I might be mistaken, but aren't the fees from a mortgage broker rolled up into the mortgage? So although there is no out-of-pocket costs up front, it does affect their rate, where a buyer who is eligible for a .0325 rate will now receive a rate of .0350 or .0375 to offset the fee that the lender pays the mortgage broker?
While we are limited by automated underwriting guidelines at times, a knowledgable broker has many resources not found at any one bank.
For example, while Fannie Mae has a cap of 45% for debt to income on most transactions (i.e. everything except HARP), Freddie Mac will often go up to 50%. A broker will be able to run your loan through a variety of conduits and they have wholesale relationships with many lenders, each of whom also have their own specific guidelines which then the broker knows where to best direct your loan.
An expereinced broker will also have established relationships with the individual actually Underwriting your loan. Many times I discuss a borrowers tricky scenario with a specific underwriter prior to even submitting the file; then when submitting the file make sure the file will go directly to that Underwriter I have already worked out the quirks with.
I am obviously biased, but a qualified mortgage broker is much better for the consumer than walking into a bank and waiting weeks to get an answer. The broker can get the answers instantaneously as they have direct access to Fannie and Freddie's automated systems and will process everything first hand (instead of sending your documents off to a processing center).
Plus as this is SlickDeals, the broker customarily can deliver better pricing than anything most of the national big banks can offer.
Mortgage Brokers have wholesale conduits and deliver competitive rates/pricing with superior service.
The Broker Compensation received is paid by the lender and is reflected as an additional credit passed to the broker.
Hello Smart People. I'm hoping you can offer me some advice and help me set some realistic goals. I expect to be in the market to buy a home in the next year or two, and with rates as low as they have been, I'm wondering what exactly I can expect to get. Rates are currently in the 3.75% range, but could I actually expect to qualify for that? I belong to my local credit union, I'd expect that would be the first place I go to to see what I qualify for (assuming they even do home loans).
I will be getting married in two months to someone who has a bad credit history (opposed to my good history, though I am working on fixing hers), how will that affect things? The decent/good houses in the areas I'm looking at are in the $175-250k range. Later will come a baby or two.
Location: Cook County, IL
My Experian Credit Score: 774
Joint Income: $70k range
I do not currently own (I'm renting for free, but that can't last forever). Thanks in advance.
Renting for free = live with parents? No shame in it -- just wondering if you're a marketing major
Congrats on the marriage plans and trying to organize your life. If you don't mind me asking, where in Cook County? I happen to know there have been some recent deals in the NW suburbs where I grew up, but Cook County is a big place. Based on the price I can make a guess on a couple of areas but they're pretty far apart from each other.
When it comes to home buying, especially first home buying, be patient. Current rates are irrelevant if you're not looking to buy ATM. IMO, the most important criteria is predicting future plans and having backups. Are you looking to make this your house for ever and ever? Or do you want a starter home and plan to upgrade in a few years? If it's the latter, you're more concerned with getting a good deal on a house that you'll be comfortable in, but not necessarily be ecstatic about. If it's the former, you want to find a place that'll make you happy for a long time and you can grow into. In all cases, it's the bones of the house that need to be examined, rather than the flash and glitz. You can always add on (though depending on where you are, the town can make it EXTREMELY annoying), but if the core structure is falling apart or if there's water/mold/etc, you're just throwing your money away (no matter how nice that game room/media room/master bed/etc is). Will you be ok if something bad happens? Will the house you pick require you to sell if one of you loses your job or do you have other investments which can be liquidated if need be?
And try to put 20% down. If not, as others have mentioned, you'll need to pay PMI which can be a SIGNIFICANT percentage of your mortgage. However, some mortgage companies will let you roll PMI payments into your mortgage (which doesn't make sense to me, but whatever) so if you get a good rate it may add only a few bucks a month to your payments rather than hundreds.
Again, 1-2 years is a long time. Start saving and planning now. Perhaps you'll stumble into a good deal earlier than that. But also try to work out your fiancees debt.
Last edited by bonkman; 10-07-2012 at 09:02 PM..
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I expect to be in the market to buy a home in the next year or two, and with rates as low as they have been, I'm wondering what exactly I can expect to get.
I guess you'll find out when you get there. If you dont' have the 20% now and are working to improve the lady's credit, then use the time to generate some cash and pay down her bad debt so you can have a go at it when you're ready.
FWIW, rates have been "low" for 5 years and they keep dropping. What makes you think they're going to all of a sudden take off and you're stuck paying 8% or something?
Other than that, I think you need to set some very specific short and long term goals to say organized and on track.
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