Buying Home, Credit Question

[fatgirl_lover]

Okay so got a credit question. My credit is bad because of really stupid stuff. For instance I bought some shoes in a gap store and did their stupid credit card thing for a discount, got confused, and didn't sent them a check to cover the bill for a while (this same thing then happened a second time with Banana Republic). I don't have credit cards to improve my credit, I just use cash. A mortgage payment was late because I was out of the country, my family was supposed to take care of it for me but messed up.

Because of this stuff the mortgage guy offered me a 7.75% loan (I forget if that's 15 years or 30 years) on a 250k loan. That extra percent or whatever that I'm paying is going to cost me a lot. I guess I can refinance in a year, but it's still going to cost me about 5k by my amateur calculations that could be wrong. Worth waiting half a year before buying a place for this reason? Can I call the credit companies and point out how stupid those problems were and get my credit fixed? Also only one mortgage company gave me that rate, I haven't asked around yet which I'm going to do now, how important is that?

[Ray Zee]

you can put more down and lower your rate. but try to finance from a bank and preferably one that will keep your loan, in house. you can see face to face and talk to the head loan officer but see someone higher up. then you may get what you want.

[DcifrThs]

[ QUOTE ]
you can put more down and lower your rate. but try to finance from a bank and preferably one that will keep your loan, in house. you can see face to face and talk to the head loan officer but see someone higher up. then you may get what you want.

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how do you control whether a bank sells off your mortgage or keeps it in house? are there certain banks that specify that they don't sell of mortgages?

i'd think that there is a cost to this too (at least until recently) since the bank that does sell off mortgages (assuming 1 does and 1 doesn't) will be able to attract more mortgage takers via lower rates since the risk of default isn't on that bank's books and thus can make up for margin via volume (it is just a servicing center rather than a credit appraiser and manager of the loans and thus has lower costs etc.).

cons are obviously what is going on now but not really from an individual(like the OP's)'s perspective.

thoughts?

Barron

[spex x]

[ QUOTE ]
[ QUOTE ]
you can put more down and lower your rate. but try to finance from a bank and preferably one that will keep your loan, in house. you can see face to face and talk to the head loan officer but see someone higher up. then you may get what you want.

[/ QUOTE ]

how do you control whether a bank sells off your mortgage or keeps it in house? are there certain banks that specify that they don't sell of mortgages?

i'd think that there is a cost to this too (at least until recently) since the bank that does sell off mortgages (assuming 1 does and 1 doesn't) will be able to attract more mortgage takers via lower rates since the risk of default isn't on that bank's books and thus can make up for margin via volume (it is just a servicing center rather than a credit appraiser and manager of the loans and thus has lower costs etc.).

cons are obviously what is going on now but not really from an individual(like the OP's)'s perspective.

thoughts?

Barron

[/ QUOTE ]

There are a lot of smaller local banks, savings and loans, and credit unions that are not conduit lenders (they don't sell their notes on Wall Street). Portfolio lenders keep their loans in house. Since they don't have to resell the loans, they can be much more flexible in their lending criteria. It is perfectly acceptable to ask the loan officer if the bank is a portfolio lender.

I work almost exclusively with portfolio lenders, mostly because I have a hard time getting loans from large conduit lenders since almost none of my deals are typical transactions. They also are much quicker because there are fewer levels of bureaucracy to get through (I've had several 7 day closings using portfolio lenders - ask your man a Bank of America or Chase for a 7 day closing and see what he says).

Anyways, in my experience, portfolio lenders will not tend to offer you lower rates per se, but you MIGHT be able to plead your case more effectively to them. You can't do that at Bank of America because their lending criteria is set by the ability to resell the loan later on.

OP,

you have to be reasonable too. Think about your situation from their position. I mean honestly, you are a guy that guy can't even figure out how to pay your credit cards, and you've shown poor judgement in asking irresponsbile people to take care of your bills for you. IMO, you are a higher risk, and therefore should pay more for borrowed money.

Also, don't forget that to refi will cost you a small chunk of change, like maybe 2,000-5,000 depending on the lenders involved.

I don't know if its better or worse if you wait to buy or not. I suspect that in the grand scheme the extra 1% won't make too much of a difference either way.

[spex x]

[ QUOTE ]

Because of this stuff the mortgage guy offered me a 7.75% loan (I forget if that's 15 years or 30 years) on a 250k loan. That extra percent or whatever that I'm paying is going to cost me a lot. I guess I can refinance in a year, but it's still going to cost me about 5k by my amateur calculations that could be wrong.

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The difference between 6.75 and 7.75 is about $170 per month. Refi isn't free though, so factor those costs into your calculations.

[fatgirl_lover]

thanks spex that was quite interesting.

[SossMan]

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you can put more down and lower your rate. but try to finance from a bank and preferably one that will keep your loan, in house. you can see face to face and talk to the head loan officer but see someone higher up. then you may get what you want.

[/ QUOTE ]

how do you control whether a bank sells off your mortgage or keeps it in house? are there certain banks that specify that they don't sell of mortgages?

i'd think that there is a cost to this too (at least until recently) since the bank that does sell off mortgages (assuming 1 does and 1 doesn't) will be able to attract more mortgage takers via lower rates since the risk of default isn't on that bank's books and thus can make up for margin via volume (it is just a servicing center rather than a credit appraiser and manager of the loans and thus has lower costs etc.).

cons are obviously what is going on now but not really from an individual(like the OP's)'s perspective.

thoughts?

Barron

[/ QUOTE ]

There are a lot of smaller local banks, savings and loans, and credit unions that are not conduit lenders (they don't sell their notes on Wall Street). Portfolio lenders keep their loans in house. Since they don't have to resell the loans, they can be much more flexible in their lending criteria. It is perfectly acceptable to ask the loan officer if the bank is a portfolio lender.

I work almost exclusively with portfolio lenders, mostly because I have a hard time getting loans from large conduit lenders since almost none of my deals are typical transactions. They also are much quicker because there are fewer levels of bureaucracy to get through (I've had several 7 day closings using portfolio lenders - ask your man a Bank of America or Chase for a 7 day closing and see what he says).

Anyways, in my experience, portfolio lenders will not tend to offer you lower rates per se, but you MIGHT be able to plead your case more effectively to them. You can't do that at Bank of America because their lending criteria is set by the ability to resell the loan later on.

OP,

you have to be reasonable too. Think about your situation from their position. I mean honestly, you are a guy that guy can't even figure out how to pay your credit cards, and you've shown poor judgement in asking irresponsbile people to take care of your bills for you. IMO, you are a higher risk, and therefore should pay more for borrowed money.

Also, don't forget that to refi will cost you a small chunk of change, like maybe 2,000-5,000 depending on the lenders involved.

I don't know if its better or worse if you wait to buy or not. I suspect that in the grand scheme the extra 1% won't make too much of a difference either way.

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I was going to post an answer, but no need..I'll just quote.

[fatgirl_lover]

Here is the new credit question. The old trusted mortgage guy at GMAC offers 7.75% (closing costs unknown - will ask and post tomorrow). A new guy at "US Mortgage" a company that called me after I applied on lendingtree.com offers either 6.5% with a $3200 point, or 6.825% without the point. And closing costs without the point of about $3400. Note, the closing costs on the last place with GMAC were pretty high so I am guessing they will be higher than US Mortgages offer.

US Mortgage is a smaller place, I asked he said they had 30 branches. www.usmortgage.com, their webpage looks kind of tacky. Can I trust an unknown company like that for something as big as a mortage? Anyone know about them or have advice on where to go from here or how to research further?

[mak15]

i know this isn't what the thread is about, but you should get some credit cards, or at least 1.

[spex x]

[ QUOTE ]
Here is the new credit question. The old trusted mortgage guy at GMAC offers 7.75% (closing costs unknown - will ask and post tomorrow). A new guy at "US Mortgage" a company that called me after I applied on lendingtree.com offers either 6.5% with a $3200 point, or 6.825% without the point. And closing costs without the point of about $3400. Note, the closing costs on the last place with GMAC were pretty high so I am guessing they will be higher than US Mortgages offer.

US Mortgage is a smaller place, I asked he said they had 30 branches. www.usmortgage.com, their webpage looks kind of tacky. Can I trust an unknown company like that for something as big as a mortage? Anyone know about them or have advice on where to go from here or how to research further?

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This is a prime example of how smaller lenders can be so much more flexible, and why I perfer them overall to the big boys. Just be sure that you know what you're signing with them. READ the mortgage. Sounds dull, and it is dull. But do it anyway. IMO, it is the buyer/borrower's job to make sure everything is on the up and up. Nobody cares about your money like you do. You can either protect it, or you can't complain later that you got 'screwed' by the bank. Read the docs. And you don't have to wait until closing to get a copy of the mortgage docs from the lender. Ask for them before the closing and review them first, then you just have to verify that they give you the same docs at closing. Most important, don't let the lender bully you - insist on getting what you need to make the deal work.

Anyway, obviously US Mortgage is giving you a much better deal. Personally, I wouldn't pay the $3200 point. Here's the break down on $250k for each:

6.5%, $1580 per month, $318k in total interest over 30 years
6.825%, $1633 per month, $338k in total interest.

So if you pay $3200 now, it'll take you 53 months to get your $3200 back from savings in the payments you get on the lower rate. Plus, you only save like $20,000 over 30 years. If you were to take that $3200 and invest it in a mutual fund that only shows a 9% return, you'd end up with $42,000 over 30 years. So do that instead.