Author Topic: Shopping for a Mortgage Loan  (Read 4093 times)

OneCoolCat

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Shopping for a Mortgage Loan
« on: March 07, 2015, 08:17:54 PM »
Hi,

My wife and I are looking for a mortgage loan so that we can buy an investment property.  We will be putting 20% down and will finance 60-80k.  So far I have just applied for QuickenLoans.  They preapproved us for a 300k loan (LOL) at 4.4-4.6% fixed w/ 20% down.  I was hoping to get something around 3.75-4% as we both have excellent credit scores (both over 770).  I was wondering if there are other banks that we should definitely look into.  We have bank accounts with Chase and Citibank, perhaps we should make an inquiry there.  I heard credit unions gave the best rates but unfortunately the credit union that i'm a member to said they require 50% down on investment properties and that's not possible.

Better yet, is there a site that you can go to which will give you an estimate of what multiple banks will approve you for?

Another Reader

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Re: Shopping for a Mortgage Loan
« Reply #1 on: March 07, 2015, 08:46:02 PM »
Investment property loans carry an interest surcharge, usually around 1 percent.  Many lenders want 25 percent down as well.  Credit unions generally want to lend money to owner-occupants, not investors, so the rates, fees, and down payments are much higher.

Rates have moved up.  They jumped after the jobs report.  They are closing in on 4 percent for conventional owner-occupied properties.  As of yesterday afternoon, Wells Fargo was at 4.125 percent for owner-occupied conventional loans with 1 percent origination fee and 25 percent down.  B of A was at 4.0 percent.  That means close to 5 percent for investment properties with 25 percent down.

Get some recommendations for reputable loan brokers through the agent or through friends.  They will shop for you and give you a selection of products with quotes.  Most aggregator websites have dated information and do not adjust the interest rate for investment property loans.

Many lenders aren't interested in loans below $100k.  You may face an interest rate surcharge for the small loan size as well. 

pennyhandlebar

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Re: Shopping for a Mortgage Loan
« Reply #2 on: March 07, 2015, 11:38:43 PM »
I found a mortgage broker using the mortgage reverse auction on Zillow.com. She offered me much better rates and fees than I got from any of the banks I contacted -- including the bank that held the mortgage (don't get me started on how stupid I think that is). Note that this was for my residence, not an investment property, but seems like you could have good luck finding someone the same way.


hello867

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Re: Shopping for a Mortgage Loan
« Reply #3 on: March 08, 2015, 06:04:00 AM »
Bankrate.com


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OneCoolCat

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Re: Shopping for a Mortgage Loan
« Reply #4 on: March 08, 2015, 10:00:12 AM »
Bankrate.com


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Thanks for this.  According to this site, HSBC is my best bet.  I set up an appointment on Tuesday!

Another Reader

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Re: Shopping for a Mortgage Loan
« Reply #5 on: March 08, 2015, 10:22:49 AM »
The rates on Bankrate are outdated and they only apply to owner occupied primary residences.  The HSBC rate shown is from last Wednesday, and rates have gone up since then.  Please post the rate, terms and required down payment for an investment property after you meet with them on Tuesday.  If you can get an investment property mortgage under $100k for 30 years at 4 percent and 20 percent down, a lot of investors here will want to jump on that offer.

OneCoolCat

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Re: Shopping for a Mortgage Loan
« Reply #6 on: March 08, 2015, 10:39:28 AM »
The rates on Bankrate are outdated and they only apply to owner occupied primary residences.  The HSBC rate shown is from last Wednesday, and rates have gone up since then.  Please post the rate, terms and required down payment for an investment property after you meet with them on Tuesday.  If you can get an investment property mortgage under $100k for 30 years at 4 percent and 20 percent down, a lot of investors here will want to jump on that offer.

Yeah I figured that it was for primary residences.  I'm leaning toward a 15 year fixed mortgage and hoping to get around 4.25-4.5%.  I will keep you all updated.

clarkfan1979

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Re: Shopping for a Mortgage Loan
« Reply #7 on: March 08, 2015, 12:17:05 PM »
I would ask your realtor to give you the names of 3 mortgage brokers. They will all shop around for the best rates for you. Get a good faith estimate from all three. Some might try to give you the cheaper rate, but make up for it with extra fees.

sol

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Re: Shopping for a Mortgage Loan
« Reply #8 on: March 08, 2015, 12:17:34 PM »
Individual lenders have a lot of leeway to offer you a better rate in order to secure your business.  When I was shopping for a mortgage last year, every single person I talked to said they would beat any other written offer I was given (spoiler alert: they lied).

So I took them up on that.  I called like six places (from bankrate and lendingtree) and spent about half an hour with each one explaining that I was rate shopping and then getting the details of their offer for the home I wanted to buy. 

Then I called back the place that had given me the best deal and told them they were the best I'd seen so far, so they should send me a written offer.  They do this all the time, it's just a form letter with the numbers on it.  I took that offer to the other lenders and said here's a better written offer than you gave me, can you beat this or not?

Some of them said yes and gave me a better rate than they had the day before.  Most of them tried to BS me with nonsense about how they were going to provide me superior service that warranted their higher rate, but really they only work on my loan for like a day and then they collect my payments for 15 years, so I wasn't about to pay extra for that crap.  You have to really cut through the sales pitches about APR vs APY vs closing costs vs fees, and even then you're never going to be 100% certain what it will cost you because they always find ways to hide costs from you.  A mortgage is a complicated financial instrument and there are lots of different ways to skim from it.

I took the new best offer and repeated the process with the people who were still answering my calls.  Some didn't, some dropped out, a few told me flat out that they couldn't possibly beat the offer I already had in-hand.  At about that point I figured I was getting close, so I called back the one other guy who was still trying really hard to convince me that he wanted my business at all costs.  He was adamant that he would absolutely beat any other offer.  He looked at the offer and told me he couldn't beat it. 

So I locked in my rate the next day, with a private local mortgage lender/broker.  It was a busy three or four day of phone calls and emailing, but I lowered my rate at least half a point and so saved myself many tens of thousands of dollars over the life of my loan.  Like anything else in life, a little education and hard work can save you money.  I figure I wouldn't buy a refrigerator or washing machine without doing at least a full day of research, and those cost only a tiny fraction of what my mortgage does so it's probably worth the effort.

OneCoolCat

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Re: Shopping for a Mortgage Loan
« Reply #9 on: March 09, 2015, 12:26:39 PM »
Just talked with my bank.  They said my use of the home would qualify as a secondary home and preapproved us for an 80k loan at 3.798% with approximately $1900 in closing costs.  If they marked it as investment property it would have been 4.498%.  That seems like a wonderful offer and its more affordable than the QuickenLoans rate I got 2 weeks ago (4.498%, $2400 closing).

Pretty excited.

MrsCoolCat

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Re: Shopping for a Mortgage Loan
« Reply #10 on: March 09, 2015, 09:30:53 PM »
Just talked with my bank.  They said my use of the home would qualify as a secondary home and preapproved us for an 80k loan at 3.798% with approximately $1900 in closing costs.  If they marked it as investment property it would have been 4.498%.  That seems like a wonderful offer and its more affordable than the QuickenLoans rate I got 2 weeks ago (4.498%, $2400 closing).

Pretty excited.

I could have sworn it was 3.875%?