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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: degrom7 on January 12, 2019, 10:24:45 AM

Title: Shopping for a mortgage
Post by: degrom7 on January 12, 2019, 10:24:45 AM
Hi everyone. I'm in NY and looking to purchase homes (haven't decided which) for around $400-500k. I have the full 20% down payment so I don't have to worry about PMI. My credit score is around 800. Ideally, I would rather get a 15 year mortgage (lower interest rate), but financially speaking, a 30 year would be easier to handle. I can always refinance to a lower rate in the future.

I don't know much, if anything about mortgage and how they work. I do know not to only focus on the lowest interest rate as the lender could have higher up front fees.

I'm a teacher so I don't qualify for a VA loan. My questions are the following. Where are the best places for me to shop around? Banks, quicken loans, lending tree, or government backed loans such as an FHA loan?

Are mortgage points worth it just to get a lower interest rate? I heard that if I refinance later on, I'll end up paying more interest. Not sure why.

Not sure if there's anything else I should be looking into. Thanks in advance.


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Title: Re: Shopping for a mortgage
Post by: YttriumNitrate on January 12, 2019, 11:30:43 AM
Are mortgage points worth it just to get a lower interest rate? I heard that if I refinance later on, I'll end up paying more interest. Not sure why.
In my opinion, paying points is basically just a way to gamble on A) the length of time you are staying in the house, and B) future interest rates. If you stay in the house a long time and interest rates don't fall, then you generally win by paying points. If you sell in a few years, or if interest rates drop enough to make refinancing worthwhile, then you lose.
Title: Re: Shopping for a mortgage
Post by: degrom7 on January 12, 2019, 02:05:41 PM
Are mortgage points worth it just to get a lower interest rate? I heard that if I refinance later on, I'll end up paying more interest. Not sure why.
In my opinion, paying points is basically just a way to gamble on A) the length of time you are staying in the house, and B) future interest rates. If you stay in the house a long time and interest rates don't fall, then you generally win by paying points. If you sell in a few years, or if interest rates drop enough to make refinancing worthwhile, then you lose.

I see. Do interest rates normally drop within 10-20 years? I plan to stay in the house for a long time.
Title: Re: Shopping for a mortgage
Post by: YttriumNitrate on January 12, 2019, 03:50:55 PM
I see. Do interest rates normally drop within 10-20 years? I plan to stay in the house for a long time.
Maybe...
(http://www.fedprimerate.com/charts/15-and-30-year-fixed-rate-mortgage-history.gif)
Title: Re: Shopping for a mortgage
Post by: Goldy on January 12, 2019, 08:53:44 PM
For shopping around Zillow seems to be pretty good for getting quick quotes that include offers from local companies.  These companies will often turn around and sell your mortgage to a larger bank but your loan details stay the same.  Aimloan always seems to be the cheapest so next time I refi or purchase I plan on giving them a try. 
Title: Re: Shopping for a mortgage
Post by: degrom7 on January 12, 2019, 09:20:47 PM
For shopping around Zillow seems to be pretty good for getting quick quotes that include offers from local companies.  These companies will often turn around and sell your mortgage to a larger bank but your loan details stay the same.  Aimloan always seems to be the cheapest so next time I refi or purchase I plan on giving them a try.

Thanks for the tip.


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Title: Re: Shopping for a mortgage
Post by: Steeze on January 12, 2019, 09:38:07 PM
I just used a local credit union who has a branch in Long Island and NYC, Bethpage FCU. They had the best rates I could find. I used negative points to cover my closing costs and intend to pay off the loan in 2-3 years. Seems buying points would only be worth it if you will carry the loan without refinancing for the whole or most of the loan term.
Title: Re: Shopping for a mortgage
Post by: Kayad on January 12, 2019, 10:59:03 PM
Keep in mind that some fees may be negotiable, especially if you are using someplace local.  Start the process with a few different lenders, ask them if they can beat the other company on fees...