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November 24, 2008
Getting a mortgage (contract signed)
According to our contract we have 5 days from the date of its execution to start an application for mortgage. Is that pretty typical practice?
How did you get the best rate? Am we suppose to go to as many lenders and brokers in that time period and fill out tons of applications and see what shakes out as the best rate? Am I entitled to know what fees they will charge ahead of time?
Our lawyer keeps saying mortgage brokers cannot be trusted and they are usually a large reason why there are issues at closing. We are hoping to close before the end of the year so any help would be greatly appreciated! Thanks!
Comments
Pre-approval or pre-qualified? I am not sure what we did - We did speak to two brokers previously who looked up our credit scores and took copies of our 2 year income tax returns. They told us we shouldn't have any problems. The issue is the rate, right? How do you know when to lock a rate - especially since most are only good for 30-days? How do you know what is the best rate?
Posted by: helppls at November 24, 2008 6:05 PM
The best rate is the cheapest rate, assuming they're all 30 year fixed. Right now rates are pretty low historically, so go ahead and lock one in.
I'm not sure what your lawyer is referring to, but if you are buying a coop, you need to deal exclusively with banks (and/or mortgage brokers) that do a lot of coop lending in New York City. Otherwise, they will give you a commitment letter, then back out when they realize it's a coop -- they don't even know what that is.
Ordinarily, the banks that do a lot of coop lending are Chase and Citibank. In 2004, I used Manhattan Mortgage as a mortgage broker to buy a coop and had a very good experience with them. You can't just use some random mortgage broker that promises you low rates online and could be located anywhere.
If anyone has more info about how to shop for a mortgage and whether to use a broker, I would love to hear more.
Posted by: mopar at November 24, 2008 6:22 PM
I used a broker - Shimon Rosenberg - when I bought my house. Excellent. Young guy. Very, very smart, great to deal with. Contact info's on here somewhere. I think it's kinda complicated. Some banks do co-ops but may not offer best deals on all amounts (conforming, non etc). Some have restrictions on number of units. Some don't like walk ups. All kinda crapola.
I think the timeframe thing is typical, but not sure. Essentially the seller wants you to get a move on. Sounds fine to me . . . who's not a lawyer.
A stressful process, but one that has a great end result. Good luck!
Posted by: Johnny at November 24, 2008 6:43 PM
Have that 5 day BS tossed out of the contract, in todays market in takes a lot longer to get a commitment from banks. Get a mortgage broker, Manhattan mortage is highly reputable, a good one can save the deal....
Posted by: IrieMan at November 24, 2008 6:55 PM
That is typical as far as I can tell.
We worked with a mortgage broker who was coming up with pretty high rates. We got a better rate going straight to Chase.
Jason Ferrante (http://www.linkedin.com/pub/4/711/21a) specifically.
When I told the broker that Chase was able to offer us a (significantly) better rate, he accused me of lying. Flat out. And refused to send my application to them. So I'm sour on brokers, though I only ever experienced one.
One question is about how complex your mortgage is: if you've got a salary and good credit and 20% already in hand, you ought to be able to call banks and give them the basic run down and get a rate quote. If your step-sister's former mother-in-law is loaning you money that you want to call a gift and you are self employed and not good with paperwork, you might need a broker to seal the deal.
Either way, you do kind of have to drop everything and do that now. You can start scanning tax returns (two years), bank statements (two months), pay stubs and god knows what else now, while you make those calls.
Everyone we talked to wanted an application fee of less than $500 ($300 or 350 as I recall) so I think that is typical.
(our sale fell through a few days before the closing, which is a different story)
Posted by: serpentor at November 24, 2008 7:13 PM
And, IrieMan has a point--it is worth asking to strike the five day clause if you haven't signed yet. If you're trying to shop around for a mortgage starting just before Thanksgiving ... eek.
Posted by: serpentor at November 24, 2008 7:14 PM
Pre-approval = Apply for a mortgage now.
The bank does due diligence. They then say "Yes, we will give you a mortgage for x amount before x date"
Then if you agree to buy a plce before x date, you have the motgage application done.
And yes, as far as what IrieMan said, not only strike the 5 day clause, insert a clause that says if you cant get a mortgage, the deal is off and you get your money back.
This is Nov/2008, a buyers market. This is standard. And if you laywer didndt tell you this already, fire him.
Posted by: jasetheace at November 24, 2008 8:06 PM
OP, here again. I believe the 5-day thing is just to make sure that we as buyers don’t stall in the mortgage process and start an application right away (since the mortage contingency is in the contract.)
Homebuyers, how many paid applications did you submit with different banks and people? I have brokers telling me – oh I can get you rates from 6% to 6.25% but that is not very definitive, right? If application fees run $200 or $300 each, that really adds up… but I can’t figure out how else you are suppose to compared rates if you don’t submit applications with different people, correct?
We have good credit – in the 800s and we have 20% already in hand. The thing is we’re self-employed but we have been for a number of years already and that’s reflected in all our past tax returns. So this might still be a stumbling block and to go with a broker? How do brokers make their money? We’ve asked brokers point blank many a times and no one has given us a straight answer. I would assume, they tack on some percentage to the actual rate that the bank is willing to give? Also, how can I tell one mortgage broker from another – what makes a “good” broker, that can close when they say they can?
Posted by: helppls at November 25, 2008 1:27 AM
you're telling me you didn't bother to get your good faith statement from the bank prior to house hunting?
You are running a risk and I hope you have a contingency clause in your contract. If not I hope you get a loan cause you will be responsible for purchase anyhow.
The best and safest practice is to obtain and lock the rate before signing the contract. This way you are safe with no worries as to how to obtain the mortgage.
Posted by: karo25 at November 25, 2008 9:12 AM
Yes, many mortgage brokers are sleazy but often they can get better deals, esp. if you have a situation that is not standard - co-op, jumbo loan, etc. We used Trachtman and Bach. I wasn't happy about our particular broker's dissembling, but he pulled off something I never would have thought possible for the bridge loan we needed until we sold our old place. (A home-equity line of credit on the apartment we had not yet bought. ) Good luck. I also was trying to make a purchase in December 2 years ago - tough to keep things moving because of holidays and vacations.
Posted by: mscrochety at November 25, 2008 10:14 AM
My husband and I had a very good experience with a mortgage broker at Apple Mortgage Corp. We paid a credit check fee, but no other application fees-- the broker was paid directly by the bank. I was happy with our rate and the experience as a whole. Ours was a condo but any NYC bank is going to have experience with coops since they are such a large share of the market. Also, if you're on a tight schedule, I would get together now the paperwork you're going to need. For us it was:
-2 recent pay stubs for both of you.
last 2 years W-2’s and tax returns
-2 months assets statements i.e. checking, savings, stocks, retirement etc. Provide all pages of all statements.
-Photo i.d.
-Name and phone number of your attorney and real estate agent.
-Copy of the contract of sale.
Posted by: fawn at November 25, 2008 12:08 PM
If you're going with a broker, I highly recommend Elise Leve at Manhattan Mortgage. She got us a great rate. I don't know how she gets paid. Closing costs were 2 or 3 percent of the total purchase price. But I think her main expertise is coops in Manhattan, not houses.
Posted by: mopar at November 25, 2008 12:28 PM
Yes, we have a getting a mortgage contigency in our contract.
Its a 1-family house. From the sounds of almost everyone's experience on here, people just went with one broker.
Posted by: helppls at November 25, 2008 1:55 PM
I just locked today at 5.65%. I think the broker was well worth it and I used Frank Tamayo at Trachtman & Bach.
Posted by: Cantaffordcarroll at November 25, 2008 3:04 PM
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