One day, even HP'ers, bitter renters, bubble sitters and screwed homedebtors will "buy" another house.
The lucky ones will pay cash. The rest will need to take out a mortgage.
So, let's start talking about that day. It will come.
How will you go about getting the best rate on a mortgage, in a post-housing-crash world?
Now that we know mortgage brokers are crooks interested in earning the highest commission they can, while getting you to overpay for a loan, that one is a bit suspect.
LendingTree I hear earns their money by selling your info to lenders. Just another company who could care less about you.
Bankrate earns their money from ads from lenders.
And your local bank overcharges, Countrywide is toxic, DiTech is GMAC, and this whole mortgage business is just a mess.
So, what to do, when the day comes that you want to reach out and catch a knife?
August 20, 2008
So, if you were gonna 'buy' a falling knife (oops, I mean a house) with debt, what would you do? Mortgage broker? Bank? e-Loan? LendingTree? Pray?
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27 comments:
Credit Union. I will shop around, but Navy Federal Credit Union has always has good rates for loans. Even after extensive shopping, I always go back to them.
Getting ANY loan is tough
you need 20% down in most cases if you don't go fha.Who has 20%. Most people are broke living on credit cards right now.
Educate yourself!It is the only way you stand a chance against the crooks in real estate.
"Think education is expensive, try ignorance"
If you need a loan, it's a necessary evil to have to deal with people you know are going to get something out of it.
Either change the way the world works, and then get a loan, or get a loan and go on about your business. Life is too short to be indignant about every little thing.
Pay cash. Interest is for suckers.
Credit Unions are great. USAA is great (but have to be in the military)
Wait long enough and the Federal US 'government' will bail you out.
Who needs banks, et. al. when we have a corrupt conrgress willig and able to 'help'?
US is Dead.
You shop around, find the lowest rate on a nn/year fixed mortgage and then READ THE DAMN CONTRACT. It doesn't really matter who lends you the money if you know what you're doing and the lender knows that you know what you're doing. You only worry about a bank failure if they're holding your money. No need to worry if you're holding their money.
After I get out of the current mess I'm in, I'm going to rent for a long time, save up money, and buy my next house cash. NO MORE STUPID MORTGAGES!!!
Oh, I forgot the obvious answer.
Call Angelo Mozilo.
Best rate possible and make sure that there is no early payoff penalty.
The later of the two is a way for you to turn around and stick it to them. My rate is locked at 5.75 for thirty years and I have no early payoff penalties. The bank is hoping that I will pay over the thirty years, giving them an additional profit of close to 200,000 dollars. If I am diligent they will see very little profit and my house will belong to me a lot sooner.
I fear we are going to see the interest rates we saw in the early 1980's. 20% interest is going to make it impossible to afford a home. People who bought in 2006 and 2007 will get a sigh of relief because the ones who got good rates fixed are going to realize that they never would have been able to afford (even though they paid a huge premium in price for their homes they never copuld afford the new rates).
With that said I predict we are going to see other consequences in the future due to the real estate market. Our rates, prices, lack of integrity in the market, and the inabilty to fix these problems is going to continue. Schiff is correct. We are going to crumble it is just a matter of how long it will take. We fix our econmic problems with a band aid or temporary fix. We get a moment of releif for some, hard consequences for others, and sooner than later the bandage falls off and we are in another gaping bleeding wound again.
I am rambling so one last point. McMillan Homes is advertising 0 down on thier homes right now. How? 0 percent financing is still in effect. It won't be for much longer but still is. Also read some important facts of the Housing Reform Bill . The minimum down payment someone will need is 3.5 percent for and FHA loan. The industry is going to be back to its old antics again soon.
Credit Union. Hands down. They have the mortgages on our houses. All 15yr fixed, low rate.
I will shop banks and brokers, only skipping Bank of America.
Last year when I almost bought, my sister's sleazy I/O broker was able to offer an interest rate 25pts lower than anyone else, with lower closing costs. The other broker I talked to was polite and notified me when the rates for people like me dropped. The banks gave a quote and left me alone, except for one.
Bank of America had 3 different people calling me repeatedly. None knowing what I was telling the other. One called the home number during the day. Another called the work number at night. And a third started called both numbers at all hours, once I got the other two to stop calling. Telling them their interest rate was uncompetitive seemed only to encourage them. They kept calling me trying to convince me to appeal the interest rate with their underwriter. But they never thought to have the underwriter call me.
To top it all off this screwed up my online banking. Forcing me to associate my credit card and my money market account which quit paying the premium interest rate. Fortunately the call center (full of people BoA got from the same place they got my account) fixed the interest rate. Sadly I can't seem to un-associate the accounts.
As for the house I was the top bidder, the bank was stubborn. I still rent. Now 2 story houses in that neighborhood are asking the same as the 1 story I bid on.
seller financed on the buyers terms. 40 year fixed at 2% with zero down.
>> If I am diligent they will see very little profit and my house will belong to me a lot sooner.
What - no prop taxes? Oh, you DO have prop taxes? Then you'll NEVER own your home. Just saw 2 families lose their homes - mortgages paid off, but could no longer afford the insane taxes. Nice Sheriff escorted them off the State's premises.
i don't even care. i don't need a mortgage. the mortgage industry could walk right off a cliff and it wouldn't matter to me at all...
buying a house is easy. i plan to sell mine next year, then rent. any illegal immigrant can get a zero down, that will **never** change. buying a house with a mortgage is stupid. i plan to wait until they are giving them away free.
"The bank is hoping that I will pay over the thirty years, giving them an additional profit of close to 200,000 dollars."
Actually, the Bank is hoping you pay off your loan as quickly as possible. Right now, they want less loans outstanding, not more. If they did want more, they'd be happy to accept prepayments on your below market mortgage and put the money back to work for higher interest to them.
"If I am diligent they will see very little profit and my house will belong to me a lot sooner."
If your goal is to prevent banks from making money, you'll keep your mortage as long as possible and make minimum payments... I take that back, you'll walk away from your home that is no doubt underwater!!!
"People who bought in 2006 and 2007 will get a sigh of relief because the ones who got good rates fixed are going to realize that they never would have been able to afford"
People over the last few years bought houses based on affordability, not worth. If I can afford an 800k mortgage at 6%, I can only afford a 466k mortgage at 12%. Guess what that does to home values... The trade off is that you either pay more in interest or more in principal, but you'll still end up in the same house!!! Either way, you lose. At least if you buy the lower priced home at higher interest rate, you can pre-pay (as you pointed out earlier) the low principal and avoid the high interest... Doesn't work the other way around.
you guys see this crap yet?
www.realstorynj.com
full of misleading information from the new jersey association of used house pumpers.
We would contact one mortgage broker, to find us the best conditions to some loan options we provide, and ask also the financial institutions we do business with about their offers, like FCUs and USAA. We would have sizable downpayment ready and compare with enough time at hand which mortgage is best for us.
I'm going to the Fed window!
Navy Federal Credit Union ripped me off. They pulled a classic bait and switch on me. I recommend everyone stay far away from these shysters.
only suckers pay points and closing costs. you shop around, negotiate the best rate, read the fine print and there you go.
Pentagon Federal Credit Union.
This is where the smart money at Fatwallet.com get's their loans. And its' where I got mine :-)
90 day rate lock.
they pay almost all closing costs
amazing rates
open to anyone (don't have to be in military).
When I bought my house way back when I looked around a lot. I ended up with an independent broker and a Countrywide, yes them, mortgage. My rate was 1/4% lower than the next leading contender. I paid almost no costs upfront, no pre-payment penalty and had a 45 day lock.
I find it funny that people will spend months shopping around for a car to save $500. But then when shopping for a house they'll go with their cousin's friend's sister broker and pay an extra $5000 without giving it a second thought.
People are morons.
anonymous 7:21pm
The later of the two is a way for you to turn around and stick it to them. My rate is locked at 5.75 for thirty years and I have no early payoff penalties. The bank is hoping that I will pay over the thirty years, giving them an additional profit of close to 200,000 dollars. If I am diligent they will see very little profit and my house will belong to me a lot sooner.
I fear we are going to see the interest rates we saw in the early 1980's. 20% interest is going to make it impossible to afford a home. People who bought in 2006 and 2007 will get a sigh of relief
Me .. If you own at 5.75% and you believe interest is going to 20% you'd pay off your mortgage why???
Cash if prices really tank... If not a mortgage.
With lenders in chaos now and soon to be shambles mortgages are already hard to get, none want to loan and it will get worse.
My gut feeling as things unwind, bottom, and evolve
I think once things have bottomed (and the L-Shaped "recovery" begins) mortgages are going to be very different for a long while even after "bottom".
Commercial lenders will be a mess, costs to borrow will be too high, and commercially available mortgages will be costly and largely unavailable / unattainable unless you 20% and can afford the 15%-20% interest they will cost.
That leaves us with a need for what was Fannie's / Freddie's original ability for the masses to buy "affordable homes". The GSE's will be bailed out, imploded, defunct, in short unable to fulfill that role anymore.
So, what then? How do people buy houses..
I see two things happening.
1) Increase of owner financing. Those with cash buy up what is to be had in the rubble pile that is bottom. They in turn sell them at a profit along with a hefty interest charge and what will be less than arms length deals.
2) Mortgage lending becomes the domain of "Not for Profit" organizations like NACA. http://www.naca.com and NeighborWorks America http://www.nw.org
Both private and public money will filter through programs such as these in place of FMN & FRM. Why? because the model already exists, it works, and is growing. Non-profits like NACA have been flooded with requests for help since the housing bubble began to burst. Lender's have been using organizations like NACA for loan workouts and saving homes.
The reason why this will be the model is the process of getting a Mortgage. The underwriting is strict, FICO is not a factor, the program requires a deep detailed review of an individual, adherence to strict rules of sensible money management both before and after a Mortgage is issued. Speculation is nill as borrowers are required to live in the property. The Mortgages are sustainable because the borrowers are limited to a Mortgage that is truly affordable at an interest rate that is "affordable" at "prime" or with a point of it. What the "not for profits" also have going for them is once a borrow is approved and gets a Mortgage, they are further required to participate in some form in the organization. In essence, they are required to take a stake in their community.
This is the model that has always worked and always will, but until private for profit organizations can put themselves back together and also come back around to sensible lending habits, the "not for profits" will fill that space.
I could be totally wrong but, it is what I see happening at least for an interim period.
I put quotes around "not for profit" because I am a cycnic and as these things become more popular the same greed and corruption that caused the housing bubble will smell money and creep and an make a shambles of this too eventually.
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