Learn first. Loan second.
Posted on June 6th, 2008 – 12:04 PMBy Kara McGuire
Thinking about buying a home? Well, a recent 270-page HUD study found that the more educated homeowners are about the loan process, the less in closing costs they pay.
In hindsight, I wish my husband and I had taken a home-buying course before we took the leap. Nothing terrible happened to us, but I’m certain we paid more in closing costs than we had to because we didn’t think to shop around. Instead, we blindly settled for the in-house loan officer that our Realtor suggested.
I will go out of my way to save a buck on milk. But I don’t shop around for my loan? Hello?
The Minnesota Home Ownership Center is having a series of classes called “Opportunity Knocking” about the home-buying process.
The dates are Thursday, June 12th, Tuesday, June 17th, and Saturday, June 21st.
What are your home-buying tips? Any resources to share? Any mistakes you wish you hadn’t made?
7 Responses to "Learn first. Loan second."
If you are buying FHA and want to be able to go in about as close to “no money down” as you can get, look into the Genesis program.
It asks the sellers to pay 6% of the sale price to the Genesis fund. Genesis then takes that amount out of their general fund to pay your downpayment, closing costs, and pre-paids. You may have to come in a little higher than you normally might on your initial offer, but keep in mind that, if you use this program, you are coming in essentially 6% below whatever your offer is.
For a high quality and trustworthy loan officer, contact Gary Rosen (he’s who I went through) at PHH Home Loans. He’s been in the industry a long time and was really looking out for my best interests. It was really nice to find someone with strong ethics at a time when that seemed to be so lacking in the home mortgage industry.
Biggest mistake we made on our first home purchase was not fully evaluating the neighborhood. The house was really nice, the location was great, and the 1 mile radius was a peaceful St. Paul area. However, some neighbors across the street and across the alley pretty much ruined the place for us. Loud, late-night street parties (that we weren’t invited to or even told about), rude comments, and constantly unkept property. We didn’t feel unsafe, but it WAS extremely annoying, enough for us to not like where we were.
We corrected that mistake on our new place. I knocked on doors. Interviewed neighbors. Studied police reports. While I can’t say we’re friendly with 100% of our neighbors, it’s still a 2000% improvement because we’re friendly with most of them and the others keep to themselves. That’s all you can ask for.
And that’s information you WON’T get from a real estate agent, the sellers, or an assessor. You don’t want to be BEST FRIENDS with your neighbors, but you DO want to know them and get along on a basic level. At least having some guess as to whether or not that’s possible before you buy is HUGE.
Kara, so timely. I am starting the first time buyer process right now. I met with the realtor’s mortgage partner last night…
Question: Will the mortgage company A work with you to try to beat the mortgage company B’s price? Or do you just up and go to mortgage company B?
Navy Federal Credit Union has some of the best rates and lowest fees out there.
After shopping around at both local and national banks, I’ve closed on three loans in a little over two years (purchased, moved across country, purchased again, refinanced after the rates dropped) and I am confident I saved thousands of dollars on closing costs and interest by using NFCU.
If you or a family member has ever been in the Navy or Marine Corps, you should look into NFCU.
They also have “no money down” loans for a 1.50% fee that can be rolled into the loan and an increase in your rate, about 0.5%-0.75%.
I bought both this house and our previous one through a mortgage broker, but when we refinanced this one, I called about a dozen places to compare closing costs (I started with all the big banks and nearby credit unions, then added any places people recommended and the place on 394 with LED rates I always drive by). I settled on three places to watch rates (this was in January when rates dipped a lot over a couple week). The place on 394 usually had the best rates, my broker’s rates were okay, and Liberty Savings Bank in St Cloud (you don’t need to live there to use them) had great rates and a flat $500 closing fee. We still paid $2100 at closing (rolled it into the financing), but most places charge 1% of the loan, so that saved us $900 (more really, since we were financing it). It was the equivalent of paying one less point in the rate. Apparently, title companies’ costs can vary a lot (and in other states they really get people there), so price shopping for title companies is useful too.
Location Location Location: Schools, Neighborhood, City and Taxes are key. Visit the neighborhood day and night…does the neighbor leave for work and leave Rover in the yard all day to bark?
As for mortgages, I have no idea why people are so tied to brokers. Try Credit Union/Bank. We have used same loan officer @ US Bank for years…very happy…everything online on one website…little fear of mortgage being sold. It’s great and simple to manage.
In terms of fees, the two biggest things under your control are points and origination. Do the math to determine the break even point on points/origination and you’ll find that it may be 7 years or more. I just did a 0/0 loan…but paying point down or origination would have been 8 year payoff.
DC1515: some fees are negotiable, but others like appraisal are fairly standard firm to firm.
USAA
