Mortgage Hackr?

Hi folks,

I’ve been shopping on a condo, and my offer was recently accepted. Now comes the exciting stuff. Any tips, suggestions, or resources for procuring a mortgage?

Any reason to go for a mortgage broker, a bank, or a retail lender like Quicken Loans? Any advice for closing costs? I’m in Los Angeles, CA.

Cheers,
Michael

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I believe @Alex is in that industry. Maybe he can help?

Holy timing!!! I am asking the same questions right now.

Maybe we’ll see a spin-off forum soon!

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@michael How strong is your condo HOA ? (Budget, reserve, % of rentals). These may effect which lender can approve the loan under favorable terms. If you have a strong HOA, any of the broker, banker or retail lender can help you. If you have a relationship with certain banks (i.e. Chase Private Client) they can give you an additional discount to your loan (and secret is they price match APR’s or beat them if you have a relationship with them). If you don’t have strong HOA go with a portfolio lender like a local bank or credit union. End of the day, find someone reliable you can trust can don’t forget to shop around. When you find someone Lock in your rate (for free) as rates should be up pretty soon.

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Like you would be shopping for a lease, go and interview at least 3 sources. Make sure you compare APPLES to APPLES. 30y fixed vs. 30y fixed or 5/1 ARm vs. 5/1 ARM. If you choose to pay points up front to lower the rate (think non-refundable MSD, but tax write-off), again, use that criteria consistently across banks/brokers. Also, how much down payment will also affect rate from one lender to the next.

  1. Go to your local banks - Wells Fargo is big out in Cali. Also give a local community bank/credit union a shot. If you open an account and do direct/auto pay, it may knock your rate down
  2. Go to a local recommended broker
  3. Try a Rocket Mortgage (Quicken) which is like a 1-stop shop for all services

In any event, DO NOT give out your SSN until you have narrowed it down to 1 or 2 lenders that you are going to go with. You should have an idea what your score is and can use that number as a basis to get rates.

PM with any questions. I have worked both sides of this industry.

Best,
D

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That is really helpful…!

I am in the same boat and located in NJ.
Do you have any specific suggestions for east coast area ?

Baggy, if you are asking me (even if you are not, I’ll answer…lol), here’s my list and advice.

Try:

  1. Chase and Bank of America as the big banks
  2. Also try Valley National (depending on where in NJ you are) as a local bank
  3. Whoever you have a checking or savings account with

Here’s something to add for Michael as well. The larger national banks (Wells, BOA, Chase, etc) may take longer to process your paperwork so when you go into a branch, ask how long the total time to process your loan will be (it’s called “turn time” in mortgage speak). From the time you submit an application, to getting an appraisal, to submitting your w-2s, paystubs and bank statements.

A good bank will be about 30 days from start to finish. Larger banks can take up to 60. That said, it’s not an exact science and things just happen. Sometimes, paperwork gets ‘lost’ or you have to resend. A lot of times, it happens with larger banks. Be prepared for delays and have all your paperwork ready to go so you don’t waste time.

Also, don’t be too quick to lock your rate. Rates go up and down EVERYDAY by 0.125 to 0.25. It’s all market drive.

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Hi Michael

First we can’t thank you enough for leasehackr.

Second, my 2 cents:
a) Just as with lease, you want to roll in the closing costs as much as possible and have as little out of pocket as possible, particularly if there is a good chance you will move/refinance etc etc
b) Don’t hesitate to shop around, get some recommendations from realtors. A local mortgage lender is much better than an online out of state/national one if your property has unique requirements etc etc.
c) Of course, check bankrate.com for latest rates/discounts etc.
d) Some credit unions offer discounts for auto pay, having existing checking accounts etc etc
e) One item that banks make money on is title insurance. Tell the bank you will find your own mortgage insurance.
f) Do your due diligence on condo fees, reserves, assessments etc etc …

Good Luck :slight_smile:

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I bought my house and have refi’d 3 times in the last 6 years. I highly recommend going on zillow mortgage and just seeing who’s willing to offer the best rates. Right on the site you can punch in all your numbers and it immediately comes back with 100’s of different brokers willing to fight for your business. Sometimes companies will try for a bit of a bait and switch, so be firm and fight for the rate you think you should be able to get.

Like others are saying, definitely try to keep closing costs as close to zero as possible. Even with the rate increases, interest rates are ridiculously low, so take advantage of it and pocket the cash for the updates and surprises that will no doubt pop up.

EDIT: Go here for zillow mortgage rates… https://www.zillow.com/mortgage-rates/ really great way of getting a ton of quotes very quickly. At the very least, use it as a good indicator of what your rate should be.

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Definitely pay attention to the input @Dannytmc provided. Especially the part about not giving your SSN until you narrow down the lender. I’d go a step further and provide as little personal information as possible until you get the clear responses you’re looking for. Come into the conversation knowing what your credit score is (use Credit Karma or some similar service). One of the first things the brokers will ask is for your approval to pull your credit so you feel that you’re stuck with them. Also, they’ll ask you to fill out a ton of paperwork. Don’t let them fool you, they can absolutely give you numbers without giving them a ton of info.

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If you are not in the mortgage industry, please be aware that some of the information you provided is not entirely accurate. If you are in the industry, I recommend brushing up on your knowledge.

Purchasing a home/condo is a major investment. Possibly one of the biggest assets a person will have. I would never give legal advice to a friend who is going through a divorce even though I’ve watched a lot of Judge Judy. :joy:

Let us be mindful of what kind of assistance we provide to our fellow members.

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Mortgages are a lot harder to hack as there are a ton of factors plus the opaqueness of the whole process. With the Dodd-Frank and CFPB, they have a new LE sheet which (theoretically) lets you shop apples-to-apples by making all lenders fill out the exact sheet (it is a combined TIL + GFE)

http://files.consumerfinance.gov/f/201311_cfpb_kbyo_loan-estimate.pdf

The numbers used to be able to move around (aka “wiggle room” +/- some % on some items) as it it called an estimate and you have to sign this to get the loan going. About 3-4 months ago, they changed this so that there is very, very little wiggle room and any change requires a signature. But you are kind of already captive since what are you going to do … go to another lender and start the process again? For purchases, timing is important.

The final paperwork (which you typically get at the END after everything is done) is this

http://files.consumerfinance.gov/f/201403_cfpb_closing-disclosure_cover-H25B.pdf

For refinancing, timing doesn’t really matter too much. If it drags on for 2-3 months, nobody really cares. For purchases, your main goal is to get approved and get the loan funded within a reasonable amount of time to close (30-45 days). If your loan doesn’t fund, it sucks for everybody – seller, buyer, etc. For a seller, specially in a hyper-competitive market like Los Angeles, cash offers above asking + no contingencies are basically the winners because it is a “done” deal. For mortgages, you have to justify every penny of your downpayment (aka not drug money). So, even if a lender has the best rate, if they can’t close the loan, you are not in a good position. A pre-approval helps but it NOT a guarantee. You can always refinance 6 months later to a better lender – your goal is to get the loan funded.

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Hi Michael, if you got the asian connect (I’m assuming you are :wink: ) then try the Home Mortgage people over in San Gabriel where the Hilton is on Valley. I’m pretty sure they’ll give you great rates and what not. I purchased a newly built house a year or so back so here is my experience:

  1. Since it was newly built I had the option of financing with the lender who financed the community or picking my own. I went with the lender, in part because I got a great rate, but also because they offered $10k towards closing cost and the remaining to be used towards HOA fees.
  2. The only “hack” I could get was use the family real estate agent and have her as the “broker” and as a result she gave me most of the commission she received. She also sent me a w2/w4 (forgot which one) for tax reasons as well.
    If you’re around the arcadia area you will understand that this type of practice where the agent/broker will give kickbacks because its an asian thing now. I know its frowned upon and I don’t much like it myself, but hey we’re all trying to save a buck here and there.

happy hackring

I’ve only bought my first home 3.5 years ago and refinanced once, so my experience is limited. I generally avoided big banks cause their rates always seemed higher and heard bad stories of their slow process (important if your escrow is <30days).

When I first purchased, I just used a broker that was recommended by my agent, mainly because I didn’t know much about the process and had a 30 day escrow and didn’t want to “mess up” the process. I had a bit ease of mind having a local person and one point of contact. Looking back, I don’t think I got the very lowest rate, but it wasn’t horrible by any means.

When I refinanced, I wasn’t as rushed with the whole situation, so I used an online mortgage firm that I think I found by searching rates on Zillow. Imho, this is where you will find the best deals money wise. The process was good and didn’t run into any hiccups. I was very happy with my rate and it was basically a no-cost refinance. I may still have hesitations using online company for a home purchase (not just refinance), but I’ve known a few people that used them for their home purchase and everything went ok.

As a resource, I like http://www.mortgagenewsdaily.com/mortgage_rates/daily.aspx to track rate movements and http://usmortgagecalculator.org/ for overall calculator.

@michael agree with what @mrpanda said. The best way to get your commission back is to put it in escrow, you do NOT want to get a 1099 as that will be treated as income and you will get taxed for it. The other way is to have your realtor pay for stuff and they can expense it on their end (for example, landscaping, new floors, etc. something that has an invoice/receipt from a company not a person).

If you have time, go study for a realtor exam (it is pretty easy, 3 tests, you can buy stuff from Allied Real Estate School (http://www.alliedschools.com/re_salesperson_license.shtml, no affiliation) for about $200-300. Take the test (this will take about 2-3 months) and they will let you know if you pass right away after the test. Once you do that, you will have to be a realtor for 1 year, membership is about $900-1,000 and then you need a supra key ($50/mo) to go look at houses. You have to “hang” your license with a broker – something like RE eBroker (http://reebroker.com/, no affiliation) or you can hang it with me. Buy your condo and you get paid the 2.5% from the seller proceeds ($600k x 2.5% = $15k). Then you can cancel all the real estate stuff.

Or like @mrpanda said, you can then just find somebody that will do this for you. I can be your realtor and pay me maybe $1,000 (?) and I will give you back the $14,000 from the example above. You will have to do a lot of the work yourself though plus I may be too far in OC. Would be better if you can find somebody local … the most important thing is the supra key so you can get in and out of the houses. Everything else can be done electronically.

This whole portion above is for PURCHASES only which involves a realtor. The other side to this is the mortgage piece (the actual lender/bank)

Becoming a mortgage person (loan officer) is much harder but also possible. There is another test called SAFE.

I don’t think I was pushing my 2 cents as legal advice. My advice is just as valuable as what it costs!!

I want 50% off MSRP … $0.01, I will buy it today

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Why buy? I will lease it to you for 0.001 monthly lol with 0 down :slight_smile:

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I This is my way of thinking of a mortgage (we are on the appraisal side of things so may be biased)

There are 3 parts on getting a mortgage approved at the “best” rate which is I guess what leasehackr is about

  1. credit score … get this as high as you can! Like car leases, this will affect your interest rate. For homes, the total dollars you pay out for the life of the loan will be about 1.5-2x the actual price of the house you are purchasing for a 30 year loan. On the flip side, the interest dollars you pay is all tax deductible and depending on your bracket, may save you more
    or less. Pay down on your credit cards. If your parents are helping you, make them pay it off using their bank and not yours (more on this later)

  2. verifiable, stable income. Obviously, get this as high as you can. Verifiable means W-2s, 1099s and make sure to file your taxes for 2016 by April 15, otherwise, there are more questions. They will go to the IRS and check your gross income using a form called 4506-T and verify that it matches the tax return you provided. Stable means employed in the same company or “profession” for a while (more years the better). Bonuses or one-time income is counted on some things and not on others. Having a lot of assets help so 401ks, bank accounts. If your parents are helping you, move money from their account to your own account ASAP as it has to “season”. They will ask your bank for the average daily balance for the last 3-6 months. They will do all these checks at the START of the loan and then again 1-2 days before the loan CLOSES. Do not do anything (like lease a car or apply for a credit card in the middle). They have to compute what is called a front-end ratio and back-end ratio which basically is math between your income vs your liabilities and the percent needs to be under the max percent.

  3. appraisal. The home must be appraised to a number that will make your loan work. Sellers usually price their house above market. Banks will only loan on the collateral so if you overpay for a house because you love it, you will have to find enough cash to cover the difference – there is NO LOAN dollars for anything the collateral will appraise for. Appraisals are done using sales comprables which means looking for “Best” comparables that are available, not the HIGHEST sold properties that you can find. The homes needs to be within 1 mile and SOLD (not listed on the market) within the last 6 months. If you are in a condo, it will have to be the last 3 SOLD in the same complex … Not the condos across the street that are 1.5x more the price. Exceptions apply but this sometimes kills deals. If your loan needs the house to be $500k and you are putting 20% down ($100k) and then the house appraises for $480k. You will have to find another $20k CASH somewhere that is traceable (aka not laundered money)

Some other tips

  1. please put 20% down, otherwise you will have to pay PMI (mortgage insurance), it is a lot of money down the drain. Balance this with rent vs PMI

  2. if you are good with money, pay your taxes outside of your mortgage. Most people don’t want to be shocked with a giant property tax bill (due twice a year) - approx 1% of the purchase price of the house so they have an impound account (kind of a layaway) which doesn’t earn interest. Just save the money on your own and pay your tax bill outside of the mortgage payment.

  3. get a 15 year loan if you can afford it, it will save a lot on interest dollars for a little more a month. A lot is like 0.75-1x of the purchase price of the house

  4. the variable rates sometimes will work out for you if you imagine yourself making more money in the near future. The lower interest rate allows you to buy “more house” for the dollars. These are designed for doctors and lawyers who will be earning more as their career moves forward and you can refinance to a fixed rate. Leasehackrs should be good candidates for this but for people who like security (stereotyping women here sorry), the variable rate scares people

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My last post on this topic will be to talk to several mortgage professionals. Interview them and find one that understands what you want to do. Most of the advice here is generic and factual but based on personal preferences.

There are many variables into what mortgage you will get:

  1. how long will i live there?
  2. how much do i want my mortgage payment to be as a % of my gross income?
  3. how much do i want to put down?
  4. etc, etc.

Good luck with the purchase and enjoy!