Ask Anything About Mortgages

[Bicycles_Biatch]

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If you goal is the LOWEST possible payment... you will want to look at a 1 month-option-ARM with a 1% start rate... PM me if you want more details

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My goal would be a mortgage that is heavy towards prinipal in the early stages, but we know those don't exist.

If you re-finance or move, it's like your back to square one. The principal reduces SOOO slowly in the early years of the loan. This has to be a huge money maker for mortgage companies since many people re-finance and/or move multiple times in their life.

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This one of the reasons that the stocks of banks and financial companies pay such great dividends... very little growth oppurtuinity... but tons of value as an income stock

[jaydub]

belg,

You achieve that structure through a large down payment and monthly payments in excess of what is required (those go straight to principal).

Assume the house is $600K:
1. Put $120K down leaving $480K as the loan amount. Monthly is about $3500 on a 30yr fixed
2. Pay $4500 each month. The excess $1000 knocks down principal
3. Raise the $4500 figure until you find a satisfactory principal to interest ratio.

Thremp,

Assuming you do not commit fraud, yes to both. I suggest you do not leverage yourself in such a manner without access to a time machine.

J

[Bicycles_Biatch]

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What if I have excellent credit but am trying to leverage myself very highly on rental properties and 2nd-10th mortgages... Will each require a larger amount down... Will rates go up? Suggestions?

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What I would do is find 3 lenders you are comfortable with. With each lender you can apply for an owner-occupied loan (assume that you will be using your 3 most expensive houses); this will get you the best available rate on 3 different properties. Next, if you have any properties that are farther away, apply for them as your "2nd / vacation home"... this strategy will allow you to get better rates and more leverage (banks are more generous on their loans on O/O and 2nd homes).

Try not to work with more than 2-3 different lenders... this will raise a red flag to the underwriter and make it look like you are trying some type of mortgage fraud angle.

The key to maxing out your leverage / cash-out of the properties is keeping your credit score above 720... this will allow you to do stated income deals with no questions asked.

If you're only keeping these properties for the short term / flipping for profit/ then don't worry so much about the rates... worry about the cash flow.

However, if you're thinking about amassing a rental property portfolio... take a look at a 10/1 interest only. Rates will be locked for 10 years and are currently hovering around the mid 6's (very good historicallY). These loans allow you to pay I.O. when cash flow is tight, and pay down the principal without worrying about interest rate changes over the next 10 years.

[Riverman]

This thread is fantastic. I have learned a ton.

[Stacheman]

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As a matter of fact I just had a guy come to me who is a repeat customer. His credit went from 668 (managable, I could still do stated income loans for him)... to 592 (can no longer help him with any loan) because Ditech pulled his credit a total of 47 times when they were trying to find him a loan.

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This is a common misconception among many brokers. It is highly unlikely that Ditech pulling his credit multiple times dropped his score by that much. I'm sure there were other things in his credit that you overlooked (higher cc balances, new accounts opened, new delinquency) that caused the scores to drop. The credit bureaus have provisions in their mortgage scoring models to allow consumers to shop for loans without being penalized. Depending on the bureau, there is a 14-45 day window in which any number of inquiries for the same purpose are counted as a single inquiry. In other words, I could go have 15 different mortgage companies pull my credit over the next 10 days and all of those inquiries would count as a single inquiry when determining my score. The bureaus will still show these inquiries on the credit report so you can see who is pulling your credit, but not affect the score.

I work for a credit reporting agency and deal with scummy brokers on a daily basis. I have come to the realization that, with a few exceptions, mortgage brokers are the lowest form of life.

Not to hijack the thread, but most brokers actually know very little about credit reporting even though they claim to. Not to pick on you BB, but some of the credit advice you've given in this thread shows this.

[Bicycles_Biatch]

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This thread is fantastic. I have learned a ton.

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Thank you... I enjoy my job a lot... and it's always slow around the holiday season, so I'm glad I can help.

Again... feel free to PM about any loan applications or rates you are being quoted.... I will do my best to respond with helpful info.

...and of course, anyone on the west-side (CA, AZ, NV) who wants to find out what i can offer can drop me a line also.

[jaydub]

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What if I have excellent credit but am trying to leverage myself very highly on rental properties and 2nd-10th mortgages... Will each require a larger amount down... Will rates go up? Suggestions?

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What I would do is find 3 lenders you are comfortable with. With each lender you can apply for an owner-occupied loan (assume that you will be using your 3 most expensive houses); this will get you the best available rate on 3 different properties.

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This is fraud.

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Next, if you have any properties that are farther away, apply for them as your "2nd / vacation home"... this strategy will allow you to get better rates and more leverage (banks are more generous on their loans on O/O and 2nd homes).


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More fraud.

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Try not to work with more than 2-3 different lenders... this will raise a red flag to the underwriter and make it look like you are trying some type of mortgage fraud angle.


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But he is.

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<Terrible but not fraudulent advice snipped>


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I understand giving terrible and dangerous advice for profit but doing so for free on a public forum? Guess you weren't content with amoral and decided to go for immoral.

J

[jackdaniels]

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Guess you weren't content with amoral and decided to go for immoral.


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Bang! Internet drama!!!

[Bicycles_Biatch]

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This is a common misconception among many brokers. It is highly unlikely that Ditech pulling his credit multiple times dropped his score by that much. I'm sure there were other things in his credit that you overlooked (higher cc balances, new accounts opened, new delinquency) that caused the scores to drop. The credit bureaus have provisions in their mortgage scoring models to allow consumers to shop for loans without being penalized. Depending on the bureau, there is a 14-45 day window in which any number of inquiries for the same purpose are counted as a single inquiry. In other words, I could go have 15 different mortgage companies pull my credit over the next 10 days and all of those inquiries would count as a single inquiry when determining my score. The bureaus will still show these inquiries on the credit report so you can see who is pulling your credit, but not affect the score.

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I've heard this argument several times from Equifax (the company we use for re-scores).... but I've seen peoples credit drop so drastically without changing anything else but their number of inquires... I want to believe you... but I don't think this system of merging inquires into one "hit" is working to well. Maybe they need to refine their matrix a bit.

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I work for a credit reporting agency and deal with scummy brokers on a daily basis. I have come to the realization that, with a few exceptions, mortgage brokers are the lowest form of life.

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do you work for one of the big 3? or do you work for one of those credit repair companies??

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Not to hijack the thread, but most brokers actually know very little about credit reporting even though they claim to. Not to pick on you BB, but some of the credit advice you've given in this thread shows this.

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Please post some of your tips here. I think its such an unfair system that the credit bureaus basically control the fate of the financial well-being of millions of individual; yet they have to give limited disclosure to the general public about how they actually determine the score.

I always appreciate the input of a credit professional (which I am not)... I'm just going off what I have seen work for the thousands of customers I've helped out.

Bye the way... i'm in no way a broker or here for solicitation... Brokers are scum for the most part [img]/images/graemlins/confused.gif[/img]

[SlowHabit]

Great thing; I learned a lot. One thing I need clarification is that brokers exist because people don't qualify for loans from the bank correct?

Another thing. I want to buy a house. I will put at least 20% down. Do I just go to the bank where my savings and checking accounts are at and ask for a loan (assuming my credit is good)? Is it possible that other banks offer a better deal than my current bank (I would assume not)?

Also, besides the cost of the house, what other "costs" (ie closing cost, buyer agent cost [but I heard that the seller has to pay for this]), do I have to be aware of and at what price range?

That's it for now. Thanks!