Your Mortgage Rate and the Closing Costs Associated with It

re: Your Mortgage Rate and the Closing Costs Associated with It

truerates — Sat, 27 Jun 2009 22:20:24 GMT

Having read all of the foregoing posts, I agree that everyone is telling the absolute truth --- from where individual stands. Unfortunately, none of the posters stand where the lender is standing and most of them don't fully understand the dynamics of loan pricing. Here is ethical pricing in a nutshell: The Second Marketing Division of the lender determines how to hedge pricing in order to maintain a reasonable yield spread on the loans the lender originates and sells to investors like Fannie and Freddie. They monitor a variety of variables, such as what the Fed is doing, what the stock market is doing, what consumer reactions are, what global economics are doing and even what that little guy in North Korea is doing with his rockets. Any of these variables can FORCE Second Marketing to adjust the amount of points required for the borrower to get a certain rate at no points, or par. Adjusting this par can take place any time and often several times a day. The par rate for the individual loan is then adjusted again, according to specific loan parameters, such as cash-out, non-owner occupancy, LTV, Credit Score, Property State, Declining Market status and a host of other variables that mortgage loans are heir to. At this point, pricing becomes very specific to the individual loan because every loan, and I mean EVERY loan is different. Even if a borrower buys two properties that are identical, the second property purchased is going to have different pricing than the first because the debt ratio is going to change. I hope that those of you reading this are beginning to appreciate the complexities of mortgage pricing. Of course, there has always been room for abuses in mortgage lending, but at the lender's end the numbers must be perfect or the transaction does not balance and the loan will not close. I work a lock desk and if I make a mistake in pricing a loan (we all make mistakes at times), the sytem FORCES me to correct it before the loan closes. If you are looking for unethical behavior with regard to pricing, look to the borrower, agent or loan officer. Origination points apply to refinances and are a fee. They can be reduced to adjust points and are tax deductable over the life of the loan. Discount points are applied to both refis and purchases. They are used to buy down the rate. That's why they are called DISCOUNT points. The lower the rate, the more must be paid in points to get the lower rates. Discount points and Origination points are added together to get the total points required to buy a specific rate for that specific loan. Discount rates are prepaid interest and are tax deductable in year year paid. Almost any loan can be adjusted down to no points. Of course, this means the rate will be increased. That's the trade-off. Some loans, such as investor properties and low FICO loans are going to require some points and will never go to no points. You can never learn enough about pricing. I've been at it for 12 years and learn something every day.......

re: Your Mortgage Rate and the Closing Costs Associated with It

Peter Gladkin — Mon, 08 Jun 2009 14:22:47 GMT

I would like to add... borrowers need to stop listening to their local news correspondent for interest rate advice and start listening to their broker... news correspondents will not help you, they don't understand what they are talking about, and their news is always out dated regarding interest rates - consumers - do not listen to them.

re: Your Mortgage Rate and the Closing Costs Associated with It

Martha Muzio — Thu, 21 May 2009 15:52:38 GMT

I would like to add, borrowers need to educate themselves or understand that when you hear 4.5% rate on conventional financing lenders are adding some MAJOR adjustments if you don't FIT into their little box. If you have a 740 + score, 75% LTV and no cashout you can get 4.5% at par but if your score is a 680 and your LTV is 80%, there is a 1.5% adjustment, cashout with that score, add another 1.375% adjustment. Lenders have really altered their criteria and rely to much on credit scoring. I wish they could determine a borrowers strength by LOOKING at the file like they did in the old days.

re: Your Mortgage Rate and the Closing Costs Associated with It

Roger Ingalls — Thu, 07 May 2009 21:33:16 GMT

Regarding non-subordination of 2nds, you can add First Horizon Tennesse to the list. Their current policy is not to subordinate anything above 90% CLTV. Is there a thread specifically addressing the "105, HARP" refis?

re: Your Mortgage Rate and the Closing Costs Associated with It

Jon Bodan — Tue, 05 May 2009 21:53:17 GMT

Bobby, I have run into the same thing about the subordinations. Wachovia just did that for a loan they originally wrote at 90%, wouldn't subordinate it now above 80%. I'd like to know about the TARP thing as well, if you find that information let us know.....

re: Your Mortgage Rate and the Closing Costs Associated with It

Catherine Coy — Sun, 19 Apr 2009 22:01:24 GMT

Mike King wrote: It's about time a credible source explained to borrowers this information from a natural standpoint. I don't know what "natural standpoint" means but the Mortgage Professor has been 'splaining it it for years through his syndicated column and his website. He even started an organization whose members vow to be completely upfront and of which I am a founding member. Upfront Mortgage Brokers http://tinyurl.com/2jct

re: Your Mortgage Rate and the Closing Costs Associated with It

T.K. — Fri, 17 Apr 2009 20:21:05 GMT

Application on 2/9/09 Appraisal came back from appraiser on 2/23/09 We are still not out of underwriting! I asked how long it would take, I'm told that they don't know.

re: Your Mortgage Rate and the Closing Costs Associated with It

Bobby Downey — Fri, 17 Apr 2009 14:53:58 GMT

Jeffrey I have heard that there is a stipulation for subordinating seconds on these DURP loans. I need to research it but here is what I have heard. if the bank holding the second has taken TARP money then they are required to subordinate point blank period. I need to find it in writing but that would be a good thing. I have lost several loans due to banks not wanting to subordinate second liens to anything over 80% CLTV.....anyone else hear this?

re: Your Mortgage Rate and the Closing Costs Associated with It

T.K. — Fri, 17 Apr 2009 14:39:58 GMT

Well Bob V.G., I consider the time from December to Februrary that it took me to apply for a loan "lost dollars" because I could have been reaping the rewards, just as I consider the time it's takine the company to "approve" my loan lost dollars because I know it's ultimately going to be approved (pristine credit in the 780-800 range, my income is over $200K, mortgage is our only debt, 75-80% LTV, for both homes put together we're only borrowing $440 K) Wish I would have gone with a broker. This site has bee a wonderful education for me.

re: Your Mortgage Rate and the Closing Costs Associated with It

Bob V-G — Fri, 17 Apr 2009 14:30:04 GMT

T.K.- Imagine how ticked you'd be if they said they weren't honoring your lock! You aren't losing $20/day--your loan hasn't been approved yet. Unfortunately some lenders didn't staff up in a timely manner. This is another reason why using a broker is advantageous---Brokers now their Lenders and turntimes. Good luck. Nice post Vic!

re: Your Mortgage Rate and the Closing Costs Associated with It

T.K. — Fri, 17 Apr 2009 14:26:00 GMT

A question: Loan Company also said that one option I have is to withdraw my loan application and recreate it as a new file because according to RESPA, we're guaranteed to be decisioned within 30 days. Can someone explain that in layman's terms? What's RESPA, and why would I be guaranteed 30 days if I reapply, when it's taking 90 days or more on this application?

re: Your Mortgage Rate and the Closing Costs Associated with It

T.K. — Fri, 17 Apr 2009 14:12:39 GMT

Filled out an application on February 9th for the two properties I own, and paid my $100 application fee. My Loan Company called me in March (the day the rates dropped due to the MBS buy-up) and asked if they should lock me at 0 points, 4.625 %. I said yes. I asked and asked for a rate lock statement, just got one this week (a MONTH later) and it actually said 4.625 and 0.25 points. Which made me VERY mad, but was a good rate anyway so I bit my tongue. My lock expires on May 4. I get a note (mass emailing) from my Loan Company saying "oh, sorry, I know that most of you started this process in January or February, but you still haven't come out of underwriting. We'll extend your locks and honor your rates, and we're really sorry. We're trying to hire more people." OK, now, I appreciate the sentiment....and that they're extending my lock, but I'm livid. I am losing $20 per day that this loan doesn't close due to the poor sevice of this bank. Large national bank, you'd think they could hire a few people to get this moving. I feel like a complete hostage. I'm at the point where I'd like to go elsewhere and start the process over, even if it will cost me ....just for the principal of the thing! How can this be right?

re: Your Mortgage Rate and the Closing Costs Associated with It

Kent Mikkola — Fri, 17 Apr 2009 03:27:39 GMT

Howard and GSE, Are you simply asking for the GFE or have you given the broker/lender a complete application including your SSN and birthdate to allow them to pull credit? I know that I do not provide a GFE without having an application. If I don't have the information that I need to provide you with a true estimate of the program I believe you qualify for, I don't believe it is in your best interest to provide you with "the best case scenario" or "the best guess" based on speculation.

re: Your Mortgage Rate and the Closing Costs Associated with It

Jeff Larson — Thu, 16 Apr 2009 21:54:36 GMT

HVCC could take you a week or more covered properly but the consumer needs to know just how much it will change the way things are done. Most of my clients are past clients or referrals from 12 years. I have never charged a deposit and I don't see anyway around it now, and, it might not be up to me anyway. I am not a broker although I can if need to so it will not make the impact on me than it will on other brethren. Could always cover DU REFI PLUS and the mysteries surrounding it. Most client's I have looked up, over 50, and researched, Fannie or Freddie are coming up Freddie so May 1 is the date. What the consumer is going to see with the plethora of seconds and piggybacks out there is the inability to subordinate and/or the time it will take to get an answer and the conditions surrounding it. Some it will benefit but I am afraid not near as much as our friends in Washington DC hope it will.

re: Your Mortgage Rate and the Closing Costs Associated with It

Victor Burek — Thu, 16 Apr 2009 21:28:36 GMT

thanks Jeffrey, and not sure. i need to address HVCC at some point. Do you have any suggestions?