Author Topic: Shopping for a mortgage  (Read 1763 times)

dailycycle

  • 5 O'Clock Shadow
  • *
  • Posts: 27
  • Location: Silicon Valley
Shopping for a mortgage
« on: July 28, 2013, 05:37:03 PM »
I know mortgages are somewhat challenging to compare.  So far I went into Chase and can see more or less what they're up to.  I'm planning to speak with a mortgage broker as well.  Everyone says to shop around.  Does it make sense just to go to another bank, almost at random?  My husband banks with a credit union, but the rates they show online were much higher than others/what Chase quoted.  Does it matter if the mortgage broker comes up with a loan from a bank I have never heard of before?

Also, I was going back and forth between 15 and 30 year loans, lured in by the lower rate of the 15 year.  The payments for either would be easily affordable.  Many online calculators later, it seems the 30 year is a better option (provided that the $ not going to the payment gets invested): more interest paid over the life of the loan, but better return on the invested $.

scamutz

  • 5 O'Clock Shadow
  • *
  • Posts: 19
  • Age: 47
  • Location: SC
Re: Shopping for a mortgage
« Reply #1 on: July 28, 2013, 08:18:13 PM »
Don't be afraid to tell the credit union what Chase is willing to do and ask them if they can do better.  You can negotiate everything, including mortgages.  I see clients do this all the time and the lenders will almost always compete for the business for a well qualified mortgager.

Another Reader

  • Walrus Stache
  • *******
  • Posts: 5104
Re: Shopping for a mortgage
« Reply #2 on: July 28, 2013, 08:55:19 PM »
The only things that matter are the rate, the terms, and whether the broker or lender you use can perform when it's time to close.  Brokers shop many banks, including the mortgage banks.  In the end, if it's a conventional loan, it's going to be sold to Fannie or Freddie.  If the bank does the loan, they will probably retain the servicing of the loan.  If it's brokered, any random servicer may be the company to whom you send the check every month.  And like any other major purchase, you should shop the various money "stores" until you get the best deal.

fiveoclockshadow

  • Stubble
  • **
  • Posts: 216
  • Location: Baltimore
Re: Shopping for a mortgage
« Reply #3 on: July 29, 2013, 06:06:37 AM »
One thing to realize is depending on the particular mortgage product different lenders will be better.  So for a 30-yr fixed one lender might have the best deal, for a 15-yr it would be a different lender, for 5/1 ARM yet another and 1/1 ARM perhaps a fourth lender.  Similarly, looking at just one bank it might be they have one particular product (say a 30 yr fixed) that is very competitive but all their other products are expensive.

If you are undecided on what exact product you are going to use (e.g. for example if your are just starting to look for a house and what you want will depend on the total cost of the house and interest rates at the particular time you make the offer) this can be the advantage of a broker.  They will be able to switch you to whatever bank and product is giving the best rate at that time.  They *may* have an idea of which banks to avoid due to slow closings but there are so many banks that isn't a guarantee.  If you are in a market with high demand and low inventory right now (e.g. So. Cal, AZ, Washington DC) you will be competing with cash buyers and the last thing you need is a bank screwing up loan closing and escrow.  You may be willing to pay a slight premium for knowing the bank will get the mortgage done in a timely fashion.

For comparing the 15-yr and 30-yr be sure to also consider how long you will be in the house.  Will you really be in it for 15 or 30 years?  If there is a good chance it is significantly less (say 5 years) then only compare over that horizon.  For short periods (5 to 10 years) consider ARMs instead of fixed rate, particularly 5/1 and 5/5 ARMS (PenFed specifically for the 5/5 which is a fairly unique product).  If you are confident you will be in the home for the long haul then the interest rates on 15 and 30 yr are of course really excellent and as you've already calculated leave you a fair bit of capital to invest elsewhere.

dailycycle

  • 5 O'Clock Shadow
  • *
  • Posts: 27
  • Location: Silicon Valley
Re: Shopping for a mortgage
« Reply #4 on: July 29, 2013, 11:03:37 PM »
Thanks for all the good advice.  I should indeed think more about how long we'll keep the house.  Pretty hard to predict that one.