Toggle sidebar

Home Loan - Educate Me

A

ALL IN YOUR FACE

New member
Jul 30, 2012
2,096
754
0
As we all know, the smartest and most knowledgeable people on earth post right here on the Paddock so I hope to get some valuable information.

I'm going to be purchasing my first home and wanted to see what experiences everyone has had with getting a mortgage and which route you would recommend while taking into account rates, closing cost, and ease of doing business.

I'm in the Lexington area with a "very dependable" credit score and looking for about a $300K loan.

Should I be looking more at a local bank, large national bank (I hate Chase), or something online like this Rocket Mortgage that I see every time I turn on the TV. Where did you find the best deal? Who should I avoid?
TIA
 
B

BBdK

New member
Sep 21, 2003
159,783
15,051
0
Taking out a mortgage loan at 3% is stupid. If you can't afford to pay cash for your house, you're a loser and the very definition of "hood rich"

-
 
  • Like
Reactions: Midway Cat, TriangleUKCat, GonzoCat90 and 6 others
B

BankerCat12

Active member
Sep 21, 2012
5,904
475
83
You should first talk to your current bank and then talk to one or two other local banks. Being in the business I can tell you Chase and PNC are nightmares to deal with. I just closed a deal in 19 days from the start of application that both of them could not guarantee before 45 days.

You need to watch fees and make sure someone is not taking advantage of you. I just left a closing this morning for a client that bought a $500k house with $400K loan. Our closing costs were $2200. Literally just the cost to do business. No admin, points or origination charges.

Not sure what term you are looking for but the 30yr rate today is fluctuating between 3.375% and 3.5%. The 15yr is 2.75%-2.875%. Pricing changes throughout the day. Keep in mind that you cannot lock a rate in until you have a fully executed contract.
 
  • Like
Reactions: Lexie's Dad and ALL IN YOUR FACE
U

UKserialkiller

New member
Dec 13, 2009
34,297
35,841
0
ALL IN YOUR FACE said:
I'm in the Lexington area with a "very dependable" credit score and looking for about a $300K loan.

Should I be looking more at a local bank, large national bank (I hate Chase), or something online like this Rocket Mortgage that I see every time I turn on the TV. Where did you find the best deal? Who should I avoid?
TIA
Click to expand...
I'd be looking at 2 year adjustable ARMS. Avoid 30 yr loans since you prolly won't live there 30 years.
 
  • Like
Reactions: RacerX.ksr
A

ALL IN YOUR FACE

New member
Jul 30, 2012
2,096
754
0
DSmith21 said:
These are competitive rates that you should be able to get if you have good credit. This bank does not do fixed rate loans in Kentucky (only ARMs) but the rates will still give you an idea of what you can get.

https://www.dollar.bank/Personal/Borrowing/Mortgages/Apps/Todays-Rates
Click to expand...
Interest rates are certainly going to go up since they are currently so low. Shouldn't I be looking for fixed rate if possible? Is there a product that offers a fixed rate for the duration of the term or is it only possible to get a fixed rate for a few years?
 
D

DSmith21

New member
Mar 27, 2012
8,297
2,036
0
ALL IN YOUR FACE said:
Interest rates are certainly going to go up since they are currently so low. Shouldn't I be looking for fixed rate if possible? Is there a product that offers a fixed rate for the duration of the term or is it only possible to get a fixed rate for a few years?
Click to expand...

Almost any bank will offer 15, 20 and 30 year fixed rate (for the entire term of the loan) loans. Go with the shortest term that you can afford the payment. You can get a 15 year fixed rate loan at 2.5% interest. Historically, that's extremely low.
 
  • Like
Reactions: Big_Blue79 and ALL IN YOUR FACE
B

BlueBallz_rivals30790

New member
Mar 26, 2003
5,688
170
0
Once you get the quotes, tell them you want to do your own escrow and to waive the fee, see who bites. If you do this after you get the quote, they can't bury it somewhere in the fees. Some won't budge and will put the cost as an additional line item. Depending on the bank, it could be somewhere between $700-$1000 which I think is a racket just to do your own escrow. If the bank does the escrow, you'll still have to have about this amount sitting in the account unused. I had BofA waive escrow once this way. Another time, I did the escrow through Wells Fargo because they wouldn't waive the fee, however after the first year, I called and said I wanted to do my own. They didn't charge me a fee and sent me the money in the escrow account.
 
A

ALL IN YOUR FACE

New member
Jul 30, 2012
2,096
754
0
BlueBallz said:
Once you get the quotes, tell them you want to do your own escrow and to waive the fee, see who bites. If you do this after you get the quote, they can't bury it somewhere in the fees. Some won't budge and will put the cost as an additional line item. Depending on the bank, it could be somewhere between $700-$1000 which I think is a racket just to do your own escrow. If the bank does the escrow, you'll still have to have about this amount sitting in the account unused. I had BofA waive escrow once this way. Another time, I did the escrow through Wells Fargo because they wouldn't waive the fee, however after the first year, I called and said I wanted to do my own. They didn't charge me a fee and sent me the money in the escrow account.
Click to expand...
Let me get this straight. The escrow is set up to pay the insurance and property tax in which I would fund the account for the approx. annual cost but then they charge a fee to handle the escrow account and make the payments that I'm perfectly capable of doing on my own? And you're saying the fee to handle the escrow can be between $700-$1K?
 
B

BlueBallz_rivals30790

New member
Mar 26, 2003
5,688
170
0
ALL IN YOUR FACE said:
Let me get this straight. The escrow is set up to pay the insurance and property tax in which I would fund the account for the approx. annual cost but then they charge a fee to handle the escrow account and make the payments that I'm perfectly capable of doing on my own? And you're saying the fee to handle the escrow can be between $700-$1K?
Click to expand...

There are two options for escrow:

The bank- in addition to your monthly payment, you also pay them the insurance and property tax. They would then pay this for you. The hitch is, at the beginning of the year, they need "x" amount of dollars in the account (could be upwards of $500-700), so there is a cushion and it's just sitting there. They make sure there is always an overage in the account.

Do it yourself- If you want to do your own escrow, the bank will charge you a fee to do it. For me, and it's been a while, I think it was somewhere between $800-$1000, I don't recall. Which I think is a racket, but yes, they charge you do do this. So the next time I got a quote, I got the quote with them doing escrow, then another quote asking them do write up the quote with me doing my own and waiving the fee. Some banks won't do it, some may, it just depends.
 
  • Like
Reactions: LineSkiCat14 and ALL IN YOUR FACE
B

buckethead1978

New member
Oct 6, 2007
15,432
1,446
0
Wait what? People write one check for their mortgage, another for their taxes, and another for their property insurance?

Why are you doing this?
 
B

BlueBallz_rivals30790

New member
Mar 26, 2003
5,688
170
0
buckethead1978 said:
Wait what? People write one check for their mortgage, another for their taxes, and another for their property insurance?

Why are you doing this?
Click to expand...

A couple of reasons:

1) It's more money in my pocket and not the banks. When the banks do escrow, they inflated my first month payment to get an overage in my escrow based on the estimated year end property taxes plus some. If I remember correctly, it was about $800. So that's $800 a year I'm basically giving them to sit in their account.

2) It's more flexibility for me. Since I do my own, I set up a separate savings account that I do a monthly transfer based on my property tax estimation. If I want to put more or less money in each month depending on my personal expenses, I have the flexibility to do that. Not that I get a great amount of interest on the money, but I get some, which I wouldn't get by giving it to the banks.

3) I don't have to worry about the banks not paying the taxes, or late, or having to deal with it. Generally, I don't think you have to worry too much about this scenario, however I have heard a few horror stories.

4) My insurance is just a monthly draft, so I'd rather pay it than worry about having the bank doing it.
 
D

DSmith21

New member
Mar 27, 2012
8,297
2,036
0
^ If the bank is holding onto an extra $800 of your money in an escrow account, then you are only losing a few bucks per year in lost interest. I am glad to pay the bank a couple of bucks per year for dealing with my insurance and taxes. You get any overage back when the loan is repaid.
 
  • Like
Reactions: Midway Cat, TriangleUKCat, Ron Mehico and 3 others
B

BlueBallz_rivals30790

New member
Mar 26, 2003
5,688
170
0
DSmith21 said:
^ If the bank is holding onto an extra $800 of your money in an escrow account, then you are only losing a few bucks per year in lost interest. I am glad to pay the bank a couple of bucks per year for dealing with my insurance and taxes. You get any overage back when the loan is repaid.
Click to expand...

A few bucks of interest PLUS the $800, which I could use for better things than sitting in a banks account. I'll get the overage at the end of the loan, but I'd rather not wait 15 years to get it. Plus, it's also about the flexibility of it. It's really not that big of a hassle for me to manage escrow.
 
L

LadyCat92

New member
May 22, 2002
20,127
666
0
I don't do escrow. First, I dont want them holding extra. Two, your property taxes and home owners insurance usually go up yearly and thus the bank over estimates more and more each year the amount of cushion they need. I'm perfectly capable of paying my insurance and taxes electronically once a year.
 
D

dgtatu01

New member
Sep 21, 2005
8,673
506
0
ALL IN YOUR FACE said:
As we all know, the smartest and most knowledgeable people on earth post right here on the Paddock so I hope to get some valuable information.

I'm going to be purchasing my first home and wanted to see what experiences everyone has had with getting a mortgage and which route you would recommend while taking into account rates, closing cost, and ease of doing business.

I'm in the Lexington area with a "very dependable" credit score and looking for about a $300K loan.

Should I be looking more at a local bank, large national bank (I hate Chase), or something online like this Rocket Mortgage that I see every time I turn on the TV. Where did you find the best deal? Who should I avoid?
TIA
Click to expand...
You're in luck because Chase sucks at home loans. In fact when we sold our house 14 months ago we got an offer from someone who was preapproved by Chase and they have such a bad rep that the realtor advised us to reject the offer because it would never close.

My pops works for Cumberland Valley National Bank in Lexington and I know they do a good job so check them out if you want a fair deal.
 
Last edited:
  • Like
Reactions: ALL IN YOUR FACE
B

BankerCat12

Active member
Sep 21, 2012
5,904
475
83
Secondary market guidelines require you to escrow your taxes and insurance. If you want to opt out, they charge you a .0025% at the time of closing, based on your loan amount. $100,000 would be $250 fee. Its minimal but not worth paying for IMO.

Laughing at the above who would rather use that money for other things or ones that refuse to escrow. Do you not have "$800" in your account now that you are doing nothing with? At the end of the day, you are not out a penny and you do not have to worry about it. Portfolio/bank level loans can waive all escrows if they desire. Its completely up to a lender. The reason there is a charge to waive secondary market was due to the housing plunge a few years back. If taxes are not paid, they are the first to be paid out at a foreclosure, sale, etc. Banks want there money back as they should.

2.5% on a 15yr is a great rate. Make sure you get a full list of all the fees before moving forward. Its amazing what fees can buy the rate down to. Dont be dumb. Not worth buying the rate down.
 
  • Like
Reactions: ALL IN YOUR FACE
B

BlueBallz_rivals30790

New member
Mar 26, 2003
5,688
170
0
BankerCat12 said:
Secondary market guidelines require you to escrow your taxes and insurance. If you want to opt out, they charge you a .0025% at the time of closing, based on your loan amount. $100,000 would be $250 fee. Its minimal but not worth paying for IMO.

Laughing at the above who would rather use that money for other things or ones that refuse to escrow. Do you not have "$800" in your account now that you are doing nothing with? At the end of the day, you are not out a penny and you do not have to worry about it. Portfolio/bank level loans can waive all escrows if they desire. Its completely up to a lender. The reason there is a charge to waive secondary market was due to the housing plunge a few years back. If taxes are not paid, they are the first to be paid out at a foreclosure, sale, etc. Banks want there money back as they should.

2.5% on a 15yr is a great rate. Make sure you get a full list of all the fees before moving forward. Its amazing what fees can buy the rate down to. Dont be dumb. Not worth buying the rate down.
Click to expand...

I had my escrow waived, didn't have to pay for it and I don't have to pay an "overage" into a bank escrow account. I like managing my own money. I'd rather have $800 in my account than given to the bank. That is more than a penny. I also want the flexibility month to month as to how much I put into my own escrow account.
 
A

arasco

New member
Dec 15, 2003
497
3
0
Im on year 4 of a 30 year fixed with a 3.5% rate. Will probably be in the house 10 more years at the most and have a kid starting college in 8 years.

Pretty conservative on investing and tend to hold too much cash (vs equities).

May look at refinancing to a 15 year at a lower rate (2.75ish). Throwing in cash to keep the payment the same.

Missing anything? Pretty amazing to look at just how little your principle drops each month on a 30 year.
 
B

BankerCat12

Active member
Sep 21, 2012
5,904
475
83
Yep. If you can do a 15yr its a no-brainer when you look at the interest saved. I had a client yesterday considering a 20 or a 30yr fixed. I told him to take the 30yr and pay it down as a 20yr note. The only reason I say this is the rate difference is not worth it. If he gets into financial hardship down the road, at least he has the smaller payment to fall back on. If I have someone considering a 15 or 30, I tell them 15 all day if they feel comfortable with that payment. In his situation, the 30yr interest if paid as agreed was $232,000 over the life of the loan. The 15yr was $92,000. $1000 a month difference but huge savings.
 
B

BankerCat12

Active member
Sep 21, 2012
5,904
475
83
BlueBallz said:
I had my escrow waived, didn't have to pay for it and I don't have to pay an "overage" into a bank escrow account. I like managing my own money. I'd rather have $800 in my account than given to the bank. That is more than a penny. I also want the flexibility month to month as to how much I put into my own escrow account.
Click to expand...

Don't spend that $1.66 all in one place. Do you live check to check?
 
  • Like
Reactions: crazyqx83_rivals88013
C

chitown87

Well-known member
Mar 22, 2007
90,431
577
103
BankerCat12 said:
Yep. If you can do a 15yr its a no-brainer when you look at the interest saved. I had a client yesterday considering a 20 or a 30yr fixed. I told him to take the 30yr and pay it down as a 20yr note. The only reason I say this is the rate difference is not worth it. If he gets into financial hardship down the road, at least he has the smaller payment to fall back on. If I have someone considering a 15 or 30, I tell them 15 all day if they feel comfortable with that payment. In his situation, the 30yr interest if paid as agreed was $232,000 over the life of the loan. The 15yr was $92,000. $1000 a month difference but huge savings.
Click to expand...
Wouldn't it be better to do 30 years and just pay 2x the principal every month? That probably doesn't exactly equal a 15 year mortgage but you get my point. Gives you a lot more flexibility that way if you run into trouble or unexpected major expenses.

And really, you would come out ahead doing a 30 year mortgage and investing the difference in mortgage payments, but that's a different conversation.
 
B

BankerCat12

Active member
Sep 21, 2012
5,904
475
83
chitown87 said:
Wouldn't it be better to do 30 years and just pay 2x the principal every month? That probably doesn't exactly equal a 15 year mortgage but you get my point. Gives you a lot more flexibility that way if you run into trouble or unexpected major expenses.

And really, you would come out ahead doing a 30 year mortgage and investing the difference in mortgage payments, but that's a different conversation.
Click to expand...

Good question. His scenario actually paid the loan off in 14.5 years if he did the 30yr and paid it off in 15. The interest paid in though was $114k to $92k. Over 15yrs, $22,000 isn't a lot of money if it gives you peace of mind that you can make a lower payment over the next 30yrs if you really have to. Just my two cents.
 
H

humperk12

New member
Mar 24, 2009
1,922
25
0
Something I would suggest paying attention to is PMI. Your down payment will drive the requirement, however some (I'd say most), will allow you to buy out of PMI in the form of a slightly higher rate.

If you only plan on staying in the home for about 7-8 years, or less, it's likely worth paying the higher rate to avoid the private insurance cost.
 
  • Like
Reactions: ALL IN YOUR FACE
J

joeyrupption

New member
Jun 5, 2007
8,686
2,278
0
BlueBallz said:
I set up a separate savings account that I do a monthly transfer based on my property tax estimation. If I want to put more or less money in each month depending on my personal expenses, I have the flexibility to do that.
Click to expand...

BlueBallz said:
It's a matter of convenience for me.
Click to expand...
You're right.

This seems very convenient and has really opened my eyes. Thanks.
 
  • Like
Reactions: Ron Mehico, Midway Cat, TriangleUKCat and 1 other person
C

crazyqx83_rivals88013

New member
May 2, 2004
167,872
1,742
0
  • Like
Reactions: ALL IN YOUR FACE
C

crazyqx83_rivals88013

New member
May 2, 2004
167,872
1,742
0
BlueBallz said:
A few bucks of interest PLUS the $800, which I could use for better things than sitting in a banks account. I'll get the overage at the end of the loan, but I'd rather not wait 15 years to get it. Plus, it's also about the flexibility of it. It's really not that big of a hassle for me to manage escrow.
Click to expand...
You have to pay the taxes and insurance. So it's not your $800, it's spoken for. And you're absolutely lucky to get 1% yield. So you're arguing about $8, but more than likely, fractions of that.

How ******* idiotic.
 
  • Like
Reactions: Ron Mehico and BankerCat12
You must log in or register to reply here.
Top Bottom