I put down 5% when i bought my house, renovated the house and was lucky that the housing market shot up significantly. By the time my first year was up I was able to get my house reappraised for 20% more than what I purchased it for and then refi’d my house to get rid of PMI. I know with the market the way it is and interest rates increasing very quickly this may not be as much of an option, but it’s something to consider.
Thoughts on asking mortgage brokers to match one another? Lowest I’m getting is 4.125% APR with 0 points and ~$1,300 in loan fees – but some are offering “lender credits” ranging from $300 to $2,600, which are applied towards the closing costs.
shoot for zero fees. Absolutely nothing wrong with pitting brokers against each other. Just like with cars, brokers can usually do better, it’s just a question of how much of their cut they’re willing to give up to make the “sale”. Just be very clear that you’re looking for a NO COST loan at such and such rate. Zero fees, zero points, zero BS, zero hassle (I made up those last two but generally I say that just to get my point across). I usually don’t even bother talking about what other brokers are willing to offer, I just give 'em the numbers I want and see if they can do it. If they give you a higher rate than just tell them you’ve already got a better offer. The big banks absolutely will not negotiate, but the little guys can usually make a deal.
Good luck!
The problem with mortgage is there are so many of them and there is no captive!!! So the world is your oyster and now you have to go find it from thousands of lenders – it gets overwhelming if you apply auto leasing strategies/tactics
@michael
I originally went with Quicken Loans and they told me everything is progressing well and 3 weeks in they decided they didn’t like the owner to renter ratio in my building and pulled out. Something that could have easily been determined in the beginning.
I personally ended up using Loan Depot (actually i think they’re based out of Orange County) and i couldn’t have been happier with them. Not only did they get everything done in under a month but they were also not concerned with owner to renter ratio.
Here’s another personal rationale with going with one of those big internet companies like Loan Depot etc. They most likely only hold the mortgage for a small amount of time before they sell them in bulk to a big bank that will end up holding the mortgage for the long run. So a bank like Wells Fargo is going to be extra diligent in underwriting because they are in it for the long term. Loan Depot or similar companies know they won’t hold it for long so their objective is different because they will sell the loan.
Also as a general rule, similar to buying a car, the sales person in a car dealer or at a bank isn’t likely to be the most knowledgable compared to the manager/underwriter. It’s one of the reasons to use a mortgage broker because they know what to look for. For example, i had no idea that the owner to renter ratio is such a big factor with most banks. The logic is that the more renters are in a building, the more risky it is so lend because if things go south the renters will just leave or stop paying rent, the owners don’t live there anyway and have no incentive to continue to make payments.
Another reason to use a mortgage broker is when you have some credit issues, HOA reserve amounts etc. A mortgage broker can help you find the right bank that might be more lenient for certain problems.
Hope this helps.
in regards to paying off your credit cards and car payments, the issue you will have is that the change won’t reflect quickly enough on your credit report. So what you can possibly do for the credit card is pay it off and get something from the credit card company in writing saying that the balance has been paid off. You will have to ask lender if they can accept that when determining your debt-to-income ratio.
For the car, it’s also lender specific. I’ve done it where i paid off the remaining lease payments in a lump sum, got it in writing from the car finance company that i don’t owe anything but underwriting didn’t want to use it because they said “well, you going to need a car in the future so there will be future payments so we are still going to use these payments as part of debt in your debt-to-income ratio”. I also owned a separate car and was able to convince them that i will use that car and not lease a new car and eventually they agreed to not hold the lease payment against me but i wanted to give you the heads up because that’s not common knowledge.
Different companies can have different lending criteria but ultimately they all want to securitize their loans. If anything, the ‘vertically integrated’ banks essentially have an assembly line churning their mortgages, repackaging them, and selling them on to investors.
Weekly Payment.
I have not gone through the whole thread so if this has been suggested than do ignore my post.
I am a big proponent of paying the mortgage on weekly basis rather than doing it monthly. You will save 20K just in interest over a 15 year loan and it gets paid off 34 months earlier. Have it done as a direct debit from your checking account every week. Below is just an example. I tried using an online calc where you can punch your real loan numbers and see your savings.
Don’t know Michael’s situation, but you don’t have to pay off your car loans if your debt/income ratio is under 30% (maybe even 40%?). Lender/broker will be able to tell you relatively quickly. Or you can get idea by figuring out before applying.
No offense, but I think paying your mortgage weekly or bi-weekly is ridiculous and pointless. All you’re doing is forcing yourself to pay additional payments every year which obviously will pay off the loan faster and save money on interest. The reasons this is ridiculous is:
- Mortgage rates (even now with the recent increase) are so ridiculously low that you’re better off taking the extra money you’re NOT putting into your mortgage and investing it. If you invest right, you should expect at least 6-7%. Rates are in the low 4’s right now, so you’ll make that back and then some.
- Cash is king! Keep that extra money you’re saving and use it as needed. Renovate your property, use it for the inevitable repairs or just keep it for a rainy day. Depending on your financial situation, this could be very useful.
- Most loans do not have a penalty for paying off your loan early! Make sure of this when you sign your loan docs! Lets say theoretically you have a chunk of extra cash each month burning a whole in your bank account, then go ahead and pay extra towards your mortgage! It’s your choice and no one is forcing you to do it every week! If one month/year you decide you can’t afford the extra payments then don’t make them.
As you can see, it’s just a gimmick for people that aren’t really great with their money. Unless you fall in this category, just don’t do it. 
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@HN308. This is interesting. Any idea why the Bi-weekly payment is exactly half of the monthly but the weekly payment isn’t half of the biweekly? If you were to multiply the weekly payment listed times 52 weeks and divide it over 12 months, the monthly payment would be $2588.91 which is $370 higher than the regular monthly!
In other words, it isn’t a bi-weekly.
It’s been awhile since I read about the bi-weekly mortgage payments, but if I remember my research correctly, it equated to an extra month’s payment every year. So instead of 12 months of payments, you made 13. So if you weren’t part of that program and you decided at the end of the year that you got a crap ton of extra cash then just double your last payment.
That sounds right…52 weeks in a year mean 26 bi-weekly payments. Assuming your monthly payment is X and your bi-weekly payment is 0.5X
yea, thanks for clarifying that 
I knew I wasn’t totally off base, but it really has been awhile.
Yes, but wouldn’t the weekly payment be .25X or .5(.5X)? Why is it so much higher?
I suspect the example is set up to show “weekly payments are better”…the weekly payments add up to almost $5,000 more per year than the monthly payments.
BREAKING NEWS: paying more every year will allow you to pay off your mortgage faster.
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If you pay cash for your house, you wouldn’t even need to deal with the pesky banks and paying interest MF 0.00000000000
You can deduct $1m in interest every year so you want to have a least $1m in interest payments if you earn $1m so you can get a write off.
LOL…
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Don’t make me pull out the bigger Pockets link of a few hard headed people debating the advantages of HELOC + prepayment vs just prepayment.
It will cause you a lot of lost time, I promise.