Anyone in home lending/mortgage company etc? Got a few questions...

[Bam]

Ok, so I got approved for a mortgage as I'm trying to buy a house, but I've got a few questions.

 

Basically I'm doing a no doc/stated income loan, which all I had to give was my name/ss# and they ran my credit and I got approved.

 

I got approved for more than enough @ 6.5%, no fees/points on a 30 year fixed rate with 20% down.

 

First off, is this a good rate for my situation?

 

Secondly, if I only put 15% down, I can get the same loan, just at 6.75% instead, which is about $20/month MORE on the payment, but it would allow me to still have some cash on hand vs. putting EVERY CENT I have down. Is this a good deal still?

 

Lastly, I can ONLY avoid the escrow of taxes if I put the full 20% down, is it a huge deal to have the taxes escrowed? I hear people bitching and complaining about mortgage companies paying it late/wrong or whatnot, and I'd rather just save the $300+/- per month and pay it myself twice a year, I guess its not horrible, right?

 

I just want some opinions on my rate/terms and how people do their taxes etc to make sure I'm not missing anything or being talked into something I should avoid.

 

Any help appreciated.

[copperhead]

Thats a good rate.

 

If you put down less than 20%, you will have to pay PMI until you have 20% of the home's value paid off. I THINK its around $100 a month, but not totally sure.

 

Go ahead and escrow the taxes and insurance. One less thing to forget about, or have to worry about not having the money for when it's due.

[Bam]

Well that's actually why I took the hike in interest rate. I can still forego the PMI at the 15% down, and since I figured $20/month was less than the $100, it seemed like a good deal.

 

thanks for the info, I figured it wasn't the end of the world to escrow.

[excell]

I come from the school of thought to take the lower interest rate and put more down ONLY if you plan on living in the house a long time. You will save a lot more money in interest over 30 years.

 

I escrow because it's painless. Technically, to get the best return, I shouldn't escrow and put the money into a savings account so it can collect interest until I need to pay - but then that takes a lot of discipline. If you fall off the discipline wagon even for a short time, you could wind up fucked quickly. As long as your lender is a big company (National City Mortgage is my lender) they shouldn't ever miss a beat on escrow payouts. Smaller lenders, I might be concerned...

[Guest hotrodmama024]

That seems you are getting an excellent rate especially for a no doc/stated deal. You should put your taxes and insurance in your payments though. Makes it alot easier in the long run.

 

Find out who your lender will be. Expecially in Ohio right now.. Alot of Lenders and mortgage brokers are going out of buisness, due to the change in mortgage laws. You do want to make sure you are with a company that is staying around for awhile.

[Bam]

I come from the school of thought to take the lower interest rate and put more down ONLY if you plan on living in the house a long time. You will save a lot more money in interest over 30 years.

 

I escrow because it's painless. Technically, to get the best return, I shouldn't escrow and put the money into a savings account so it can collect interest until I need to pay - but then that takes a lot of discipline. If you fall off the discipline wagon even for a short time, you could wind up fucked quickly. As long as your lender is a big company (National City Mortgage is my lender) they shouldn't ever miss a beat on escrow payouts. Smaller lenders, I might be concerned...

 

I agree with both your points. I would love to get the lower rate, but as I've said, its a stretch. I don't see myself in this house a long time, I'd say 8-10 years MAX. Mainly I'm just putting money down to lower my payment.

 

I calculated the difference on the rates on the same mortgage amount and over a 5 year span it'd cost me about $2000 I think, if I did it right. So it wasn't a bank breaker, but I agree, I'd rather pay cash for a house, lol.

 

Secondly, that's the main reason I asked about the escrow, its sitting in a non-interest bearing account forever, whereas my savings account is over 5%, and every little bit helps.

 

thanks for the thoughts.

[LJ]

Don't escrow your insurance. Get your seller to pay your closing costs and 1 year of your insurance is paid at closing as a prepaid

 

Plus if you buy a house and close before the end of the year you will get the prorated property taxes paid to you

[Mr. Jones]

I come from the school of thought to take the lower interest rate and put more down ONLY if you plan on living in the house a long time. You will save a lot more money in interest over 30 years.

 

I escrow because it's painless. Technically, to get the best return, I shouldn't escrow and put the money into a savings account so it can collect interest until I need to pay - but then that takes a lot of discipline. If you fall off the discipline wagon even for a short time, you could wind up fucked quickly. As long as your lender is a big company (National City Mortgage is my lender) they shouldn't ever miss a beat on escrow payouts. Smaller lenders, I might be concerned...

 

I am through National City as well. They have never missed a beat in the past 4.5 years

[Mojoe]

I want to know who your lender is that will do a stated/no doc loan @ 6.5% with 20% down, with no closing cost.

[Bam]

I want to know who your lender is that will do a stated/no doc loan @ 6.5% with 20% down, with no closing cost.

 

I never said there was no closing costs, they've been estimated at $1900 on a $150k mortgage. It's Countrywide, which is another reason why I'm trying to close ASAP, lol.

[LJ]

I never said there was no closing costs, they've been estimated at $1900 on a $150k mortgage. It's Countrywide, which is another reason why I'm trying to close ASAP, lol.

 

They will be higher

[Bam]

They will be higher

 

True, but most likely I'm going to have the seller pay, at least that's what I'm hoping. But $1900 is my good faith estimate, I'm not too worried.

[Mojoe]

If you can get it done. Do it. Good luck. If you don't want to put any money down and have a rate close to that, let me know.

[PonyPimpstress1647545491]

Putting that much down is insane. Eric and I didn't put nearly that down and got about that rate. No PMI either. Dunno your situation but MoJoe is da man, he knows his stuff.

[Bam]

You have to understand that I'm 21, and there was NO financial information exchanged. As far as they know I'm a bum that doesn't make jack, or I'm a multi-millionaire that doesn't want anyone to know.

 

That's the difference. Joe probably does know his stuff, but if I have that much to put down and can get a rate LOWER than what Joe can offer, which I can, why would I use Joe's service's?

 

Just curious?

[Bam]

And honestly, putting LESS than 20% down is crazy IMO, especially with this market how it is, that's how people lose their house. Their value either doesn't appreciate or it actually depreciates so that they cannot sell it. I'd rather not worry about that considering no one know how long the housing recession could or will last.

 

20% down used to be, and still should "the norm".

 

What rate did you get, which type of mortgage and what month/year did you get it? There's a lot of factors...

[thorne]

if you have that 20% still in the bank would it matter? Me personally would not buy a house right now. POP.

[PonyPimpstress1647545491]

We baught our house less than 6 months ago. We got 6.875. btw, I thought the norm used to be 10% (but which ever). If you are paying full value for a house in this kind of market, you aren't looking to hard for a house and don't really care about spending your hard earned cash. Because most people don't know how to control their finances people who do can take advantage of a bad situation... meaning that you can find a bank owned property for a pretty nice ass house and have instant equity. Having instant equity (and enough of it) is what is going to keep you on top regardless of how much you put down. Besides if you don't put that money down, there is normally no penalty for early pay off on a loan so you can always pay more to your principal.

 

I understand what you're talking about the no financial info exchanged and considering your age that is a quote on a rate almost like a pre-approval letter from a credit card company. Before you go to close they'll ask to pull a report to lock in that rate for you and you'll find that their 6.5% is going to go up significantly.

 

As for the reason that I suggest Joe... he's in the business to help people by showing them all of their options and letting them know how to save money based on their situation. When we were buying our house we went thru alot of brokers and all of them were out to make a quick buck bc 9/10 are working on comission.

 

This is a decision that is a life changing one and to explore all options and get as much info as possible is something i encourage. If Joe doesn't have a consulting fee (which i don't think he does) what could be the harm in contacting him and picking his brain?

 

p.s. Joe, since I'm selling you do I get some sort of referral fee? hehehe j/k

[Bam]

if you have that 20% still in the bank would it matter? Me personally would not buy a house right now. POP.

 

That's not the thing with the majority of american's, its the fact that they cannot afford the 20% down and therefore don't have it sitting in the bank.

[Bam]

I'm glad you cared enough to respond, honestly I think you have some good points.

 

A few things though, I've already got my mortgage done up, I have the approval letter sitting on my desk, my rate is locked for 60 days, nothing's changing unless my lender runs out of money to lend, lol.

 

I also am definitely searching and negotiating VERY much on properties, I know this is a buyer's market and I'm in an excellent position, compared to most sellers. I most definitely will not pay top dollar for a house unless its completely worth it for some ungodly reason. 10-12% off LP is a good place to start IMO.

 

I would much rather purchase a foreclosed home or one in need of repair to save some money, as I'm more than comfortable in rehabbing the house myself.

 

I've only been looking for about 45 days, so nothing crazy and I have found a few good homes, this thread was just to make sure of what I thought was right.

 

Lastly, 6 months is HUGE in the real estate market, in terms of price, rates, etc, I mean a week can be a big difference as well.

 

Currently the average 30 year fixed rate is a 5.95% I believe, so for me to be paying .5% more for my loan is nothing to be complaining about in my situation.

 

Where'd you guys purchase, do you still feel you got a good deal and the house is right? Just wondering...

[PonyPimpstress1647545491]

Considering that we have an instant $30k in equity before the house was rehabed I think we did alright. We are still very happy with our house. Hope that everything goes as well as you make it sound, you seem to have everything locked down. Good luck.

 

As for interest rate, you might want to research what the prime rate of mortgages is and it's change over the past six months. You'll find that you might want to do a tad more research.

 

http://mortgage-x.com/general/indexes/prime_rate.asp

 

http://mortgage-x.com/general/national_monthly_average.asp

[Bam]

Considering that we have an instant $30k in equity before the house was rehabed I think we did alright. We are still very happy with our house. Hope that everything goes as well as you make it sound, you seem to have everything locked down. Good luck.

 

As for interest rate, you might want to research what the prime rate of mortgages is and it's change over the past six months. You'll find that you might want to do a tad more research.

 

http://mortgage-x.com/general/indexes/prime_rate.asp

 

http://mortgage-x.com/general/national_monthly_average.asp

 

 

That first link cannot be correct. It has the prime rate being OVER 8% for the past year, that's obviously false information.

 

The second link confirms what I said, interest rates have changed and they have gone up since you purchased. You said you purchased 6 months ago, which would be March, since then prime rate has risen over 3 tenths of a percent.

[ICEMAN1647545504]

That first link cannot be correct. It has the prime rate being OVER 8% for the past year, that's obviously false information.

 

The second link confirms what I said, interest rates have changed and they have gone up since you purchased. You said you purchased 6 months ago, which would be March, since then prime rate has risen over 3 tenths of a percent.

Prime rate has nothing to do with the 30 year fixed rates... prime rates are mostly for HELOC's (Home Equity Line Of Credit) and yes they are over 8%. Also the market has changed a lot in the last 6 months. If you put 15% down you will have to escrow with Countrywide and you will have PMI. You can keep the same rate and pay PMI or you can bump the rate and do what is called LPMI (Lender Paid Mortgage Insurance). That is why your rate goes from 6.5% to 6.75%. LPMI meens that you pay the PMI within the rate (with the rate increase). This is better for you because PMI is not tax deductible but interest on your home is... so technically, you can get a tax advantage on the PMI also... By the way, after you get under 78% of the value on the home your rate will go down to the 6.5% as the LPMI will fall off and will no longer be needed. The program that you are being put on is called Conforming 30 year fixed Fast&Easy and the minimum you need down to qualify is 10%... PM me if you need more info... I'll be glad to explain it to you...

[Mojoe]

Surerhawk and I PM'd briefly last night. Jenn, thanks for the kind words.

 

This is not the 1970's anymore. We are also not in a rural area, for the most part. Buying a home is nothing more than an investment these days and should be treated as such, DEPENDING ON YOUR GOALS. If your goal is to buy and house and retire in it, put all the money down, or into it you want. Less than 5% of home buyers do this before they are in their 40's. If you know you are going to move, why put money into the home? Equity does not earn interest. Leave the money where it will work for you, invest it or leave it in an account to get interest. Paying off a house would be great, but it might not be the best move with your money at an early age.

 

There are so many options these days, it's overwhelming. The most important thing is to feel comfortable the people you are working with have your best interest in mind. On this site I simply put myself out there to help advise. If someone wants me to do their loan, we can go from there. My consultations are free. I would rather guild people on here to a good decision, than get money from them and have tension.

[PonyPimpstress1647545491]

Any further development on this?