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Message
Mortgage Advice - What Am I Missing?
Posted on 7/22/14 at 9:29 am
Posted on 7/22/14 at 9:29 am
The wife and I are looking into buying a house, and things started moving pretty quickly. Our info: 20% down, 775 credit score, 30 year fixed loan in Houston, TX.
Our real estate agent recommended a lender, we sat down and talked, and he gave his pitch. On the recommendation of what I have read here and other places, I "shopped around" for a mortgage; I would just provide my credit score so I wouldn't get multiple inquiries.
Long story short, I found an online lender (FFSi, First Financial Services Inc) who offered us a 30 year fixed, zero points, for 3.99% and they would also pay the lender fees. On the other hand, the guy we originally sat down with gave us 4.375% with $1,300 in lender fees.
The lender we talked to face to face was really helpful and the real estate agent is pushing him, but I don't see the benefit of going with him at all (FFSi was really helpful on the phone, had great reviews, and don't they usually just sell the mortgage anyway?). Is there something I am missing or some hidden cost that I should be asking FFSi about?
Seems like a simple decision, but don't want to make a mistake on such a big thing. Thanks for any help or advice.
Our real estate agent recommended a lender, we sat down and talked, and he gave his pitch. On the recommendation of what I have read here and other places, I "shopped around" for a mortgage; I would just provide my credit score so I wouldn't get multiple inquiries.
Long story short, I found an online lender (FFSi, First Financial Services Inc) who offered us a 30 year fixed, zero points, for 3.99% and they would also pay the lender fees. On the other hand, the guy we originally sat down with gave us 4.375% with $1,300 in lender fees.
The lender we talked to face to face was really helpful and the real estate agent is pushing him, but I don't see the benefit of going with him at all (FFSi was really helpful on the phone, had great reviews, and don't they usually just sell the mortgage anyway?). Is there something I am missing or some hidden cost that I should be asking FFSi about?
Seems like a simple decision, but don't want to make a mistake on such a big thing. Thanks for any help or advice.
10
Posted on 7/22/14 at 9:40 am to LSU Delirium
quote:
Our real estate agent recommended a lender
Red flag. She is probably getting something on the back end.
quote:
First Financial Services Inc) who offered us a 30 year fixed, zero points, for 3.99%
quote:
Seems like a simple decision
I'm not in the lending business though so wait for some of the other guys to chime in.
Posted on 7/22/14 at 9:53 am to LSU Delirium
quote:
Multiple inquiries generated when rate-shopping for a mortgage, auto or student loan are consolidated by credit scoring models when done within a certain window of time. The FICO scoring model ignores mortgage, auto and student loan inquiries in the 30 days prior to scoring. Mortgage, auto and student loan inquiries older than 30 days are lumped as one inquiry whenever they fall within a 14-day span. Newer versions of the scoring model count the shopping period as any 45-day span. VantageScore lumps such inquiries that occur within a rolling 14-day window as one inquiry.
Read more: https://www.bankrate.com/finance/credit-cards/how-credit-inquiries-affect-credit-score.aspx#ixzz38D1k2Pde
Follow us: @Bankrate on Twitter | Bankrate on Facebook
bankrate
Have you looked anywhere else? With that score on a conventional loan, the big players like Chase and Wells Fargo might be the best place to be
Posted on 7/22/14 at 10:37 am to LSU Delirium
quote:
Long story short, I found an online lender (FFSi, First Financial Services Inc) who offered us a 30 year fixed, zero points, for 3.99% and they would also pay the lender fees. On the other hand, the guy we originally sat down with gave us 4.375% with $1,300 in lender fees.
I refinanced with that exact company (FFSi) a couple years back and then did a new purchase with them very recently. They were very easy to work with and had great rates/incentives. There are no "got you" moments where they hit you with unexpected fees/costs. They will absolutely grill you on your income/finances/etc., but I think everyone does that these days. Overall, I was happy with both my experiences and would recommend them. You can read a ton of reviews on the online mortgage companies on Zillow too.
Posted on 7/22/14 at 10:43 am to I Love Bama
quote:
Red flag. She is probably getting something on the back end.
Which would be illegal and a violation of the laws regarding real estate transactions. Try again. She probably wants him to do it because he has a proven track record getting deals done in a timely fashion with satisfied customers.
Posted on 7/22/14 at 10:51 am to VABuckeye
Yeah , I always use the same people on all my stuff, the one time I didn't it was a complete cluster frick. I'd take your agents advice unless you have somebody better.
Posted on 7/22/14 at 11:04 am to VABuckeye
quote:
Which would be illegal and a violation of the laws regarding real estate transactions. Try again.
Mortgage lenders wine and dine real estate agents ALL the time in order to get business. Try again.
Posted on 7/22/14 at 11:10 am to I Love Bama
You talking dinner and drinks? You really think someone would funnel business because of dinner and drinks from time to time? That's laughable.
Posted on 7/22/14 at 11:13 am to VABuckeye
quote:
That's laughable.
I don't care enough about the topic to debate you on it. Fact is, agents do steer clients towards certain mortgage officers and there is usually a reason for it.
Posted on 7/22/14 at 11:20 am to LSU Delirium
I would be very direct with your realtor. Show them (you got it in writing, right?) the proposed terms from the other lender.
Are you buying or building? If building, a lot of times, the builder/lender has incentives for using the "reccomended lender".
Are you buying or building? If building, a lot of times, the builder/lender has incentives for using the "reccomended lender".
Posted on 7/22/14 at 11:23 am to VABuckeye
quote:
VABuckeye
Are you a realtor? Sound very defensive!
quote:
You talking dinner and drinks? You really think someone would funnel business because of dinner and drinks from time to time? That's laughable.
It's a referral relationship. The broker sends potential buyers the agent's way, and the agent sends potential borrowers the broker's way. Food and drinks may exchange hands, but it would be risky for cash paybacks to occur (not saying it doesn't).
I'm a CPA, and I have certain bankers/attorneys/etc that I refer business to, and them to me. It's how the world works. Of course, I'll work with anyone, but, naturally, you refer people whom you are comfortable with and have worked with before.
Posted on 7/22/14 at 11:25 am to LSUFanHouston
quote:
Are you a realtor? Sound very defensive!
Nope. I'm a small business owner who has never had to grease anyone's palm to get business.
quote:
Of course, I'll work with anyone, but, naturally, you refer people whom you are comfortable with and have worked with before.
quote:
Red flag. She is probably getting something on the back end
To me this inferred a kickback which is not legal. Nothing wrong with business lunches and stuff like that if it's your thing. I just don't need or have to rely on stuff like this to get business.
This post was edited on 7/22/14 at 11:33 am
Posted on 7/22/14 at 11:46 am to LSU Delirium
I would take everything as a grain of salt until you get a TIL (Truth in Lending).
You can compare the APR at that point and see whether points means no buydown of the rate or no fees (it used to mean a buydown of the rate).
Never get too hung up on the APR because it really doesn't mean much to your loan. It is a "what if" you stayed in that mortgage for the full term of the loan (that probably happens less than 10% of the time). However, it can give you an eyeball's glance to compare one lender against another.
Good luck.
You can compare the APR at that point and see whether points means no buydown of the rate or no fees (it used to mean a buydown of the rate).
Never get too hung up on the APR because it really doesn't mean much to your loan. It is a "what if" you stayed in that mortgage for the full term of the loan (that probably happens less than 10% of the time). However, it can give you an eyeball's glance to compare one lender against another.
Good luck.
Posted on 7/22/14 at 11:48 am to VABuckeye
To me he is saying that option might not be the best for the customer since some mortgage officers refer to "their lenders" in order to generate business for them and vice versa. There is probably a better lender(bank usually)with better rates and terms is what he is saying to me.
This post was edited on 7/22/14 at 11:49 am
Posted on 7/22/14 at 11:52 am to AUtigerNOLA
Could certainly be that. 
Posted on 7/22/14 at 12:19 pm to VABuckeye
Each refi/purchase stands on its own. He said he only gave his credit score to the other companies, so there could be issues there that the other people he is getting quotes from don't know. Also, real estate scores are not the same as what you get from free credit report. Also, DTI, Down Payment, and other things factor into it, so there are differences there. Just make sure you are comparing apples/apples.
Realtors do refer people to lenders, etc. They cannot be paid for referrals from brokers, but banks do not have the same requirements. Brokers/Banks are not the same and are not treated the same by Dodd/Frank, etc. Also, there are ways around referrals. Most Realtors won't send any business w/o some kind of glad handing. It is just hidden. Never give them cash, but it doesn't take much for someone to get a Realtor to send then referrals, it does take a lot to keep them doing it. Also, a large number of realtor offices now have their own brokers, their own appraisers, etc. The relationships are very incestuous.
He will be fine if he can get a true comparison. It is always better to get different quotes, and I would never just go with who the realtor recommends. Shop around it will save you money. I also, would not go with a bank, they almost never quote you the best rates, terms, etc.
If this is a long term purchase, rate is the most important thing. Even if the fees are higher, the lower rate will eventually make up for the higher fee. Don't be fooled by no closing costs. They have to make it somewhere, so it has to be in the rate.
Realtors do refer people to lenders, etc. They cannot be paid for referrals from brokers, but banks do not have the same requirements. Brokers/Banks are not the same and are not treated the same by Dodd/Frank, etc. Also, there are ways around referrals. Most Realtors won't send any business w/o some kind of glad handing. It is just hidden. Never give them cash, but it doesn't take much for someone to get a Realtor to send then referrals, it does take a lot to keep them doing it. Also, a large number of realtor offices now have their own brokers, their own appraisers, etc. The relationships are very incestuous.
He will be fine if he can get a true comparison. It is always better to get different quotes, and I would never just go with who the realtor recommends. Shop around it will save you money. I also, would not go with a bank, they almost never quote you the best rates, terms, etc.
If this is a long term purchase, rate is the most important thing. Even if the fees are higher, the lower rate will eventually make up for the higher fee. Don't be fooled by no closing costs. They have to make it somewhere, so it has to be in the rate.
Posted on 7/22/14 at 5:30 pm to tiger94gop
Thank you all for taking the time to respond. I will try to give a few more details and also try to get a better understanding of some things mentioned above. I will try to be brief....
I have contacted four lenders, the two that the realtor recommended, and two I found through zillow online.
#1 - Guy I sat down with I mentioned in first post. Did the whole "Good Faith Estimate", with a breakdown of everything. Estimate had a lot of great info, but the short of it: 4.375%, $1,300 in lending fees.
#2 - Just emailed the second one that was recommended, only providing my 3 credit scores that were pulled by the first guy, % down, etc. 4.5%, didn't mention the lending fees.
#3 - FFSi through zillow. Provided same info as in #2, 3.99% with the lending fees covered because of some promotion through zillow. I asked him what the next steps were, since we may be making an offer in the next week, and he basically said we need to get an offer accepted and then move forward. Did not get anything in writing though.
#4 - Sebonic Financial. Basically exactly the same as #3, except 4.00% and no lender costs.
I won't speak for the realtor's motives; he could have had a good experience working with the lenders in the past, or he could be getting some other benefit. All I know is they both have higher rates and I don't see any benefit in going with them. I realize there could be some problems with the paperwork, etc with some of the lenders, but from I have read about #3 and #4 it shouldn't be an issue.
We are buying, but the house we are looking at is a new construction. We haven't made an offer yet, is it a bit early to be asking about financing from them?
How do I get a TIL? If I am not looking at the APR, what should I be looking at? This was one of major concerns when I posted this, that I am completely missing something.
I don't know if I will still be in the mortgage 30 years from now, but we plan on staying a while.
The only costs covered by #3 and #4 are the lending costs, I figured the other closing costs will be the same. Still, that’s $1300-1500.
TL;DR...unless I am missing something, I can save ~$1300 at closing (No lender fees) and have a .375% lower rate (~$100 a month) by going with an online lender. The downside is the paperwork may be more of a hassle, and the real estate agent won't get his kickback. Is that accurate?
Thanks again the help. Buying a house is nerve racking.
I have contacted four lenders, the two that the realtor recommended, and two I found through zillow online.
#1 - Guy I sat down with I mentioned in first post. Did the whole "Good Faith Estimate", with a breakdown of everything. Estimate had a lot of great info, but the short of it: 4.375%, $1,300 in lending fees.
#2 - Just emailed the second one that was recommended, only providing my 3 credit scores that were pulled by the first guy, % down, etc. 4.5%, didn't mention the lending fees.
#3 - FFSi through zillow. Provided same info as in #2, 3.99% with the lending fees covered because of some promotion through zillow. I asked him what the next steps were, since we may be making an offer in the next week, and he basically said we need to get an offer accepted and then move forward. Did not get anything in writing though.
#4 - Sebonic Financial. Basically exactly the same as #3, except 4.00% and no lender costs.
I won't speak for the realtor's motives; he could have had a good experience working with the lenders in the past, or he could be getting some other benefit. All I know is they both have higher rates and I don't see any benefit in going with them. I realize there could be some problems with the paperwork, etc with some of the lenders, but from I have read about #3 and #4 it shouldn't be an issue.
quote:
Are you buying or building? If building, a lot of times, the builder/lender has incentives for using the "recommended lender".
We are buying, but the house we are looking at is a new construction. We haven't made an offer yet, is it a bit early to be asking about financing from them?
quote:
I would take everything as a grain of salt until you get a TIL (Truth in Lending)....
..........However, it can give you an eyeball's glance to compare one lender against another
How do I get a TIL? If I am not looking at the APR, what should I be looking at? This was one of major concerns when I posted this, that I am completely missing something.
I don't know if I will still be in the mortgage 30 years from now, but we plan on staying a while.
quote:Guy in #1 gave me the credit report he pulled, it has "EFX Facta Beacon 5.0, XPN/Fair Isaac Model II, TU FICO Classic 04” scores. These are the ones I gave the others, so hopefully it is close to apples to apples. Guy in #1 had also told me no DTI concerns, so I figured I was getting the best rate possible from all.
Also, real estate scores are not the same as what you get from free credit report.
The only costs covered by #3 and #4 are the lending costs, I figured the other closing costs will be the same. Still, that’s $1300-1500.
TL;DR...unless I am missing something, I can save ~$1300 at closing (No lender fees) and have a .375% lower rate (~$100 a month) by going with an online lender. The downside is the paperwork may be more of a hassle, and the real estate agent won't get his kickback. Is that accurate?
Thanks again the help. Buying a house is nerve racking.
This post was edited on 7/22/14 at 5:47 pm
Posted on 7/22/14 at 10:02 pm to VABuckeye
quote:
a proven track record getting deals done in a timely fashion
More than one story of folks choosing a lower priced lender and then paying more expenses related to not closing on time, or even losing out on the contract to a backup offer.
Are there many professionals that you use that are the absolute cheapest? Plumber? Electrician? CPA? Attorney?
As stated by another poster, you may get good results from this lender, but they do not have much at stake to make sure the deal happens on time. While the lender the Realtor is referring wants to maintain his relationship with the Realtor and will bend over backwards to make sure the loan closes on time.
Posted on 7/22/14 at 10:04 pm to I Love Bama
quote:
agents do steer clients towards certain mortgage officers and there is usually a reason for it.
I have agents refer buyers to me and I can assure you it is not because I violate federal laws. It is because I have built a reputation of making sure the loan closes on time. If I have to work late, take a weekend call or whatever takes, the agent knows they will get paid and the buyer will be happy because the loan will close on time.
THAT is your reason!
Posted on 7/22/14 at 10:07 pm to tiger94gop
quote:
their own appraisers
HVCC? Really? How long have you been out of the business?
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