The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: Bearded Man on June 06, 2014, 08:23:04 AM
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I am buying my third house, though this is only the second one that I will have financed. Last time I was new to the financing game so I used a broker that had great review online.
I am curious, is this a mistake? I am not sure if I am paying a ton more fees by doing this rather than just going through my bank (Bank of America, which has a poor reputation with most [though I've never had a single problem with them])
Nice thing about this broker is he can close on impossible deadlines. He get's things done and he is quite consultative and easy to work with.
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You can always talk to the bank as well and just compare what they are offering.
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I did that, and I actually got a better rate through the broker. BoA wanted 4.5% at the time, about 2 years ago. I was able to get a 3.25% FHA loan through my broker and 4% conventional if I wanted to. Where the bank came in better was willing to reduce the fees saving me 1-3 K from what I remember. But it was a higher interest rate so...
I chose FHA due to lower interest and minimum down payment. I was one of the last ones to get grandfathered in for no PMI after 5 years with minimum (3.5%) down. Now anything less than 10% carries PMI for the life of the FHA loan.
I purposely chose to put minimum down since my cash on cash return is higher and I have enough cash left to put 25% down on 3 more houses.
I guess I could shop around myself, and I did apply with a credit union as well, but their communication was so poor, I did not realize I was approved until I had already closed escrow. Using a broker seems to be for the convenience of one stop shopping for the best deal, yeah?
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I am not sure if I am paying a ton more fees by doing this rather than just going through my bank
You can always talk to the bank as well and just compare what they are offering.
I did that, and I actually got a better rate through the broker.
I'm not sure why you're worried you're paying a bunch more if you compared them... what am I missing?
For future reference, get a GFE (Good Faith Estimate) from any potential lenders to compare total cost apples-to-apples, it's a quite standard format that you'll easily be able to use to compare everything (counting fees added in, so if one has a lower rate but higher fees, you can appropriately compare it).