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Help dealing with mortgage lenders(one a family friend) as a first time home buyer

reign1 128 21 March 27, 2016 at 08:56 PM in Home & Home Improvement
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Looking for some opinions on obtaining a 30 year fixed mortgage of 260k, as a first time home buyer. We are placing 20% down and have been working with a family friend, who we assumed would give us the best possible rate/service. I was concerned about his original rate of 4.375% so I obtained quotes from other mortgage companies. Amerisave, who offered 3.875% and they will lower their origination fee from $577.00 to $77.00. Our Credit Union, who we do our regular banking with, also gave us a rate of 4.0% with a $295 fee and said we just missed the credit score of 700 nessesary to qualify for their 3.875% rate by one damn point (699).
After telling the family friend, he offered us a rate of 3.875% but is charging a loan origination fee of $715.00. He also said Amerisave is an underwriter with tons of bad feedback and they do not normally recognize preapprovals from them, have to fix mortgages written by them, etc.

Should we go with the family friend? Any experiences with Amerisave?

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Joined Nov 2005
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#2
Who is this friend? A pro that's going to do you a solid or some self-proclaimed guy doing this on the side? If you go with the friend and the deal goes south, the friendship goes south too.

Amerisave is hit and miss- looking online you'll see a ton of reviews, good and bad. I had a great experience with them but it was a refi. They are a broker of sorts - IOW they quickly sell off mortgages to other companies (for the borrower it's all benign.... nothing on the loan changes insofar as you are concerned). I like them because their fees are upfront and known; you can pick rate/points/term combos as you like without having to go through an intermediary to get them. FWIW, their stated fees for refis (at least) are about $2100 which includes a $400 appraisal (same fees regardless of rate/points/term combo), but when all was said and done I got a few hundred $$ back after the closing, because they overestimate the fees (better to overestimate and get $$ back than get to the closing and have to bring $$ you didn't anticipate).

to compare the scenarios, run amortization on the loans and look at the payback periods. Obviously the lower rate will be better off in the long term, but not if the fees are extraordinary.
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Last edited by Dr. J March 28, 2016 at 06:49 AM
#3
Can you go back to the credit union to see if they have some flexibility or if their is anything you can do to get the lower rate? Unfortunately the more you shop for these the more potential damage to your credit score, assuming all these show up as hard credit pulls on your report.

It seems like the friend is the worst of the three options in this case.

Do you already have the house you want to buy or can you wait a month or two and see if you can't get your credit score just a bit higher?
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#4
It depends how much knowledge you have as first time home buyer. Do research in advance of making sure you are ready with the right documents, understanding the ins and outs of the fees, loan documents, etc.

Online based mortgage lenders tend to offer some of the best rates and fees, however communication can be poor at times, you have to be more on top of things and some experiences varies (good and bad). If bottom line you are paying a few extra hundred bucks to your friend I say it may be a lot easier working with him assuming he is a full-time professional and knows what he's doing as Dr. J mentioned. If you can have the credit union to get close in rate and costs then that might be another great option as you can also have face to face contact with one of their brokers.
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#5
Friend or not, you go with where you can get the best rate and the lowest fees.

Your friend isn't looking out for your wallet.
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#6
check quicken and pay off some debt your score can change one point if you sneeze
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#7
doesnt sound like that good of a friend....

your best friend is your wallet.
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#8
Quote from reign1 View Post :
Looking for some opinions on obtaining a 30 year fixed mortgage of 260k, as a first time home buyer. We are placing 20% down and have been working with a family friend, who we assumed would give us the best possible rate/service. I was concerned about his original rate of 4.375% so I obtained quotes from other mortgage companies. Amerisave, who offered 3.875% and they will lower their origination fee from $577.00 to $77.00. Our Credit Union, who we do our regular banking with, also gave us a rate of 4.0% with a $295 fee and said we just missed the credit score of 700 nessesary to qualify for their 3.875% rate by one damn point (699).
After telling the family friend, he offered us a rate of 3.875% but is charging a loan origination fee of $715.00. He also said Amerisave is an underwriter with tons of bad feedback and they do not normally recognize preapprovals from them, have to fix mortgages written by them, etc.

Should we go with the family friend? Any experiences with Amerisave?

Assuming your 'friend' is a mortgage broker, ask them is they have United Wholesale Mortgage as one of their lender conduits.

If you have excellent credit (740+) and based on the purchase price of 325k with a 260k loan amount this falls within their Elite product pricing and they should be able to deliver to you 3,75% - 3.875% on a Fixed 30 (based on todays pricing) and still earn a fair fee.

Credit does mean everything to obtain the best pricing.

-Adam
Old Hippy & Mortgage Pro
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-Adam
Old Hippy & Mortgage Pro

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#9
Quote from Rob_799 View Post :
Can you go back to the credit union to see if they have some flexibility or if their is anything you can do to get the lower rate? Unfortunately the more you shop for these the more potential damage to your credit score, assuming all these show up as hard credit pulls on your report.

It seems like the friend is the worst of the three options in this case.

Do you already have the house you want to buy or can you wait a month or two and see if you can't get your credit score just a bit higher?
Your info is NOT correct and hasn't been for quite some time
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for those that hate spelling mistakes www.walmarts.comCool

bulb save money by checking your insurance every 2 years (and not every 20)
#10
Ah. I was in a similar situation where a family friend was just "helping us, no charge whatsoever"- her words. I called up a few loan agents from banks, credit union, and local real estate agencies for quotes. The family friend gave me a rate lower than the banks and credit union but higher than the other loan agents. When I questioned her, she told me to be careful as the other loan agents might have lied to me and would increase the rate last minute so I couldn't close on time. I wanted answers in emails so that I had proofs. She just wanted to talk on the phone and would not email me answers. I went with a local agent due to a lower rate and quick responses via emails and texts.

Since you already know your credit score, email some higher rating local loan agents and ask for a rate quote without pulling your credit score. Get friend's and family's recommendations and compare them all.
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#11
Quote from stufine View Post :
Your info is NOT correct and hasn't been for quite some time
I appreciate the correction, although the website myfico.com says there is a possibility of your score dropping although it does appear to be low. It depends on the time frame for which these inquiries are made. Several mortgage applications in a short time frame may only show up as one credit pull on your score but if spread out over time it can appear as several.

http://www.myfico.com/CreditEduca...acies.aspx
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#12
"although" doesn't have a place in your response.
you are correct on the time frame

most scoring models have special rules to account for the fact that the activity relates to only one financial transaction. For example, multiple inquiries for a mortgage loan within a short period, typically 14 days, are counted as one inquiry. That minimizes any impact on your credit scores.
(experian.com)
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Last edited by stufine March 31, 2016 at 07:53 PM
#13
While speaking of credit, here is a tidbit that some may find interesting.
On June 25 Fannie Mae is updating their automated underwriting system to DU 10.0

One component of this major update will be the use of Trended Credit Data.

Credit reports currently used in mortgage lending indicate only the outstanding balance, utilization and
availability of credit, and if a borrower has been on time or delinquent on existing credit accounts such as credit cards, mortgages, or student loans. DU Version 10.0 will use trended credit data in the credit risk assessment, which provides access to historical monthly data (when available) on several factors, including: balance, scheduled payment, and actual payment amount that a borrower has made on the account.

Leveraging trended data in the DU risk assessment allows a smarter, more thorough analysis of the borrower’s credit history. The use of trended data is a powerful predictor of risk, and its use enhances the DU risk assessment to better support access to credit for creditworthy borrowers.
The DU Version 10.0 risk assessment will only use the trended credit data on revolving credit card accounts for the most recent 24 months’ payment history (even if more than 24 months’ worth of data is provided on the credit report). The trended credit data may be used on other types of accounts in a later version of DU.


Credit scores will remain key for best pricing and product guidelines, however, this deeper look into historical credit habits and the ability to access raw data we customarily do not see on a credit report may have an impact on the automated underwriting results.

While no one yet knows how this may impact the automated underwriting model yet, it will be interesting to see what affects it may have.

Stay tuned; -Adam
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#14
I'd look into what is going on with your credit first. Double check it for mistakes as well. You could have an incorrect 30 or 60 day late that is tanking your score. As you can see, one point means a LOT.
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