The sub-prime mess - in its simplest terms.

[annunaki]

Any advise on how to haggle with the banks/mortgage brokers? Does Lending Tree really get you the best offer? Can you take the best offer and counter offer to the lenders? Let say I get a fixed 30 year at 6.25% (is this a good rate?) could I send out a reply saying first lender to knock of 1/4 of a % gets me to sign the dotted line or do they tell me to go away?

It does not really work like that. I would also advise against doing that as most loan officers will not want to work with you. The more you understand about the process the better the deal you should be able to procure.

A mortgage rate is based upon several key factors.

1) Credit score/history

2) Loan-to-Value Ratio or LTV

3) Loan purpose/type of mortgage/property type/use

A rate tends to be custom for each person's situation.

All mortgage lending is risk based, the lower the risk the better the rate.


Because of the subprime mess and tightening of credit standards, brokers do not really offer the best deals anymore.

There are two type of pricing for rates, retail (through banks directly) and wholesale (brokers). Most larger banks have retail and wholesale divisions. The biggest banks offering the best rates have been leaving the wholesale business completely (Bank of America & National City to name a couple), and/or increasing the rates on the wholesale side of their business. It ends up with people getting better rates directly from banks rather than through a broker. It is simply a way for the banks to control where their business is coming from and lowers their exposure to potentially higher risk loans.

Lending Tree doesn't offer you anything more than an educated shopper can't do on their own.

Be careful with rate quotes also. Find out the assumptions. Nearly all online rate quoting services quote with you paying at least one point (1% of the loan amount) to get that rate. If you do pay a point, ask if the point is charged as an origination fee or as a true discount point. If a broker is getting you a good deal, they will have to charge both, but it will cost you.

6.25% is a good rate without paying any points in today's volatile market. Lower is possible but it depends upon the day. If bonds are up again on Monday, it may be worth locking in if you are ready to go on something.

 

[annunaki]

The most amazing thing is that in one hundred years, our bank has never bundled and sold a single mortgage.

I doubt that, highly. They can sell your mortgage but retain the servicing. There is nothing you can do about it, nor does it affect you in any way.

 

[annunaki]

I think you're giving the masses too much credit, the average person on the street doesn't know/care about real state/mortgages as they don't deal with it on a daily basis, to them it's only important once or twice in their lifetimes.

Which is all the more reason they should care and try to know as much about it as possible. For many it is the single biggest purchase they will ever make and where most of their hard earned money will be spent.

 

[annunaki]

I hope this actually pays off for me since the wife and I are now in the market for a house. We have killer FICO (790+) and 10-20% down.

I wonder how much haggling power we will have? I was thinking of finding 4 properties with the same features and let them duke it out... I know that it seems prickish' but I want the most for my money and I am not the one that got into a hot mess that I couldn't afford or made the loan.

Does anyone know if it is a Bank Owned/REO property that they will negotiate the price?

Banks will negotiate, a little. It depends how long they have held the home, and how far upside down it is.

With your credit and down payment, you will be quite well off in this market. Beware declining market areas though where the bottom has not been hit yet with home prices.

 

[jinjuku]

1) Credit score/history

2) Loan-to-Value Ratio or LTV

1) I don't have to worry about. Both of use are 790+

2) That is why we have money for down payment . Is this the same where they don't want to loan you 100% of the houses value?

There are two type of pricing for rates, retail (through banks directly) and wholesale (brokers). Most larger banks have retail and wholesale divisions. The biggest banks offering the best rates have been leaving the wholesale business completely (Bank of America & National City to name a couple), and/or increasing the rates on the wholesale side of their business. It ends up with people getting better rates directly from banks rather than through a broker. It is simply a way for the banks to control where their business is coming from and lowers their exposure to potentially higher risk loans.

Could you expand that explanation a bit with an example? If I read it correctly you are saying the brokers shop around banks and their wholesale rates and try to connect buyers with them? That with BoA and Nat. City, which has been my bank for years, it would be better to deal direct with them?

Be careful with rate quotes also. Find out the assumptions. Nearly all online rate quoting services quote with you paying at least one point (1% of the loan amount) to get that rate. If you do pay a point, ask if the point is charged as an origination fee or as a true discount point. If a broker is getting you a good deal, they will have to charge both, but it will cost you.

The thing with points: We will most likely be there 5-7 years. Two, I plan on making bi-monthly and 10% extra principal only payments each time. So I will most likely decline the points due to the fact that I will have the ability to lower the over all principal. At least that is my understanding.

I will have to of course read the fine print and find out if there are any penalties for acceleration of the payment schedule via bi-weekly and principal payment mechanisms.

You have to wonder if there are professional mortgage negotiators out there, you sound like you could do it

Thx for the NFO.

 

[Audioholics]

Never EVER get a mortgage with a pre-payment penalty. NEVER EVER EVER EVER EVER EVER.

 

[annunaki]

1) I don't have to worry about. Both of use are 790+

2) That is why we have money for down payment . Is this the same where they don't want to loan you 100% of the houses value?




Could you expand that explanation a bit with an example? If I read it correctly you are saying the brokers shop around banks and their wholesale rates and try to connect buyers with them? That with BoA and Nat. City, which has been my bank for years, it would be better to deal direct with them?

That is exactly right about brokers. The thing is now is that neither BofA nor Nat. City offer mortgages to brokers. You can ONLY deal with them directly now.

The thing with points: We will most likely be there 5-7 years. Two, I plan on making bi-monthly and 10% extra principal only payments each time. So I will most likely decline the points due to the fact that I will have the ability to lower the over all principal. At least that is my understanding.

I will have to of course read the fine print and find out if there are any penalties for acceleration of the payment schedule via bi-weekly and principal payment mechanisms.

You have to wonder if there are professional mortgage negotiators out there, you sound like you could do it

Thx for the NFO.

In your case do not pay any points. You will build enough equity with your plans. Bi-monthly payments are the same as making 1 extra monthly payment per yr. Most reputable lenders will have no penalties of any such kind with there standard mortgages.

I am actually a mortgage loan officer by day. I worked the broker side of things for over a year. Now I work for Bank of America.

If you need anything else, let me know.