Shopping for Mortage

[The Bad Guy]

Well, it's finally time to shop for my first mortage. An offer we put in for land was accepted today and we are trying to finalize a builder we want to use for a new home construction. We had our pre-approval done from Wells Fargo.

This also means I'll be shopping for my first mortgage. Is there any advice to pass down for this? I'm going to shop around for the best quote and understand all the programs available for first time home owners.

I'm just more or less soliciting advice. My credit score is immaculate. The only debt I currently carry is student loan based.

Thanks in advance for any help.

[Alton deFlat]

My last one was done thru a mortgage company, who immediately sold the loan to Wells Fargo. I've been happy with WF so far.

[The Bad Guy]

Originally Posted by Alton deFlat

My last one was done thru a mortgage company, who immediately sold the loan to Wells Fargo. I've been happy with WF so far.

That's good to know.

They have been good to answer all my questions about the land/construction loan I'll be taking out in a few weeks.

I'm curious do I have to start paying on the construction loan immediately or once all the work is completed.

[Alton deFlat]

Originally Posted by The Bad Guy

That's good to know.

They have been good to answer all my questions about the land/construction loan I'll be taking out in a few weeks.

I'm curious do I have to start paying on the construction loan immediately or once all the work is completed.

Probably should check, but I've always heard that it's at the completion... or at least at a certain % of completion.

BTW, I've only had the loan for 9 months, and Wells Fargo determined that they had overestimated my escrow. They sent me a check for $144 about a month ago. Never had that happen before.

[The Bad Guy]

Originally Posted by Alton deFlat

Probably should check, but I've always heard that it's at the completion... or at least at a certain % of completion.

BTW, I've only had the loan for 9 months, and Wells Fargo determined that they had overestimated my escrow. They sent me a check for $144 about a month ago. Never had that happen before.

Yep. Just called them. You only pay the interest in the loan every 30 days.

[Amnorix]

Originally Posted by Alton deFlat

Probably should check, but I've always heard that it's at the completion... or at least at a certain % of completion.

BTW, I've only had the loan for 9 months, and Wells Fargo determined that they had overestimated my escrow. They sent me a check for $144 about a month ago. Never had that happen before.

I had it happen. I've also been dunned the other way. They re-evaluate the escrow every year.

TIP FOR ALL CURRENT HOMEOWNERS -- if your annual real estate taxes went down because of reduction in home value, you can then contact your mortgage company, send them a copy of the appraisal, and get an IMMEDIATE adjustment in the monthly escrow holdback. Otherwise, as Alton notes, they'll catch you up at the end of the year if there has been, basically, overwithholding.

[mesmith31]

Depends on your income level, downpayment availability etc.

If you are looking to build on the raw land you will probably want to get a construction loan to start. Wells has a product which is a temporary to permanent loan. They will loan you the money to buy the land and set up an escrow account to dole out the money as the building progresses. Once the project is complete, the construction loan would roll into a long term conventional loan.

Sometimes the builders will offer terms or potential buy downs on the rates or closing cost incentives. They often have some type of deal worked out with the L/O (loan originator) at a local bank. Usually, these loans will start off with a local bank and then get sold on the secondary market to a bigger bank like Wells, Citi, B of A, etc.

Depending on your income they also have CRA loans which are Community Reinvestment Act loans where banks provide favorable terms and loans with as little as 2% down with no mortgage insurance to people who are building houses in areas that qualify under HUD guidelines for low to moderate income.

FHA also has 203k loans which will loan you the money to purchase a property and then escrow the money to make the improvements, and then roll it into a fixed product. There are all kinds of products out there. Shop around, talk to your builder and find out who they are using and interview them. Then take that knowledge and talk to someone at another bank to compare apples to apples.

[DaFace]

PM Bill Lundberg

[Red Beans]

Originally Posted by DaFace

PM Bill Lundberg

Didn't know Innetech did residential loans...

[jiveturkey]

If you're local you should look into Cap Fed.

I'm working on a refi right now and didn't have any luck reaching Mr Lundberg. I don't believe that he's been around.

[The Bad Guy]

Originally Posted by jiveturkey

If you're local you should look into Cap Fed.

I'm working on a refi right now and didn't have any luck reaching Mr Lundberg. I don't believe that he's been around.

Yeah, I tried to send him a PM and it didn't go through for some reason.

Once I agree on a builder, I'll ask them who they use for financing. I'll talk to them and a ton of local banks.

Hopefully Lundberg checks this thread.

I'm located in PA.

[Bill Lundberg]

Originally Posted by The Bad Guy

Yeah, I tried to send him a PM and it didn't go through for some reason.

Once I agree on a builder, I'll ask them who they use for financing. I'll talk to them and a ton of local banks.

Hopefully Lundberg checks this thread.

I'm located in PA.

That's weird, I replied to you on 2/22/2011. Anywho, here was my response.

First piece of advice would be to get at least two quotes. One from a bank and one from a reputable Mortgage Broker. The latter is a dying breed, but a good broker will save you thousands in comparison to a bank. I would ask your Realtor if you are working with one for a referral on the broker. If you're going in without an agent then you may ask a financial planner if they have a good referral to a mortgage broker.

I find if you ask for a referral from someone you do business with you will usually get a good one. Most people are smart enough to not refer business to idiots at the risk of losing a customer.

Most pre-approvals can be done over the phone, so once you find a number just call and tell them what you need. It shouldn't take more than 24-48 hours for them to get back to you with some numbers.

Hope this helps!

As for my reign as Planet mortgage guy, it's over. I closed my last loan yesterday and am officially out of the mortgage business. Things have changed so much that I don't care to be involved with it another day after 12 years. It's a bittersweet end. I used to take great pride in helping people save money or buy the home they've always wanted. Banks and the government have made it such a ****ing pain in the ass that customers don't appreciate the lengths we have to go to in order to get a loan completed these days and quite frankly I don't blame them.

If I were in your situation I would ask the builder to carry the construction loan and just take care of the end loan once the house is completed. It may be hard to do in today's market, but it will protect you from someone walking in the middle of a build job. Most reputable builders have access to a line of credit that will allow them to carry the note until completion.

[The Bad Guy]

Originally Posted by Bill Lundberg

That's weird, I replied to you on 2/22/2011. Anywho, here was my response.



As for my reign as Planet mortgage guy, it's over. I closed my last loan yesterday and am officially out of the mortgage business. Things have changed so much that I don't care to be involved with it another day after 12 years. It's a bittersweet end. I used to take great pride in helping people save money or buy the home they've always wanted. Banks and the government have made it such a ****ing pain in the ass that customers don't appreciate the lengths we have to go to in order to get a loan completed these days and quite frankly I don't blame them.

If I were in your situation I would ask the builder to carry the construction loan and just take care of the end loan once the house is completed. It may be hard to do in today's market, but it will protect you from someone walking in the middle of a build job. Most reputable builders have access to a line of credit that will allow them to carry the note until completion.

Thanks Bill.

I did get a response on that, but tried today and it wouldn't go through.

I'm not real worried about people walking in the middle because the people I'm using are people my father in law has built 5 houses with and are close friends of his.

Good luck to you in your future endeavors.

[Bill Lundberg]

Originally Posted by The Bad Guy

Thanks Bill.

I did get a response on that, but tried today and it wouldn't go through.

I'm not real worried about people walking in the middle because the people I'm using are people my father in law has built 5 houses with and are close friends of his.

Good luck to you in your future endeavors.

Thanks. Not sure why it didn't go through, but I just deleted a bunch of PM's maybe that will help.

As for the construction loan I would still try and get the builder to carry it; even if you trust him you won't have to start paying interest on something you can't live in.

You're going to get two options from everyone you talk to. A Lender paid option which will consist of a higher interest rate and lower closing costs and a consumer paid option which should get you the lowest interest rate (that said company offers) and slightly higher closing costs. Once you get both quotes let me know and I can show you the numbers on each so you can decide which one is right for your situation. The LO you talk to should do the same, but if you want me to check them to be sure they covered everything I would be more than happy to do so.

[Amnorix]

Originally Posted by Bill Lundberg

As for my reign as Planet mortgage guy, it's over. I closed my last loan yesterday and am officially out of the mortgage business. Things have changed so much that I don't care to be involved with it another day after 12 years. It's a bittersweet end. I used to take great pride in helping people save money or buy the home they've always wanted. Banks and the government have made it such a ****ing pain in the ass that customers don't appreciate the lengths we have to go to in order to get a loan completed these days and quite frankly I don't blame them.

As usual, a few jerks screw it up for everyone, but the problem here is that the loan originators of the world contained more than a few jerks during the boom era, and there is absolutely no doubt in my mind that the Countrywides of the world helped cause the housing market to inflate. Don't get me wrong, they weren't 100% of the blame. Maybe not even 50%. But shady loan origination firms that passed the paper on to idiot investors and pocketed the profits even though they KNEW many borrowers could never repay were definitely part of the problem.

So if the crackdown prevents that -- great. The unfortunate part is that the honest ones, the good ones, have to deal with all the new rules too.