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July 29, 2016

Questions Your Lender Does Not Want You To Ask

Who pays for the appraisal when the appraisal is ordered and at closing? They are different, some lenders say they pay for appraisal, but they make the borrower pay for it with their own credit card and then credit the borrower back at closing. We take the risk and order it with our own money. 

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Can you email me 3 rates, monthly payments and Total Closing Cost for each of these scenarios. All conventional. 3%, 5%, 10%, and 15% Down LPMI 
(LPMI means the lender is paying for the mortgage insurance not the borrower) PMI means the borrower is paying for Mortgage Insurance with a Private Mortgage Insurance Company in hopes to pay a lower rate. However this normally results in a higher payment. I would never recommend anyone pay MI ever unless its a reverse mortgage. According to HUD, 95% of homeowners who choose a 30 year fixed rate never keep the loan longer than 5 years unless they are retired or about to be retired. 

Are there any Pre Payment Penalties? Can I pay the loan off whenever I want? If rates drop will you inform me and drop my rate for free? If so, what method do they use? Does a human keep track of their rate or do they have autimated software doing it? This is huge, when rates dip to their lowest like a couple weeks ago when I locked in loans at 3.125% for 0 Points and 0 Fees on a 30 year fixed, there is no way I could have checked all 600 clients of mine and notified the ones that were eligible and lock them in the same day without automation. Or when rates dropped to 2.99% on 30 year fixed for FREE in 2012, both of those times the rate was only that low for 1 day. Most mortgage companies do not automate quotes because the software is extremely costly and generally very complicated to use. 

What are your turn times? From the date the lender gets the accepted Real Estate Purchase Agreement (RPA), how long until they lock the rate, order the appraisal and submit the package? For example: We do it all in the same day. How long until they get the full approval? We get ours in 24-48 hrs. Do they work weekends? We never close, ever! How long does it take them to review and clear conditions? We take 4-24hrs.

Keep in mind, unless the seller agrees to pay all the fees picked out by the seller (All Title, Escrow, Notary and any other junk fees from both sides) then you will need negative closing cost of about -$2,000 to make it free.

The lender has no way of knowing what these fees are going to be until after they have made an agreement (the title/escrow fees can range from 1500-6500). That is why I always recommend making the seller cover all the title and escrow cost. (unless the seller allows the buyer to choose their own title and escrow company. Which I have never seen happen.) The reason is if they are picking the fees, why would we pay for them, even if its for us, they picked it out! Let us pick out our title and escrow company and then we will cover it, we know how much our company charges and we know they are reliable and most importantly, ethical. However that is exactly why they will justify using their title company, and that is exactly why you will justify that they cover these cost.