D. was in fact legit. In other words, where does it end?

But I was able to put a stop to all of it. Our primary residence was worth far more than I had estimated, has sold and the mortgage will not be required.

The OP is putting the cart before the horse. Get the pre-approval if you feel you need it to know how much you can borrow, how expensive of a home you can buy, etc., and when you make up your mind, take it to the next step. But be aware that the pre-approval letter is pretty much meaningless the day after it's issued. Circumstances change. The reasonable estimate of what you qualify for today, won't mean a whole lot even six months from now.

 

[boomerang]

Chase killed the first sale on our primary residence. The appraiser wasn't aware that I had an IP camera on the mantle. He spent less than five minutes in the house and didn't even walk down the hallway to see the bedrooms and the two full baths. The appraisal came in 12% below listing/selling price and killed the deal. We sold it the second time in two days and the appraisal came in right at list price.

Chase is not interested in going through the steps required to make mortgage loans. They can't turn people away because somebody is going to sue them for discrimination. So they take the app, charge the fees they can as the process moves along and when it hits a snag, they are off the hook and made a few bucks in the process.

F*ck Chase.

 

[MrSquished]

Chase killed the first sale on our primary residence. The appraiser wasn't aware that I had an IP camera on the mantle. He spent less than five minutes in the house and didn't even walk down the hallway to see the bedrooms and the two full baths. The appraisal came in 12% below listing/selling price and killed the deal. We sold it the second time in two days and the appraisal came in right at list price.

Chase is not interested in going through the steps required to make mortgage loans. They can't turn people away because somebody is going to sue them for discrimination. So they take the app, charge the fees they can as the process moves along and when it hits a snag, they are off the hook and made a few bucks in the process.

F*ck Chase.

Yep just like my post stated, Chase is the worst.

 

[edro]

Was happy with QuickenLoans on my last mortgage.
Bankrate.com give you the best rates, but the companies may not be fantastic to work with.
I also used Sebonic in the past on Bankrate and they were fine.
And yes, Chase has terrible rates. They were like .5% higher than everyone else.
They just don't care about mortgages or savings, they aim for consumer credit.

 

[rh71]

Wells Fargo has treated us well through 2 mortgages, a refinance, and 2 payoffs. So glad that is all done now, but I'd recommend them in a heartbeat. Over 15 years, it was never sold off. Never dealt with a broker either.

Use bankrate to compare rates and see if they are in the ballpark. Even through our refinance, that's what I did. Looking pretty competitive right now: https://www.wellsfargo.com/mortgage/rates/ vs http://www.bankrate.com/mortgage.as...homepage-compare-rates_mortgage_30-year-fixed

 

[Jimzz]

My first mortgage was passed around like a family tub of popcorn at the theater. Pissed me off and we refinanced through the Navy Federal Credit Union who doesn't sell your mortgage. Big plus in my opinion.

Are you a member of a credit union?

Yep check out credit unions. When we had a mortgage it was through PenFed credit union. They did not sell it and everything was in our bank login. So to make payments, even extras, we just did online and that was it.

 

[nisryus]

My first mortgage was through Wells Fargo and I never had any problem. Loan was never sold off too. On the second house we tried Lending Tree first but man, my mail box had gotten so much spam and the rates those lenders quoted me were too great. Wife spoke with a few friends and neighbor and we ended up going with a small local mortgage lender ( or processor as the mortgage was later sold to Flagstar.. However we haven't had any problem with Flagstar so far. ). They gave us great rate and costed us less to complete the process.

 

[MrSquished]

I'll just repeat what I said before that it's best to go with an independent mortgage broker vs a big bank most of the times. All the top agents at my office recommend mortgage brokers to their clients, not a big bank. They do occasionally recommend a specific mortgage broker at a big bank because they know they have the skills. This is in NJ.

 

[RockinZ28]

I shopped online at zillow/trulia. Pick the one with the best rate. Then took that to a local bank/credit union and they matched. I'd rather do local so you can go to the office if things aren't being handled as they should. Multiple credit pulls shouldn't matter if they're within 15 days of each other. It all counts as one supposedly.

You'd have to read the terms/ask when and for how long you can lock your rate.

I've done two mortgages now, was a complete breeze both times.

 

[chimaxi83]

If your Fico is at 800, why do you give a damn about a couple inquiries? Your overall credit profile matters infinitely more than any pulls.

Sent from my LG-H820 using Tapatalk

 

[overst33r]

I had a good experience with online direct lenders. I personally used AHC Lending, but I cross shopped several. Aimloans is another good one. My local credit unions and other banks couldn't even get close.

My loan was sold immediately after closing to SunTrust and shortly after that to Freddie Mac/Fannie Mae.

BTW since you're new to real estate, I suggest you spend some time reading here https://www.mtgprofessor.com/home.aspx

 

[zinfamous]

IME, doing an over-the-phone, "no credit pull" loan offer isn't going to give you a loan offer that is worth its salt in the local market. At least, that's what scummy agents that want me to use their people tell me.

Best bet is to look around at local branches and their loan officers, see who is the most active in the area. There is no way to avoid hard credit pulls but as long as you do it all at once, it doesn't hurt your score in the eyes of lenders. As far as shopping around no, with no plan for buying, then trying again several months from now with today's pull on your score, I'm not sure--but I don't think it's really an issue.

I recently went through 3 or 4 credit pulls applying for a mortgage, and my score went from 806, down to 790 for about a week, then back to 800 now, 2 months later. As long as you stay above 760 or 775 or whatever, you have nothing to worry about. Basically: your score can't be effected to the degree that will actually matter for you, if you are starting out at 800.

 

[zinfamous]

I'll just repeat what I said before that it's best to go with an independent mortgage broker vs a big bank most of the times. All the top agents at my office recommend mortgage brokers to their clients, not a big bank. They do occasionally recommend a specific mortgage broker at a big bank because they know they have the skills. This is in NJ.

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

 

[purbeast0]

I only have had 1 mortgage (and still have it) and only went to 1 place for it - Navy Federal. They were the only place in town that didn't require PMI for putting down less than 20% (we only put down 5%) on a conventional 30yr loan, and their rates were good too for a first time home buyer.

 

[Capt Caveman]

I've had my last several mortgages with Chase. Never had a problem and it's nice to be able to access/pay my mortgage as well as my credit cards going to chase.com and they've never sold any of my mortgages. And I don't think they've ever come into my house for the appraisal, just walked the property and used comps in my neighborhood. Looking to refinance to a 15yr and other's have lower rates but not sure if I want to deal with the hassle of my mortgage being sold repeatedly.

 

[dullard]

If your Fico is at 800, why do you give a damn about a couple inquiries? Your overall credit profile matters infinitely more than any pulls.

Listen to chimaxi83. Shopping for a mortgage won't harm you a bit. A few credit pulls has no impact on your credit score, and if you do get a mortgage it will IMPROVE your credit score. What harms your credit score is repeatedly shopping around for many months and doing nothing. But even then, the impact is small and temporary in the credit score and has NO impact on your life since you are well above any threshold for which the score matters.

However if you do not shop around, you may end up paying thousands or tens of thousands of dollars more for a sub-optimal mortgage. Don't let your irrational fear of maximizing a number that doesn't matter force you into an expensive mortgage.

 

[dullard]

1) Will a broker working for one particular bank be at a disadvantage compared to one who can pull mortgage offer from multiple financial institution?

2) Does a broker has to offer the rate on pre-approval letter? And can the rate change between pre-approval date and the date of purchase?

3) Any tip to shop around?

1) The bank isn't what matters. Your mortgage ultimately will go through one of two large semi-private, semi-public entity (since no private company was willing do to it fully). They set the terms and since there are only two of them, there isn't much difference from mortgage to mortgage. You could go to thousands of different banks, but they are all likely to be dealing with the same two entities (either Fannie Mae or Freddie Mac).

2) The pre-approval letter is for the house sellers, not for you. The house sellers do not care about the interest rate. It is basically a way to tell the sellers that they should care about you (and not some bum off the streets that just wants to have fun but won't actually buy). Yes, interest rates can and will change up until you sign the papers. You can pay the bank/broker to fix the mortgage rate for you for a set amount of time. But, that is quite expensive and very temporary. Unless mortgage rates are skyrocketting (they aren't at the moment), it is usually a bad idea to pay so much money to lock in a rate.

3) You want to go to a few banks and a few mortgage brokers. While they have fairly set terms, they still have some leeway. Your credit score may say that you deserve between a 3.75% and 4.25% interest rate. The person you deal with gets to choose within that range based on their particular reading of your risk. That is very opinion based, not fact based. So just going to a few places will get you the best shot of getting the best mortgage rate.

Also, compare ALL costs. What is the interest rate? What points do you have to pay (points are basically pre-paying interest to avoid paying interest later, and can be good or very terrible to do)? What are the exact terms? What are ALL of the fees associated with it (lots of banks/brokers like to tack on silly fees like $300 to hold your paperwork for you for a few years; which should cost nearly $0 for electronic copies on a cloud).

Don't get caught up in fads like bi-weekly payments. That is basically a scam for the mathmatically challenged. Shop based on interest rates, total up-front fees, and if you get an ARM (a mortgage with rates that can go up over time) then the exact details of that (how fast and how much can the interest rate go up).

The most important tip is for you to try to figure out your future. Honestly how long will you be in that house? Most first-time buyers stay for about 5 years. For example, if you pay so many points (pre-paid interest) that it takes 15 years to reach a payback, then is a bad idea to pay points if you sell in 3 years.

 

[Tweak155]

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!