Going mortgage shopping

Hi
As usual, I need some basic lending enlightenment. I’m planning on putting an offer in on a property in the near future, within a month or so. I currently own a home, which will be sold, hopefully at the end of Sept., after the 2 year tax period is up. It’s the only house I’ve ever bought. I acquired a loan through QuickenLoans, and my mortgage has been with IndyMac so I suppose that would be considered seasoned.

As I begin to actually shop for rates, unlike what I did for my first loan, I believe I can get much better terms from another lender. I have done some preliminary looking on bankrate.com and lendingtree.

What I wonder is this: how do I go about finding who can offer the best deal? Meaning: If I collect, say, 3 lenders that seem to have the best terms for my situation, and I call them, I’m assuming they will all promise me the world at first, but when I decide on one, and the paperwork starts rolling, and credit inquiries heat up, I’ll find that the terms or program I was told at first may not be what I finally can get.

Why that concerns me is that if I decide to revisit another lender, then they’ll have to pull a credit report, and so on. OR, when I call each lender in the beginning, will they do inquiries, immediately effecting my credit? In other words, can my credit score be effected by having lenders see what kind of rates they can give me when I start comparing? And is it common or problematic if I decide to go with one, but they change their tune after our initial meeting(can they even do that?) and I decide to look at another? I think I heard if I have a barrage of inquiries at once from several lenders, it will be assumed I am shopping for a home loan and it will not effect my score, but I’d like to be certain.

Or another scenario: since I’m seasoned with Quicken/IndyMac, should I look at them again? The difference in rates with my score looking at bankrate.com, from the lowest is 1st National Mortgage, 5%, 1 point, and QuickenLoans, 6.25%, 0.63 point and IndyMac is 6.25%, 1.06 point. That’s a huge difference.

OH! And also, as I plan to put an offer in on a place, but close on the new place after the closing on this house on Sept. 28, I’ll have to lock in a rate for possibly 60 days. I know it’s possible, at a fee, but do most lenders offer longer lock in rates? That could make a difference in the lender I wind up choosing, too. **I will also have to do a no-doc loan, making my search even more tedious (and a little more costly). I will say, QuickenLoans was great and very easy to work with and they have been helpful and eager to assist me again. Their rates are just high.

Does anyone have any insight as to how I should approach my new loan? Since I’ve only done this once, and am pretty sure I could have done better had I had some smarts at the time, I’d like to do it right this time and protect my credit as best as possible.

Thanks!
Michael

Michael,
I am a loan officer, I can tell you the rate is determined by several factors. first being what the market is offering now, that being said loan officers especially for mortgage banks that can also broker out can look at lots of programs to meet your needs, the rates will be determined by your credit score, your lock time, your ability to go full doc or stated, stated is riskier therefore higher interest rates, the size of the loan; because mortgage companies are most often paid on yield spread by the actual funder of the loan pays the LO to go through them, this is actually to your advantage. I would encourage you to find a reputable mortgage broker visit with them, tell them your goals and find a program that works for you. I would not go off the interet, that is actually just a lead generation source for the mortgage co. the LO you choose does not have to be local but ask questions. I work with people in many states, but I throughly try to hear what they want and then research a program for them. Good Luck, and ask lots of questions.
wendy

Wendy-
Thanks for the quick advice! My situation is 730 FICO, should go up a little soon, will have to go no doc, for around 150k, 80%LTV locked for 60 days, probably 5/1 ARM b/c I don’t plan to keep the property more than 2 years.

I currently live in a small town, and will be moving to a larger city in another state that I’m completely unfamiliar with. SO I presently know no mortgage brokers here or there.

I also had an absolutely terrible experience with the only loan broker I’ve ever used or known. He was recommended by a very trusted source(but they had no experience with him when they recommended him), and screwed me. It was for a business loan for 160k, and I had no experience obtaining one so he took advantage of that, as well as just blowing me off after taking my $3200 fee. He initially tried to charge me 2% of the total project amount, and I shot that down quickly, and should have run then. But I didn’t, and he did the most pitiful “job” imaginable, and took over 8 months to finally get an approval, after I threatened legal action, and I finally just went and got a loan myself in a week for $200k no problem after nearly having a nervous breakdown from dealing with him and not knowing if or when I’d ever get a loan via his services. He almost never called me or returned my calls or was in his office, blamed me for everything I had a problem with, lied to me and the SBA at least twice, the “loan package” he supposedly submitted on my behalf was nothing more than the faxed paperwork I filled out myself and did all the work on, plus a few pages he printed out from a bank’s website and had his secretary erroneously fill out, didn’t even ask for pro formas until 6 months after our first consultation, and on and on. I hate him. I filed a BBB complaint and of course got no satisfaction from that, and he’s in NY, so small claims wouldn’t be worth it. I live in the South. So I’m skeptical, incredulous, wary and jaded by loan brokers.

I (now) know loan brokers charge 1% of the loan amount; do you think it would really be worth the $, which could go towards buying down a loan instead, just to find a loan that I only plan to possibly service for 2 years or less? Is QuickenLoans actually a broker? They offer a ton of programs (that would be perfect for me, except for the rates), and sold my loan to IndyMac about 3 months after we closed. What is the smartest way to locate a quality loan broker, if I avoid the internet? Like I said, I currently live in a small town.

Sorry for all the dumb questions, but this is very very helpful. Thanks again.

what state are you in?

Michael,
your fico is very good, could be higher, but honestly you will be able to get a nice rate.ask about fees, these are tacked onto a loan cost to pay for things associated with working your loan. the underwriters, processors, lawyers, it costs to run an office so in fairness to LO’s these must be charged but I have seen some that were unbelievable. i would have a hard time with my concience to make these excessive. It can sometimes be worth buying down a point have your LO give you some options.

Michael,

None of those rates you quoted are bad for a no doc loan. Especially for a 60 day lock. The best way for you to locate an honest mortgage broker is to ask someone you know for a referral from someone they have done business with. After you have contacted the broker ask them for references of recent past customers. Also ask them for the name of a local title company they do business with. Your next step is to actually call the references and ask what they thought of the broker and would they use them again; then call the title company and inquire if the broker in question closes his loans on time, and have they had a problems with rates or fees that were not disclosed. I know this sounds tedious, but it will help you establish a good strong relationship with a good broker. As for the fees, the best way to compare lenders fees is after you have established your rate just compare the APR on the truth in lending disclosures you receive from the broker. If rate is the same then whomever has the lowest APR is giving you the best deal.

I’m looking to buy in Virginia, currently in SC. The realtor I’m working with up there is the broker/principal of the firm, and they have their own title company, which I’m agreeable to using. I guess I could ask her for loan broker references. Other than her, I really don’t have any connections that could refer one, that I can think of off the bat. Are there larger/national mortgage broker services out there that are reputable and reasonable, or are they mostly local people with small companies that need to be hunted down? It seems the latter.

The rates I stated were just what could be offered with my FICO score; they don’t take into consideration being a no-doc loan or a rate lock or anything else. That’s why I’m sure once I contact the companies that seem to offer the most attractive rates and points and I explain I need a no doc loan that will need to be locked, the initial “offer” will be changed to who knows what, and at that point I’ll want to check out other companies immediately. So for my situation, you’re probably right-a loan broker could offer a lot of help. But for $1500+(which isn’t a fortune, but hey, it’s $), I wouldn’t mind doing my own legwork. It may be tedious, but I have the time right now to proceed with caution and gather information. And the info I’ve gleaned here should help direct me to the best offer.

I certainly understand that fees are necessary and can totally sour the deal, and I also have heard of lenders tacking on ridiculous fees for unbelieveable amounts, so thanks for the heads-up. I think that’s unconscionable, too and if not flat-out dishonest, a terrible way to conduct business and a great way to ensure they won’t have any repeat business.

I should be nudging my FICO up to 770 soon, and then shooting for 810. The ultimate goal of course, being 850, which is hopefully doable in 2007. If not, it will certainly be up there, barring any unforseen disasters. I plan to buy several properties, and with rates increasing, I’m protecting and nurturing my credit like a newborn child.

I just got burned so bad the one time I used a loan broker I’m wary, but I’ll definitely do more due diligence this time if I’m able to go that route.

Great tips and advice-Thanks!
Michael

Michael,
your anxiety is understandable, but you are very aware of what you are looking for you should do well in finding a good mortgage broker/LO. If you like drop me a private message through my registered email and I will on Monday look at some companies for you that are licensed in VA. regardless of company you go with it is the LO that you will develop the trust with, so again ask lots of questions and go with your gut.

With all the fees here and there. Bottomline is value and benefits. How long are you planning to stay in the house … need the right loan to suit your goal and plan. Look at APR. The lower the better. This is the ratio for the life of the loan. Ask for a good faith estrimate… once you see one, you will know, what is the best one for you. Make sure you loan officer are in the same ball park as you. What index is the lender is offering? If he/she do not know…run Forest run Forest… I do foreclosure do not worry I will catch you on the flip side.