Mortgage Question - Broker vs Credit Union - Your Experiences

In reply to Sine_Qua_Non :

Apparently my PMs aren't working, but they appear to give you my email address once it bounces so you can just send an email

Finally had time to get back to this.

Yes, Wells is evil.  Just look at all the hand slaps they keep getting for very flagrant violations of just about every law.  BUT Wells has been buying up tons of servicing.  They took the moniker of Too Big To Fail to heart.

Servicers are who you make your payments to, not necessarily who owns your loan.  There's always a lot of confusion on that point.

Shellb we are limited to mortgages in Texas but the basic rules are the same everywhere so I'm happy to help.

Escrow shortages at the beginning of your mortgage are something I just don't understand.  There are 3 different entities checking numbers and making sure things balance so that you can close.  No one is allowed to fudge, make up or adjust anything.  I'll bet most early escrow shortages happen thru the big banks because they don't have anyone except themselves checking numbers until they sell the loans.

Now if things change later that I understand.

BE CAREFUL OF YOUR REFINANCES!!

I just received a copy of a refi letter from a customer that they got from Quicken.  Quicken was charging 4 points for a rate that almost any Broker can deliver for ZERO points and ZERO origination fee.  But because most people don't pay as much attention to closing costs on a refil because it's made so that they aren't out of pocket costs, most people don't even notice the extra 4 points and the extra $5,000+ closing costs they made up and threw in the mix.  In my customer's situation that amounted to over $16,000 extra dollars he was paying over the normal costs.

So a summary: 

What are the top 5 questions I need to ask my mortgage guy/gal in order to most quickly compare with other lenders? 

Re: selling of mortgages.

I was listening to an interview of a woman who was a PhD in mortgages or something talking about the housing market and the history of our housing crisis' and crashes. She had studied the last 3 or 4 American crashes and had some interesting observations about them. But most interesting of all, they asked her at the end what she wanted to investigate next - and she said she wanted to study the history of loan ownership documentation. Think about it, the land owner (well, mortgage holder) is well documented in public information everywhere, and has been for ages. But the mortgage is written and then sold. And maybe sold again. And again. And then likely packaged up by the bank into a mortgage backed bond, and sold to a mutual fund. Where it might be traded more times between mutual funds and the thousands of individual investors in the mutual funds are changing everyday.

So you own the house (and it is well documented and everyone knows it) but literally thousands of different entities who are changing everyday own infentisimal portions of the loan on the house, and there is next to zero documentation about who any of them are or how much they own for how long. Interesting!

Re: escrow mishaps.

Around these parts there is a significant property tax discount for home owners living in their primary residence, but of course this is abused and many people who do not live in the house still claim the discount (especially common for flippers). Property taxes are also in arears, which means you pay the 2017 bill in 2018. 

So, if you bought the house from someone who is dishonest about the tax, you will either have to lie during your first year of ownership or eat significantly higher taxes for the first year (but paid in the second year) of ownership. This has happened to me, and I chose to eat the higher taxes. 

That absolutely spun the heads off whatever automatic program calculates the escrow payment. Ours is beyond messed up, and no one at the bank has any power to veto it. 

I guess you could also buy a house from an honest snowbird and find that during year two your taxes go way down. And that would also screw with the escrow calumulatoratoes.

pheller said:

So a summary: 

What are the top 5 questions I need to ask my mortgage guy/gal in order to most quickly compare with other lenders? 

 

1. term

2. Interest rate

3. Closing costs

4. Convince me that you work in my best interest and I'll buy from you.

5. Don't bullE36 M3 a bullE36 M3ter.

Well I’m glad this topic came up as there aren’t jackE36 M3 out there for a rental for us and probably should just up and buy and live with it.

Just blows that the credit scores we have blow... oh well.

To be fair, even if you "own" your house. No mortgage, you don't really "own" it.

Try not paying those property taxes.

z31maniac said:

 

 

paying those property taxes.

Yeah it’s crazy these days. 

The In reply to pheller :

My experience with credit unions is wildly different than most.  

First I used my credit union for everything. They were unbelievably good. To the point we’d tell them when we were ready to buy a car and they told us go ahead, write a check and we’ll do the paperwork when you come in. Always the lowest rates,  great terms etc.  

That went on for decades.  Our Mortgage with them was down to pocket change,  in fact we were thinking of transferring some of our savings to finish it off when the person we’d been working with quit and went someplace else.  

The new guy talked me into remodeling the house and taking a loan out to cover it.  Long story, but wound up tearing down the whole house to start fresh.  Still was easy, until the final loan. 2007.  Right about then The credit union was sold to Wings. ( part of Delta Airlines.)  That’s when things got horrible.  

Property was worth $ 600,000 more than I owed on it. I’ll skip all the boring details but in 2008 I joined the estimated 22 million unemployed and from then on the credit union did everything they could to  take the house.  In 2010 We  were current on payments but money was tight so we asked if we could make interest only payments.  

That weekend they knocked on our door and asked when we would vacate the house.  It got worse, much worse from there.  In the end we spent $36,000 in legal fees and penalties to keep the house. Without the help of the State Attorney  General  and politicians who aggressively defended me I would have lost the house. And the worst I was ever late was 68 days!!!! 

Most recently  Wings raised the interest rate from 4% to 8 &1/2 % and demanded a big refinance fee.  They gave me 30 days notice ( which I stretched to 48 by careful reading of the notice)  Our Credit score is really good  and the property appraised for more than twice the Mortgage. 

But this time I had to use a mortgage broker to close in that tight a schedule.  He was great but quick and low interest do not work.  So I accepted a too high interest rate knowing we’d refinance  soon.  Now,  I’ll shop for a better deal knowing I’ve got time.  

What have I learned?  

Do not ever trust financial institutions you aren’t on first name basis with no matter how big.  You can fulfill your obligation and they can still change the game requiring you  seek expensive legal help.  

Robbie said:

pheller said:

So a summary: 

What are the top 5 questions I need to ask my mortgage guy/gal in order to most quickly compare with other lenders? 

 

1. term

2. Interest rate

3. Closing costs

4. Convince me that you work in my best interest and I'll buy from you.

5. Don't bullE36 M3 a bullE36 M3ter.

Can you better clarify what you mean by "Term"? Like 30 year fixed? Or are there more details in that ...term? 

Robbie said:

So, if you bought the house from someone who is dishonest about the tax, you will either have to lie during your first year of ownership or eat significantly higher taxes for the first year (but paid in the second year) of ownership. This has happened to me, and I chose to eat the higher taxes.

?? The property taxes you pay should always be the taxes during the time you lived there. At closing they settle up the property taxes to current as part of your HUD-1 settlement statement. You never pay property taxes for the time period that anyone else owned it.

In reply to pheller :

No that's basically it. If you are trying to compare offers that is what you need to know. It should include the down payment amount and loan amount and maybe some other things like PMI if you will be getting it. But it needs to be as simple as possible to effectively compare offers.

Don't let anyone put "points" in the initial offer. Points are just trading higher closing costs for lower interest (or vice versa), and you will not come out ahead on the conversion (it's like exchanging your dollars to euros, the bank always comes out ahead), plus it muddies the waters when comparing offers. If I wanted to use points, I would find the best 2-3 simple offers first and then talk to them about the points. But I still wouldnt use points at all.

dculberson said:

Robbie said:

So, if you bought the house from someone who is dishonest about the tax, you will either have to lie during your first year of ownership or eat significantly higher taxes for the first year (but paid in the second year) of ownership. This has happened to me, and I chose to eat the higher taxes.

?? The property taxes you pay should always be the taxes during the time you lived there. At closing they settle up the property taxes to current as part of your HUD-1 settlement statement. You never pay property taxes for the time period that anyone else owned it.

That's correct, but here's what happens:

Say I buy a house June 30th of 2019 (because it makes .5 year of property taxes easy). In 2019, the current owner is paying taxes that were incurred in 2018. They have maybe already made a payment for 25% of the year and lived there 50% of the year so I will get a credit from them for the 25% of the year they lived there but did not yet pay. Fine, easy. 

But then Jan 1 2020 comes around, and now it is time to claim the homeowners exemption for the 2019 taxes that will be paid in 2020. To file for the exemption, I have to sign a document that states "I certify that myself (or the previous owner) occupied this property as their primary residence on January 1, 2019." Since I did not buy the house yet, I did not live there. And since I know the previous owner was a flipper and definitely did not live there either, I cannot honestly apply for the exemption for 2019 (which I will be paying in 2020). 

So therefore the 2019 payments paid in 2020 will be 20% ish more than what was being paid in 2019 when I bought the house and the mortgage math was done. So at the end of 2020 the escrow account will be empty or negative, and that will make the bank flip biscuits. The bank will assume that the property taxes are not going back down (even though they will when on Jan 1 2021 you can honestly say that you were living there on Jan 1 2020), so the bank will charge you for the catchup and will also charge you for the extra property taxes they assume you will pay forever. So now at the end of 2021, the bank will be trying to figure out why you have a giant overage in your escrow account and they will write you a giant check and will adjust down your payment. 

I'm sure most people just sign to certify that the previous owner used the house as their primary residence. But I want no part in knowingly lying to the government, and DEFINITELY not on someone else's behalf. 

Do I need to go through the whole pre-approval process before getting term, rate, and closing cost numbers? 

pheller said:

So a summary: 

What are the top 5 questions I need to ask my mortgage guy/gal in order to most quickly compare with other lenders? 

 

I don't come around here as much anymore, so sorry for late to the party.  The resident mortgage broker, Carguy123 is generally giving good advice as always.  The overwhelming majority of your mortgage requests will be agency-eligible (FNMA, FHLMC, FHA, VA, USDA, etc.) and the underwriting is pretty cut-and-dried, so it really comes down to price and service.  If you are buying anything other than a plain-vanilla real estate transaction, my first question would be about acceptable collateral.  APR is your shopping buddy.

1. Who will my Servicer be?  The 'servicing rights' are cooked into your rate and traded as a commodity.  A lender who will commit to retained servicing (or sub-servicing) may save you some headaches.

2. Average time from application to clear-to-close?  Ideally you want clear-to-close with at least 10 days to spare.

3. Can I pick the Appraiser?  A 'yes' answer would be illegal - this is a good test of how weasely the Loan Officer is.

4. Can I shop for Title Companies, Home Inspectors or anything else?  The answer should be yes without any steering towards favorites.

5.  Who's your toughest competition?  Don't let them dance around this one.  Get an answer, and then consider the rival.

I'm a big believer in credit unions and I think that they will usually prevail on a level playing field.  As an industry veteran, I'd pay a little bit more for a solid processing experience and a Servicer who won't jerk me around.  YMMV and good luck.

carguy123 said:

I am a Mortgage Broker and I have been a Banker and worked for a Bank.  I've done this since 1974.

Let me share with you some numbers I've developed over the past month.  Brokers have a protection factor built in for you.  They are forbidden from making up fake closing costs.  Banks wrote the new law and they can make up anything they want.

Fannie, Freddie & Ginnie set the rates they are willing to pay for certain loan types and situation. There is no economies of scale that allows a big bank to get a better rate.  All lenders begin with the same cost, the cost to you is determined by their profit margin.

Suddenly closing costs and rates are skyrocketing at Banks, Bankers and CUs - because they can.

i got a call from a Navy Federal Mortgage loan officer this week shopping for a better rate and costs than she could get at her CU.  She knew Navy Fed was high and that's why she was shopping around.  By the end of the conversation we found out that I was over $4,000 cheaper on closing costs and .5% cheaper on rate.  PROFIT MARGIN!!

Here are some other lenders numbers when compared to a Broker.  These are actual numbers derived from Loan Estimates given to the consumer.

USAA $3,197 extra CC + .375% to rate

Texas Mortgage Capital  $6,016 extra CC + .75% to rate

Loan Depot $4,060 CC same rate

Highlands Residential Mortgage $4,096 extra CC + .25% to rate

DR Horton $7,000 extra CC + .125% to rate

Cendera Funding $4,324 extra CC + .25% to rate

Prime Lending $4,689 extra CC + .375% to rate

Mortgage Financial Services $7,125 extra CC + .25% to rate

Supreme Lending $4,242 extra CC & .5% to rate

For the very first time in history it's as important to shop closing costs as it is to shop rate.  Most Realtors, Lenders, Builder Reps & of course consumers have no idea they can vary by this much.

Loan Origination Fees and Points are not necessary in this market.  You should only expect to pay them if you are getting a below normal rate.

DR Horton is offering a 3.875% rate for FHA/VA & USDA.  It only costs the consumer 1 point and 1% origination fee.  Yesterday I locked 2 FHA loans.  1 was at 3.75% with ZERO points and origination.  The other was at 3.875% with ZERO points and origination.  The difference between the 2 was loan size and credit score.

SHOP!

Get binding loan estimates and look at the fine print.

SHOP!

Online Lenders are the worst you can find. Rates won't be better, costs won't be better and service is nonexistent.  Very few people's situation is good enough for a checkbox type of mortgage.  Big Banks and Online lenders turn down about 60% of all applicants.  They work off of numbers and don't care what that does to you

 

I am in Texas, DFW  specifically

 

I’ve always assumed that CC’s and other similar fees were “F-U we have money and you don’t” fees, so I’m somewhat glad to see that’s basically the case and I wasn’t being overly paranoid. 

pheller said:

Do I need to go through the whole pre-approval process before getting term, rate, and closing cost numbers? 

They will initially say you do, but that normally means a hard credit check. You don't want 20 banks pulling that at the same time. Tell them you are shopping around and you want the best deal and be as honest as possible about your credit. If they won't give you any numbers without running your credit, keep moving.

We bought a house last year, and got our mortgage through better.com.  It is a start-up that does mortgages online. It was a good experience for us.
They had by *far* the lowest rate and closing costs, and were very straight-forward about rates and closing costs.  We talked to Quicken, LoanDepot, and one or two others.  We did not talk to a broker like carguy123 out of ignorance.  Better.com and the local bank were the only ones that dealt with us in at straight-forward way by just sending us a loan estimate sheet (with rate, term and estimated closing costs) immediately.  The others made vague promises, spouted marketing BS and eventually sent me loan estimates with insanely high closing costs.

better.com beat the local bank because they had both a lower rate and lower costs than the local bank, and I am comfortable doing things online.  I liked the local guy a lot, he was helpful and straight-forward with me, but I didn't like him $1500 and 1/8 point better.

Pro:

• Best rate and closing costs that we found
• Easy application process if you are comfortable doing things online
• No BS about immediately giving you a loan estimate

Con:

• Less personal (you deal with different people for different phases of the process, and we had one person just kind of vanish and get replaced by someone else).
• The loan will definitely get sold if you care about that (but the local bank we talked to also said they would be selling the loan).

The short advice as I see it: shop the loan estimate sheets.  The loan estimate is a standard format which has all the information about the rate, term and closing costs on it.  To compare lenders, you do have to read it carefully to separate out the lender-imposed costs from their estimates of other costs.  For example, in PA title insurance rates are fixed by law, and some of the out-of-state lenders put incorrect estimates for that on their estimates. If a lender won't immediately send you a loan estimate, go elsewhere.

To avoid escrow problems we asked if we could not have escrow.  At first they wanted to charge us some money up front, but I asked if they could do it without the fee and they agreed.

Is there a way to get or provide credit information to a lender to get a Loan Estimate Sheet without doing a hard pull? 

Our broker the first time around mentioned that after we had a house that my credit score might improve after a few years of on-time payments. I also got a credit card that I've always paid on time and in-full automatically for two years since buying our house. As such, I'd think my credit has improved, so using that two year old information might not be beneficial. 

In reply to pheller :

I was told and it seemed true that once you do a “hard pull” to buy or refinance a home subsequent “pulls” don’t affect your credit score for 90 days.  

Apparently the credit  rating agencies  understand you have to shop to ensure you’re getting the best deal you can.  

My experience will always have me suggesting broker. You want the cheapest rate and closing costs, who cares who services the loan later.

Dead old thread brought up by some spam.  Move along, nothing new to see here!  

Even more foolish to take a mortgage on a canoe.

In reply to Floating Doc :

Unfortunately Wells buys lots of loans from all sources.  All (normal) mortgages are made with the idea of being sold.  Some are sold quickly and some never at all, but Wells buys from CUs and other banks too.  No lender has control over where your loan may ultimately be sold.