What's the best way to shop for a purchase mortgage?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Post Reply
User avatar
Topic Author
cannedham
Posts: 225
Joined: Thu Jul 05, 2007 2:27 pm
Location: San Mateo, CA

What's the best way to shop for a purchase mortgage?

Post by cannedham »

I'm gearing up to buy a first home and know that I want a 30-year fixed rate mortgage, most likely 0 points. What is the best way for me to shop around and get the best terms possible on the mortgage?

For what it's worth, I'll be buying a home in the Bay Area.
User avatar
bnttwnbnt
Posts: 374
Joined: Sun Jun 08, 2008 3:39 pm

Post by bnttwnbnt »

Take the time and shop around. As one recent similar post mentioned, make all your lenders compete for your business. I'd get a quote from a local credit union, an online lender (penfed is boglehead approved) and perhaps a mortgage broker.

Good Luck!
Chuck T
Posts: 1062
Joined: Wed Sep 03, 2008 3:23 pm
Location: Lowcountry of South Carolina

Post by Chuck T »

I would first check with my own bank, and a credit union if you use one. Check PenFeds rates by going to their website. Anyone can join their credit union and their rates can be used as a barometer. Also look on Bankrate.com. Only then would I contact a mortgage broker. Good luck.

Home ownership can be very satisfying. Just remember IMO you buy a home to provide shelter for you and your family. I have never viewed it as an investment. If your home appreciates in value that is a great thing but not the reason you buy in the first place.
bozo
Posts: 1038
Joined: Wed May 28, 2008 2:07 am

Post by bozo »

There must be blogs out there that track mortgage rates (sort of the flip-side to Bankdeals for CDs). Bankrate covers mortgage rates, but I'm not sure how comprehensive it is (I've heard there is a "pay-to-play" aspect).

Here in the Bay Area, it might be worthwhile to consider whether you will be over or under the "true" conforming amount of $417K, since that will make a difference.

Bozo
User avatar
Taylor Larimore
Posts: 32842
Joined: Tue Feb 27, 2007 7:09 pm
Location: Miami FL

Re: What's the best way to shop for a purchase mortgage?

Post by Taylor Larimore »

cannedham wrote:I'm gearing up to buy a first home and know that I want a 30-year fixed rate mortgage, most likely 0 points. What is the best way for me to shop around and get the best terms possible on the mortgage?

For what it's worth, I'll be buying a home in the Bay Area.
Cannedham

Try this:

Mortgage Marvel
"Simplicity is the master key to financial success." -- Jack Bogle
Wabbit
Posts: 205
Joined: Fri Feb 06, 2009 3:12 pm

Post by Wabbit »

My small additional suggestion is that if you look for a mortgage broker, look for "upfront mortgage broker". It basically means that they are willing to show you how much of a commission the lender is paying them, which helps align their interests with yours. It doesn't guarantee they are good but seems like a good idea to me.
livesoft
Posts: 86076
Joined: Thu Mar 01, 2007 7:00 pm

Post by livesoft »

Check your bank, online, and a couple of mortgage brokers. Make sure all people have been funding mortgages for at least 3 years and maybe longer. I don't think you want to deal with the folks who got in a couple years ago when the money was easy.

Consult http://www.mtgprofessor.com/ for tons of helpful advice.

I'd make sure all loans were quoted with 0 points and compare closing costs to be the same. Otherwise, you will be fooled by a lower rate that is bogus.
User avatar
AnimalCrackers
Posts: 436
Joined: Mon Mar 19, 2007 1:37 pm
Location: Northern Front Range, Colorado

Post by AnimalCrackers »

Before purchasing our first home, I went to the mortgage professor website above and did my homework . . . a lot of it.

We had a lot of confidence in the process (and probably a lot more money in our pockets) as a result.

I highly recommend that site.
User avatar
Topic Author
cannedham
Posts: 225
Joined: Thu Jul 05, 2007 2:27 pm
Location: San Mateo, CA

Post by cannedham »

Which comes first -- the home shopping, or the mortage shopping? Or do you do both simultaneously?

This feels very overwhelming. :P
bozo
Posts: 1038
Joined: Wed May 28, 2008 2:07 am

Post by bozo »

cannedham wrote:Which comes first -- the home shopping, or the mortage shopping? Or do you do both simultaneously?

This feels very overwhelming. :P
Our daughter just bought her first home in Alameda. She got pre-approved for a loan before she made an offer. It really helped when she was negotiating.

I think you can go home "shopping" (indeed, you'll have to have an idea of how much you'll need), but it might help to get that pre-approval before you make an offer.

Bozo
User avatar
DiscoBunny1979
Posts: 2054
Joined: Sun Oct 21, 2007 10:59 am

Post by DiscoBunny1979 »

in my opinion, getting pre-approved is great when the market is moving quickly and you need to be first in line at the table when presenting the offer. But, I don't think getting pre-approved is as big a deal when the market is slow and the house you're interested in has no foot traffic or is a foreclosure. You just need to have narrowed your choices of who you want to help you secure your loan.

The house I'm currently in was obtained through a mortgage broker. However, I told the broker what I wanted . . . a 15 year fixed mortgage, 20+% down, no PMI, and less than 6% (6 years ago was the purchase).
The broker researched options for me based upon my credit profile and income and desired loan type. Having met with the broker was important because the first house I was going go buy fell out of escrow because of mold and a bad roof . . . and then I had 30 days with a real pre-approved loan and locked-in rate to secure the house I'm in now. So, getting the paperwork started is important because sometimes the house you want isn't the house you end up with!
User avatar
pointyhairedboss
Posts: 504
Joined: Fri Mar 02, 2007 9:47 pm

Post by pointyhairedboss »

I am in a similar boat as cannedham - where to go to find the best mortgage. It is more difficult than most financial choices because

a) Mortgages rate change every day, so its very difficult to compare competing quotes given out on different days. And most of the time, you can't get a quote from their website...

b) There are very few, if any, non pay-to-play web sites that list mortgage quotes

c) Even if you found a good mortgage query site, some internet mortgage lenders have a horrible reputation, Lending Tree in particular.

I have sought quotes from:
- banks I am already of customer of
- zillow.com - Zillow.com has a decent anonymous way of soliciting rate quotes from lenders. Again, you have to be careful with (c) from above.
- realtor recommendations. You have to be very careful here too as realtors and lenders can have affiliated business arrangements. Most of that is illegal now but there are legal work arounds and some agents are under tremendous pressure to push through house approved vendors. Ethics was a big factor in my choice of realtor.
indexer
Posts: 162
Joined: Wed Mar 19, 2008 10:07 pm
Location: Denver

Post by indexer »

Has anybody on this forum dealt with an "upfront mortgage broker"? The website www.mtgprofessor.com talks highly about them and the concept seems to make a lot of sense.
We are relocating to the Denver area and I saw of couple of UMBs listed in their website.
User avatar
Ilovevolleyball
Posts: 352
Joined: Fri Jan 11, 2008 1:56 am

Post by Ilovevolleyball »

Hello,

I too am looking for a home. First time home buyer.

So many things to learn. I am using the mortgage professor site the most.

I also have been looking on Amerisave.com for quotes as per his recommendations....

Mike
User avatar
bnttwnbnt
Posts: 374
Joined: Sun Jun 08, 2008 3:39 pm

Post by bnttwnbnt »

A certain section of the Mortgage Professor's site you should visit is: http://www.mtgprofessor.com/mistakes_to_avoid.htm. He has just about every mistake you could possibly make. I will also be a first timer in 2009 if I stick to my savings plan. I particularly like the mistake people make confusing the down payment with the down payment plus settlement costs: http://www.mtgprofessor.com/A%20-%20Dow ... ayment.htm

There are some strange ones:

http://www.mtgprofessor.com/A%20-%20Pur ... _house.htm

Anyways, this is yet another endorsement for the MTG Professor. Great site, but he could be a little less stiff with his writing.
User avatar
Ted Valentine
Posts: 1561
Joined: Tue Jul 10, 2007 10:28 am
Location: Music City USA

Post by Ted Valentine »

cannedham wrote:Which comes first -- the home shopping, or the mortage shopping? Or do you do both simultaneously?

This feels very overwhelming. :P
No brainer. Do the Mortgage first.

You need to know your budget and what you can afford -- including taxes and insurance. Otherwise you're at the mercy of your realtor who will sell you the biggest house they can squeeze you into. Most realtors tell me the biggest part of their job is finding a way to get people financing for their home. Obviously the more they sell the more they make.

Also know that lenders will approve you for way more than you should spend also. No more than 25% of your monthly income should go to your PITI payment.

Get the finances straight first. Know what your budget is. Don't be tempted to stray from that when the lenders and agents try.
Although our intellect always longs for clarity and certainty, our nature often finds uncertainty fascinating.
Post Reply