Refinancing Home Mortgage
In: Mortgage Lending
24 Feb 2010I’m currently applying for a mortgage via my mortgage consultant/broker.
First question~
Should I shop around via different brokers to get various comparisons or will my various loan camparisons come from one broker?
2nd Question~
At what point should I recieve my Good Faith Estimate? Some people say 3 days after the loan application is submitted and others say once you find the property!
Isn’t it too late to bargain and shop around once the property is found???
3rd Questions
Yield spread premium…should I be leary or is this everyday practice in the mortgage lending world?
I don’t have a full understanding of this!
WOW! I feel really overwhelmed right now!
Credit rating is approx. 620
Thanks
I have 20% and closing cost, I believe I’m ready financially, however I’m afraid of not asking the right questions and not looking for obvious RED FLAGS!!!
I’m pretty much settled on the fact that I want a 30 year Fixed Loan!
I was told that I didn’t have to use a sub- Prime Loan
This is about mortgage information questions.
6 Responses to Mortgage Lending Questions for Newbie!?
Matt K
February 24th, 2010 at 7:46 pm
First Question:
Yes you should shop around to different brokers because generally each broker has a set number of lenders with which they deal.
2nd Question:
RESPA requires that a Good Faith Estimate be provided no later than 3 business days after completed application. You can always shop around for different properties until you sign the “agreement of sale” contract with your realtor. This agreement is legally binding and says you must buy the house, unless certain things happen that prevent you (i.e. you are unable to obtain financing).
3rd Question:
Yield spread premiums are junk fees usually done by brokers. If you deal directly with the lender (i.e. a bank), then you probably would not have these fees. However, with your 620 credit score, you are probably better off going through a broker, unless you know of banks that make subprime loans around you.
If I might make a suggestion…..if I were you, I would wait about a year and work on my credit score. If you can get that up close to 680 or even 700, then you would qualify for some of the best rates that the banks offer……especially since you have 20% down payment and money for closing costs.
Doctor Deth
February 24th, 2010 at 7:50 pm
good faith estimate of closing costs will depend on the particular property – taxes will be different and some costs are based on a percent of the final agreed upon price.
One broker should have access to many different types of mortgages – no sense bothering more than one
what do you mean too late to bargain once property is found – once it is found is when you begin negotiating final price
your real estate agent – find one who will be your buyer’s representative – can answer most of your questions
Stephen G
February 24th, 2010 at 7:55 pm
Listen to what Matt K said. Best answer by far.
Good Luck
unisberkensap
February 24th, 2010 at 8:12 pm
First question~
Always shop!
2nd Question~
RESPA requires the Good Faith Estimate be delivered within 3 days of you signing the loan application. RESPA defines a loan application an ‘application’ when a property has been identified. Many lenders will not issue a GFE if there is no property but that should not stop you from asking for one, using information known at the time and ‘best guess’ estimates for the rest. If a lender refuses to give you a GFE without a property, Run!
3rd Question
Yield Spread Premiums are NOT junk fees. They are a legitimate part of the broker’s income. (What part of anyone’s income is JUNK?)
Yield Spreads are a % paid to, or received from, a broker delivering a loan at a said interest rate. (Example: At 6.25%, the broker would receive compensation from the lender. At 5.75%, the broker would be paying compensation to the lender.) The yield spread is owned by the borrower but captured by the broker to offset what the buyer would be paying in broker fees. For instance, if at 6.25% the broker is charging you 1% origination fee and capturing 1% yield spread, you could have that loan at 5.875% and pay the broker 2% origination. Either way it is the same money to the broker.
Why does the broker collect a yield spread and not a lender? Well the lender does as well, they just are not required by Federal Law to disclose it as the Broker is. Think about it. Their rates are virtually the same, so where did the yield spread go on the lender deal? Answer: they captured it and forget to tell you about it.
Assuming you qualify overall, the 620 score should not cost you anything in rate with your 20% down.
A little education such as a 1st Time Home Buyer’s class would be a GOOD idea for you!
evensonhimself
February 24th, 2010 at 8:35 pm
unisberk…. by far had the best answer in explaining how ysp is not a junk fee. it is what gets paid to the lender for choosing that particular bank. the broker will typically find what bank is going to give you the lowest interest rate for your particular loan scenario, and then pick who will pay them the best for that rate so that they can also help keep your fee’s down that way.
americannationwidemtg
February 24th, 2010 at 9:19 pm
unisberk has it going on.
By the looks of your questions and the answers, you should be in good shape.
There is nothing wrong with shopping around, as long as you do it tactfully.
And it’s not too late at all. It’s just the right time, since now you’ve found the property.
A 620 won’t get you the best rates, but it won’t kill you either. I’ve seen much, much worse.
YSP? It’s true the Lender gets it too. It’s also true that it is viable source of income, verifiable in writing, and a legitamate part of the lending process.
It is not true that it is a junk fee.
You’re situation is probrably best handled with a Broker. Your rates at a bank right now will not be as low as what a Broker can get you.
Good Luck, I can see you’re excited.