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Where is the best place to go to look for a home loan and to compare rates?

 

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Question:

Where is the best place to go to look for a home loan and to compare rates?

Answer:

Forget about those web sites. You will never get the best rate from them.

Same goes for the independent mortgage brokers. They need to make some money, at least $500 per loan.


You need to contact someone who is employed directly at a lending bank e.g. BofA.


True story, 11/2007.

I walk into a BofA building and ask how much is to refi $650k, 80% loan-to-value, 760+ median credit score, full documentation of income, reasonable debt-to-income. No cash out. 7/1 ARM.

The guy in the BofA office wants to get my SS number (to pull credit) before he can tell me a number. I say 'no way', I just told you mynumbers, now give me an estimate.

Ok, he gives in, comes back with 5.875% and closing cost will include like $3000 underwriting and processing fee. He adds that this is good, normally they charge a full 1% ($6500) processing. I asked if he could waive those fees and he declined.I KNEW upfront that was going to be his answer, I had just been playing with him.


Then, just for fun, I call the #1 from bankrate.com - on that day it was 'yourBestRate.com', Atlanta based I think. Never heard of that. Similar quote, also 5.875% about $3000 processing/ underwriting, and they were even going to charge me for pulling my credit.


Then I called one of the loan officers that I knew from the beginning I was going to get the loan from. These loan officers will charge you nothing in the 800 section of the HUD statement. The 800 section is the section that has the lender fees. I know each one such person at BankOfAmerica, WellsFargo, Citibank.

Do not confuse this with a 'no closing cost' loan. The term 'no closing cost' is a bunch of nonsense to confuse the consumer. I am very happy to pay closing cost that are

- prepaid interest (amount depends on which day in the month you close)
- prepaid property tax if you impound
- prepaid hazard insurance if you impound
- title insurance

I do NOT like to pay anything in the 800 section where you see items like

- underwriting fee (as much as 2% of the loan value.. thousands!)
- processing fee (same as underwriting)
- loan origination (1% - 2% of loan)
- credit check (it costs the bank $3 to pull your credit but they like to charge you $50 or even $150 for it.. it's just a way to make money)
- application fee (even if refunded at closing)


When you want to compare two lender's offers, you need to get a good-faith-estimate-of-closing-cost (good faith estimate, GFE) IN WRITING from each of them. Even if they quote you the same interest rate, they could have a big difference in the 800 section.

When comparing two lender's good faith estimates, you ONLY need to look at the 800 section. You will see that all the fees have a number. Only compare the fees with numbers 800-899.

The two lenders will probably have different closing cost e.g. one may assume you close escrow on the 10th and therefore include prepaid interest for 20 days, while the other one assumes you close on the 15th and includes prepaid interest for only 15 days. Don't let this fool you. Only the 800 section matters.

I would love to give out the phone numbers but I feel that posting them on this web site is not the right way. You can contact me at ptiemann_2000 AT yahoo DOT com or through the yahoo messenger (there's a link to chat with me on the left side). I will be happy to give you a contact at citibank or BofA or Wells Fargo. I have made loans with each of them and never paid any fees to the bank.



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