Loan questions

[bigcaat]

Hello.

I'm brand new here. We just moved from Central California to San Diego. We sold our house and have $230,000 to put down on a new one. We could probably afford $1500/month payments, no more than $1600/mo. If we borrow $250,000 I think that puts us in the range of a $470-$480,000 house, tops, depending on closing costs.

Of course we would like to go much cheaper, but we are looking in one of the most expensive areas in the country, and the ideal houses for us are probably in the $500-$600K range. But I think housing here is still going down, so perhaps we might find something.

Our house closed yesterday and we are living in a temporary place with a lease until Oct. 17. I am just stepping my toe in the water of how to do this.

I think our biggest problem will be that since we have moved, we have not been in our jobs for the 2 years that people seem to ask for. But we have good-excellent credit (I don't know our Fico scores yet) and we have no debt.

Is our very first step to get our credit scores so we know what we're dealing with? Once we do, how do I go about finding a reputable lender? We had a Chase loan before, and we liked the rate, but I think we got taken on the closing costs. I don't want to make the same mistake this time, and we need to be very precise in knowing how much we can afford.


Also, my other question is about points. The last person I asked said, "Don't ever pay points, it's just a fee in advance." How would I go about figuring out if paying points is good for us, or how long it would be that it would even itself out if we had such a high interest rate because of not paying them? (I hope I said that right.)

I know this section of the board is new, but I hope someone can help. We just had the most horrible experience selling our house. The agent was an unethical slime and she probably cost us a good $10-20 grand because of it. Of course, we are novices at this (we bought our first house from our landlord, so no agents were involved) and I thought we were doing the right thing, but we didn't really find out until the contract was signed. I'm so shellshocked from the whole miserable experience, I'm sort of feeling like I never want to own a house again, just so I don't have to have someone abuse us in that way again.

So I want to be triple-y sure that I understand what we are doing every step of the way. I read everything -- our first loan, from Chase, the lender forged our initials trying to put us into an impound which we had specifically rejected. I caught it because I read the paperwork and then he had the audacity to ask us to pay for the re-write. I bitched enough about it that we didn't, but it delayed our escrow by 2 weeks, and made us close in the middle of the month. Now, I'm not exactly sure how that cost us money, but I understand that it did. Our lender when we refinanced was not much better. I just don't want to go through this again.

Any help or advice you could give would be greatly appreciated. If it hadn't have been for one real estate agent that I spoke with during this ordeal, that I found on a real estate board, I would have a very bad opinion about *all* real estate agents. Hopefully someone here can show me that there are good lenders out there as well.

Thank you for your time.
Caat

[indymacfighter]

bigcaat:

It appears you are doing the right thing, always do your research. Not all real estate agents and loan officers are alike, a lot us are ethical, honest and helpful. As far as your jobs, if you have less than a 2 year history at your current job, you can use previous employment as long as it is the same field of work. If there is a gap of employment, that can be overlooked with an explanation letter. Most lenders have guidelines on the length of the gap, usually not more than 3 months. If you were in school working for your degree in your current field, you can use your trannscripts from your education as work history to make up for the one year. You would need to have someone look at your credit and take an application to find out how the loan would be structured. With Fannie and Freddie struggling, the credit guidlines have tightened, but with a good score and at least a 10% down payment, you should be fine. My opinion would be to put down enough on the house so that your new loan amount is at $417,000 or below. That is max conforming loan amount on conventional financing and will yield the best rate for you. You can also look into FHA as well.

In regards to "points", I personally relate that to the fee you would be paying for the rate if you chose to pursue a lower rate than available. When you shop around, you need to ask the bank or broker what the "PAR" rate is, that means that it doesn't cost anything nor does it pay the bank or broker money that you don't see. Most brokers charge an origination fee along with a processing fee. Always ask for a Good Faith Estimate and pay attention to the fees and look out for any junk fees, they are pretty easy to find.

I hope that helped. Good Luck.

Indymacfighter

[bigcaat]

Thanks Indymac.

We just finished filling out an application tonight. I'm brain-dead. Last weekend we tried to compare good faith estimates and it was absolutely impossible. It's like shopping for a bed. Everybody has a different name for things so that you *can't* compare. It's so frustrating. The whole system is set up, I think, to keep people in the dark. And then they wonder how so many people got into bad loans.

They really should regulate what people call the fees so that borrowers can compare line by line and see what kinds of junk fees everybody is charging. And once you do find the junk fees, how do you get them to not charge them. They have their pat answers for why they need them and I don't know how to bargain with that. All these document fees and crap. $50 bucks for punching a keystroke. But how do you say, "no, I won't pay for that" if you need the loan? It's really depressing. I feel like no matter where I go I'm going to get screwed and there's nothing I can do about it because they have the money we need.

I work really hard at understanding and being informed, but right now I'm feeling like that's just a waste of time because I don't know how to negotiate what I see as being taken advantage of. It's so frustrating.

Caat

[ferminet]

Bigcaat-
On the fees, everyone is charging more than they used to. That said, what you need to do is get estimates from 3 lenders with all fees. Specify loan amount and 30 yr fixed with no points. Then sit down and compare. Go back to the lender you feel most comfortable with with the best estimate, and ask him to match it. If he wants you business, he will.

Points are a fee paid in advance. Generally, the savings from the lower rate you get from points takes about 7 years to offset the cost of points.

Help this helps and good luck.

[bigcaat]

Hi Ferminet.

Y'know, we tried that, I like this one woman, her interest rates were a little higher (I got all my GFE on the same day) but she said that she couldn't really go to her manager to negotiate anything unless I had a good faith estimate from another place where I had actually gone through the application process. Do I need to pick two or three of these and actually *apply* there to be able to negotiate with somebody? And how will that affect my credit if they all do hard pulls?

Thanks,
Caat

[ferminet]

Hmmm..
Sounds a bit like baloney- No you shouldn't apply a bunch of places. If she can't be competitive then she can't do the loan. Keep shopping.

One other word of advice. Hold onto the initial good faith estimate. If your lender changes fees at closing, you can file a complaint and get the money back. Some lenders try that, but it's illegal.

Good luck.

[bigcaat]

[QUOTE=ferminet;29579]Hmmm..
Sounds a bit like baloney- No you shouldn't apply a bunch of places. If she can't be competitive then she can't do the loan. Keep shopping.

One other word of advice. Hold onto the initial good faith estimate. If your lender changes fees at closing, you can file a complaint and get the money back. Some lenders try that, but it's illegal.

Good luck.[/QUOTE]
Good to know, both. Thank you.

Caat