Louisville, Humana, Mortgages

[Broughden]

Anyone here live in or around Louisville? My wife and I have fled NYC and are settling in Louisville. Voted in this month's Outside magazine as the 7th coolest outdoor city to live in.

Anyone have any connections, especially IT side, with the Humana the health services company? (My wife's field)

Anyone very very knowledgeable about the mortgage process? Yes, believe it or not Im now upper 30's but have never purchased a home before using a mortgage.

[JWIV]

I've been through the mortgage process a few times as well as a refi or two, so can give some general advice, though each state tends to have their own sets of rules.

I will say that Lendingtree has worked out fairly well as they've beat out both friend and realtor recommendations multiple times in regards to rates.

In general - I don't like ARMs in this current market (interest rates are still way too low to gamble on them falling further), interest only is dangerous unless you are planning to invest the difference and then use that profit to pay a big chunk after 10 years when the accelerated payments come in, 80/15/5 is fine,  but gives you very little equity so unless you benefit from rapid appreciation, don't expect to be able to be able to tap the house piggybank any time soon.  FHA I've never done, but it can be a slight hassle based off of points and market value analysis, 80/20's are easy and boring.  Escrow is a good thing to have unless you like scrambling to pay for property tax and don't pay points for a lower rate unless you plan on living in the house for 10+ years (Your math may vary).

[Merusk]

Well, at least it ain't Lexington. 

I'm the only Kentuckian, and it isn't by choice but by market force. (Houses are cheaper here than Ohio, and it's only a 12 mile drive to work this way.)   I've only been to Louisville once, for work.  There wasn't a lot to do there as I understand.  Most of the folks around here go to Lexington if they're going further south for city trips. 

As far as 'local' vacation getaways, everyone and their brother who's a native Kentuckian loves trips to Pigeon Forge, TN.  They won't shut up about it when I ask about vacation spots.  Really? Tennessee?     You won't have any place nifty for day trips like you did on the East coast.   

You're about a 2 hour drive from Owensboro which is a small town but reportedly has some of the best BBQ in Kentucky.

If you care about sports, then I'm sorry.  I think you get the Bengals instead of the Titans for your sports team coverage.  Maybe you luck out and get the Colts since you're so close to Indiana. 

[Broughden]

Well, at least it ain't Lexington. 

I'm the only Kentuckian, and it isn't by choice but by market force. (Houses are cheaper here than Ohio, and it's only a 12 mile drive to work this way.)   I've only been to Louisville once, for work.  There wasn't a lot to do there as I understand.  Most of the folks around here go to Lexington if they're going further south for city trips. 

As far as 'local' vacation getaways, everyone and their brother who's a native Kentuckian loves trips to Pigeon Forge, TN.  They won't shut up about it when I ask about vacation spots.  Really? Tennessee?     You won't have any place nifty for day trips like you did on the East coast.   

You're about a 2 hour drive from Owensboro which is a small town but reportedly has some of the best BBQ in Kentucky.

If you care about sports, then I'm sorry.  I think you get the Bengals instead of the Titans for your sports team coverage.  Maybe you luck out and get the Colts since you're so close to Indiana. 

Well we have visited the city a couple times now and are pretty impressed. Primarily an Irish/Scottish heritiage. For example the down town "cool area" to live in is called "The Highlands." And as I mentioned Outside magazien voted it number 7 in the nation this month. Seems the mayor-for-life has been busy building bike paths around the city and promises a hundred more miles of them around the city linking every greenway and city park.
Supposedly the city parks were also designed by the same guy and firm as New York's central park. Additionally the Highlands area I mentioned along Bardstown road has that distinct cool hippie, eclectic, university town vibe going on...with lots and lots of old bungalow, tudor and four sqaure houses near Cherokee Park and nearly every yard has an Obama sign in it.

As for outdoor pursuits I keep getting told that Red River Gorge is great for camping, backpacking and rock climbing.
http://www.redrivergorge.com/
http://www.redriverclimbing.com/

And its only an hour or so from Mammoth Cave National Park and 5 hours from Great Smoky Mountain National Park. Great Smoky Mountains N.P is at Pigeon Forge, TN so maybe thats why they rave about it?



Edit: Oh and my wife's a Colts fan which means by default I am as well. She grew up in Indiana. Where as I grew up in Florida and only worshipped at the altar of Bobby Bowden and the Florida State Seminoles, and so had no pro preferences.

[Broughden]

I've been through the mortgage process a few times as well as a refi or two, so can give some general advice, though each state tends to have their own sets of rules.

I will say that Lendingtree has worked out fairly well as they've beat out both friend and realtor recommendations multiple times in regards to rates.

In general - I don't like ARMs in this current market (interest rates are still way too low to gamble on them falling further), interest only is dangerous unless you are planning to invest the difference and then use that profit to pay a big chunk after 10 years when the accelerated payments come in, 80/15/5 is fine,  but gives you very little equity so unless you benefit from rapid appreciation, don't expect to be able to be able to tap the house piggybank any time soon.  FHA I've never done, but it can be a slight hassle based off of points and market value analysis, 80/20's are easy and boring.  Escrow is a good thing to have unless you like scrambling to pay for property tax and don't pay points for a lower rate unless you plan on living in the house for 10+ years (Your math may vary).

The only thing in here I understood was" Try Lendingtree" the rest is pretty much jibarish.
I assume an 80/20 means 20% percent down payment and 80% of the balance as a loan? Then what is a 80/15/5? How does the extra number work?
Are there any pitfalls I should avoid? Wait a minute these are bankers.....of course there are pitfalls. They are little better than masked guys with guns stealing my money. Okay so what are the pitfalls? What other than "closing costs" and "mortgage insurance" are the other obvious scams simply meant to seperate a fool and his money?

[Hawkbit]

1.  Talk to mortgage brokers.  Get someone you like. 

2.  Don't, don't, don't, don't, DON'T go with an ARM (Adjustable Rate Mortgage).  They're half the reason the housing market is crashing.  Most often, you'll see the interest rate start really low first two years, but by year five the rate becomes unmanageable by quite a few people.  Imagine you buy a $200,000 home (average here in Columbus Oh) and your payments begin at $750/month.  By year five with an ARM they're $1600-$2000 depending on how badly you got screwed by the bank or didn't pay attention to the details. 

FHA= Loan/mortgage setup for first time home buyers... you mentioned: "but have never purchased a home before using a mortgage" which impies you've bought a house before, in which you might be excluded from this process.  You would need to clarify with a broker if owning a home without taking a mortgage excludes you from that process.  Essentially, it allows first time home buyers to put NO money down and get a home. 

80/20= You borrow a primary 80% and a secondary 20%.  If you're not under an FHA, you either put down 20% of the cost or else you wind up paying a PMI (primary mortgage insurance).  You don't want to pay insurance to someone because that builds you NO equity, whereas at least having a second mortgage does. 

80/15/5= You bring 5% to closing, and take a primary 80 and secondary 15. 

Lendingtree is not allowed to service Ohio, so I never got the opportunity to look at them.  I met with a financial adviser that we liked and he recommended a mortgage broker that we also liked.  Primary rule:  If your broker won't spend the time to explain the process in detail to you, tell him/her to shove it up their ass and find someone else.  That said, understanding the process is not at all easy... it's literally the most stressful thing I've ever done in my life. 

My wife is an attorney for bank-side foreclosures here in Columbus.  She's very, very busy right now. 

[Broughden]

1.  Talk to mortgage brokers.  Get someone you like. 

2.  Don't, don't, don't, don't, DON'T go with an ARM (Adjustable Rate Mortgage).  They're half the reason the housing market is crashing.  Most often, you'll see the interest rate start really low first two years, but by year five the rate becomes unmanageable by quite a few people.  Imagine you buy a $200,000 home (average here in Columbus Oh) and your payments begin at $750/month.  By year five with an ARM they're $1600-$2000 depending on how badly you got screwed by the bank or didn't pay attention to the details. 

FHA= Loan/mortgage setup for first time home buyers... you mentioned: "but have never purchased a home before using a mortgage" which impies you've bought a house before, in which you might be excluded from this process.  You would need to clarify with a broker if owning a home without taking a mortgage excludes you from that process.  Essentially, it allows first time home buyers to put NO money down and get a home. 

80/20= You borrow a primary 80% and a secondary 20%.  If you're not under an FHA, you either put down 20% of the cost or else you wind up paying a PMI (primary mortgage insurance).  You don't want to pay insurance to someone because that builds you NO equity, whereas at least having a second mortgage does. 

80/15/5= You bring 5% to closing, and take a primary 80 and secondary 15. 

Lendingtree is not allowed to service Ohio, so I never got the opportunity to look at them.  I met with a financial adviser that we liked and he recommended a mortgage broker that we also liked.  Primary rule:  If your broker won't spend the time to explain the process in detail to you, tell him/her to shove it up their ass and find someone else.  That said, understanding the process is not at all easy... it's literally the most stressful thing I've ever done in my life. 

My wife is an attorney for bank-side foreclosures here in Columbus.  She's very, very busy right now. 

1. Arent mortgage brokers like stock traders? Advising you on how to make money but taking a cut? How do they get paid? How much do they typically make?

2. Im a veteran so I have the whole VA Loan guarantee thing helping me out, but my credit score isnt as great as my wife's. So we are trying to figure out does the VA guarantee off set the potential higher rate we would get with my credit score on the application. We cant tell. And the VA's website on the home loan program is spectacularly less than helpful.

3. FHA program. Dont know anything about it, but given how much furniture goes for these days being able to use the cash for furniture appeals to me more than dropping 20% down on the loan. Would the broker know about this?

4. Columbus, OH huh? We were looking at Dublin, OH before deciding with Louisville. Really nice area and they have a huge lack of outdoor supply stores centered around camping, kayaking, backpacking...so we could have easily set up a shop there and printed our own money.



Edit: I know you said you dont have much experience with Lendingtree, but I wonder if someone else out there thinks they are better or worse than using a broker?

[Merusk]

As for outdoor pursuits I keep getting told that Red River Gorge is great for camping, backpacking and rock climbing.
http://www.redrivergorge.com/
http://www.redriverclimbing.com/

And its only an hour or so from Mammoth Cave National Park and 5 hours from Great Smoky Mountain National Park. Great Smoky Mountains N.P is at Pigeon Forge, TN so maybe thats why they rave about it?

Ah, yeah Red River is great. My sister and brother in law go down there every year with his High School buddies for camping. 

Nah, the raves i hear about Pigeon Forge are just because it's got good scenery and cheap alcohol near as I can tell.  Cabins and drinking aren't my thing so I don't pay it much mind. If I go camping I need things to do other than getting plastered.  My youth ruined activities for me. :p

[Merusk]

My wife is an attorney for bank-side foreclosures here in Columbus.  She's very, very busy right now. 

I bet she is.  Dominion homes was into some bad-loan pushing big time when the boom was hottest and they were like 50% of the Columbus new home market.  Their troubles are one of the reasons my company decided to expand up there. Big vacuum when things shake-out.

[Hawkbit]

1. Arent mortgage brokers like stock traders? Advising you on how to make money but taking a cut? How do they get paid? How much do they typically make?

2. Im a veteran so I have the whole VA Loan guarantee thing helping me out, but my credit score isnt as great as my wife's. So we are trying to figure out does the VA guarantee off set the potential higher rate we would get with my credit score on the application. We cant tell. And the VA's website on the home loan program is spectacularly less than helpful.

3. FHA program. Dont know anything about it, but given how much furniture goes for these days being able to use the cash for furniture appeals to me more than dropping 20% down on the loan. Would the broker know about this?

4. Columbus, OH huh? We were looking at Dublin, OH before deciding with Louisville. Really nice area and they have a huge lack of outdoor supply stores centered around camping, kayaking, backpacking...so we could have easily set up a shop there and printed our own money.



Edit: I know you said you dont have much experience with Lendingtree, but I wonder if someone else out there thinks they are better or worse than using a broker?

After chatting with my wife, her advice is to NOT talk to brokers directly, rather talk to banks.  The only reason we went for a broker before was because it was a personal referral.  Sorry for the bad advice earlier, my bad and I should stop giving random advice.  She does all this fine detail crap since she's the expert.     So start calling banks and compare them against each other.  As far as brokers go, yes they get financial backing and do take a cut... which you won't need to spend any money on because your bank will be handling it.  I suppose you could compare to Lendingtree as well, but do your research on them first.  A simple Google search brought more negative stuff on them than positive when I looked at it. 

She also mentioned that if you're going VA loan, from what she understood you can only take it once, but that it will likely be better than anything else on the market.  Sadly, we can't answer much about them because we've never been around them much before.  I think this is the site:  http://www.homeloans.va.gov/   But I've got no help, man... sorry. 

So at this point, start calling banks and get some figures (get preapproved, or whatever else you need for your VAloan).  Look at how much you can spend and start looking.  A bank OR broker will know about the FHA eligibility.  Make sure you see with a bank if you qualify. 

We live south of Dublin, my daughter will go to Hilliard schools in a few years (but we want to be in-city by then).  From what it sounds like, you did smart by going to Louisville.  Columbus is good for jobs, but it's very plain living.  It's at least an hour to any camping, and that's even sparse here.  It's been financially good to us though.  Good luck... wish I could have been more help. 

[Broughden]

Hawkbit,

No you have been very helpful. I fully and completely admit I know next to nothing about most of this stuff.
Did your wife say why she recommended going straight to the bank versus broker?


Anyone else...so anyone with a connection to Humana floating around on F13?

[Salamok]

Bank vs broker argument is pretty much bullshit.  You go with who you feel you can trust.  I worked for a broker and over that 6 year period we had more than our share of ex-bank loan officers roll through as well as a few of our guys jump the fence in the other direction. 

Bank loan officers aren't licensed and generalyl ONLY know the programs their bank offers.  If the bank you walk in to just happens to have the best deal in town for your particular situation then great but the odds of that being the case are pretty slim.  If you have a ton of assets with a bank they might cut you a decent deal, if you don't they are going to charge you what they think they can get away with (same as everyone else).  Also, when you go the bank route you wont know how much they are really charging you as the bulk of it will be hidden in the rate and they don't need to disclose what their yield spread is.

Loan officers that work for mortgage brokers need to be licensed and they usually get wholesale rate sheets from 20 or 30 funding sources.  The company I worked for was approved to do business with a shitload of funding sources but we only maintained active relationships with about 30.  Unless the mortgage broker is funding you on their own line of credit they will have to disclose to you exactly what they are making on the loan.

Lending tree is the highest priced lead service in the business and you the consumer is ultimately the one paying for that.

Generally you will be charged 1-3 percent of your loan amount to get your loan done and generally the lower your loan amount the greater the percentage, so if you are looking to buy a 120k house expect to be charged closer to 3 percent.  Also keep in mind that most of this fee can be rolled into your loan or paid for by the seller of the house and isn't necessarily an out of pocket expense. 

VA/FHA Loans - government loans restrict the amount charged up front to 1% but allow the loan officer to charge up to an additional 4% on the back (basically giving them a fat check and you a higher rate).  If you go this route and your loan officer is maxing you at the full 5% then you are getting raped.

FHA does have a 1st time home buyer program, last I knew (may have changed) it was 3% down payment and 97% financed in 1 loan, you need to purchas FHA insurance which requires a fairly large up front payment but the seller is allowed to pay for that for you ;).

Remember it is a BUYERS market most financial institutions allow 5-6% sellers concessions so get the seller to pay for as much as possible a good loan officer will know which items are allowed to be paid by the seller.

[Hawkbit]

The broker finds banks from his/her client list, a list of preferred banks s/he deals with all the time.  

Without broker:  You call bank, bank says your rate will be say, 5%.  You buy a house at $150,000 and so you sign the paperwork and you get 5% on a $150,000 purchase.  

With broker:  You call broker, who says rate will be say, 5%.  You buy a house using your broker for $150,000 and you sign the paperwork... only now you get 5% on a $153,000 purchase.  

At the end of both sales you get a house and a mortgage.  By not utilizing a broker you save money that you simply don't need to spend.  

The advantage (albeit negligible) of using a broker is that they do the footwork on calling the banks.  Is that worth their fee?  Almost never.  

[Salamok]

The broker finds banks from his/her client list, a list of preferred banks s/he deals with all the time.  

Without broker:  You call bank, bank says your rate will be say, 5%.  You buy a house at $150,000 and so you sign the paperwork and you get 5% on a $150,000 purchase.  

With broker:  You call broker, who says rate will be say, 5%.  You buy a house using your broker for $150,000 and you sign the paperwork... only now you get 5% on a $153,000 purchase.  

At the end of both sales you get a house and a mortgage.  By not utilizing a broker you save money that you simply don't need to spend.  

The advantage (albeit negligible) of using a broker is that they do the footwork on calling the banks.  Is that worth their fee?  Almost never.  

Dude either yer retarded or the brokers you deal with are.  Mortgage brokers get wholesale rates bank customers don't, if the broker is good their fee is less than the spread between wholesale and retail. 

If I were looking right now and didn't know anyone I'd get multiple quotes from different parties on both sides of the fence.  It's against the law for either one to even mildly misquote you to get yer business.  IF you end up in a situation where that happens walk away from closing, just be sure and schedule closing a few weeks prior to your option period being up so you have time to find another lender (also be sure and get a finance addendum on your purchase offer so you can't be held liable if your financing falls through).

[Hawkbit]

And the 'retarded' talk begins... I'm out.  That's what I get for helping someone.... on the internet.  gfl

[Merusk]

The broker finds banks from his/her client list, a list of preferred banks s/he deals with all the time. 

Without broker:  You call bank, bank says your rate will be say, 5%.  You buy a house at $150,000 and so you sign the paperwork and you get 5% on a $150,000 purchase. 

With broker:  You call broker, who says rate will be say, 5%.  You buy a house using your broker for $150,000 and you sign the paperwork... only now you get 5% on a $153,000 purchase. 

At the end of both sales you get a house and a mortgage.  By not utilizing a broker you save money that you simply don't need to spend. 

The advantage (albeit negligible) of using a broker is that they do the footwork on calling the banks.  Is that worth their fee?  Almost never. 

Dude either yer retarded or the brokers you deal with are.  Mortgage brokers get wholesale rates bank customers don't, if the broker is good their fee is less than the spread between wholesale and retail. 

This WAS the case. It's not now for the vast majority of mortgage brokers because of all the bad loans they floated.  We had a special meeting at work because our affiliated mortgage company is the ONLY local lender allowed to offer some of the old rates. This was a decision that had to go all the way to the national level of the underwriter. The only reason we were allowed to do it is because out of nearly 4,000 loans we made during the "boom time" of '03-'06 only 3 are in default - because we as a company decided not to drop our lending standards when everyone else was.

[Tale]

After chatting with my wife, her advice is to NOT talk to brokers directly, rather talk to banks.  The only reason we went for a broker before was because it was a personal referral.

A few months ago, I sat down with several mortgage brokers and the one thing they had in common was "our software says the best current deal for you is from Bigass Bank, but we think you might prefer a different style of loan from Middling Mortgages."

It just so happens that my money is with Bigass Bank already, so I made an appointment with the lending manager. She turned out to be from the same area of Scotland as my parents, and we had a good chat about life and emigrating to Australia and mortgages.

I got loan approvals from her and a broker, then decided to hold off for a bit as prices looked like falling (might pay a few thousand in rent, but save tens of thousands on the mortgage).

Later she rang to see how I was doing, and I told her my decision and she said "probably a good idea, talk to me when you're ready". But the broker rang, was told my decision ... then kept ringing, texting, ringing, texting.

I'd much rather just go with the bank.

[Murgos]

And the 'retarded' talk begins... I'm out.  That's what I get for helping someone.... on the internet.  gfl

So, rather than help someone you're just going to walk off and give the discussion to the 'retard' and let the clueless person founder into difficulty?

Avoiding confrontation on stupid internet issues is one thing, failing to help someone who could use your advice is something else altogether.

There are many people who are considering buying homes in this temporary buyers market, I'm sure they would be more than happy to hear a few pointers, even if they are at odds with other points-of-view, simply so that they have a basis for future research.

[Broughden]

And the 'retarded' talk begins... I'm out.  That's what I get for helping someone.... on the internet.  gfl

So, rather than help someone you're just going to walk off and give the discussion to the 'retard' and let the clueless person founder into difficulty?

Avoiding confrontation on stupid internet issues is one thing, failing to help someone who could use your advice is something else altogether.

There are many people who are considering buying homes in this temporary buyers market, I'm sure they would be more than happy to hear a few pointers, even if they are at odds with other points-of-view, simply so that they have a basis for future research.

Quite agreed. As the floundering mortgage newbie I want to hear advice from all sides of the fence!

[Hawkbit]

And the 'retarded' talk begins... I'm out.  That's what I get for helping someone.... on the internet.  gfl

So, rather than help someone you're just going to walk off and give the discussion to the 'retard' and let the clueless person founder into difficulty?

Avoiding confrontation on stupid internet issues is one thing, failing to help someone who could use your advice is something else altogether.

There are many people who are considering buying homes in this temporary buyers market, I'm sure they would be more than happy to hear a few pointers, even if they are at odds with other points-of-view, simply so that they have a basis for future research.

Fair enough.  I've simply spent too much time arguing on forums with people that when it resorts to name calling I generally don't stick around.  I've got time to answer questions and help people, but I'll be damned if I'm going to waste my time being yelled at.  That said, I've nearly exhausted my knowledge on the subject at this point anyways...

In regards to Tale's post above, my boss recently bought a house and had the exact same experience.  They called two brokers, one was smarmy enough that they said no right off the bat, yet he called them incessantly even after they told him about the sale being complete.  The second broker wouldn't bother to call them back at all, until they started calling banks.  Then he was all over it.  In the end they just stuck with the bank loan.

When talking to your bank about getting a loan, also ask them if they tend to sell off their loans AND ask who they sell the loans to.  That's a practice a lot of people don't know about either.  Broker and/or small bank gives you the loan, then immediately sell it off to big banks.  If you can find out who they sell to you can try to get a good deal straight through the big bank.  It also helps to know a bit about who will actually have your loan for the full 30yrs in case it's a bank that you don't like.  Our FHA on our condo years ago was literally 25 days old and it was sold out. 

[Nebu]

When talking to your bank about getting a loan, also ask them if they tend to sell off their loans AND ask who they sell the loans to.  That's a practice a lot of people don't know about either.  Broker and/or small bank gives you the loan, then immediately sell it off to big banks.  If you can find out who they sell to you can try to get a good deal straight through the big bank.  It also helps to know a bit about who will actually have your loan for the full 30yrs in case it's a bank that you don't like.  Our FHA on our condo years ago was literally 25 days old and it was sold out. 

Good point.  My recent home purchase was about 20 days old when the loan was sold to Wells Fargo.  Interestingly, the rate that I got from a local lender was lower than the rate I could have gotten from Wells Fargo directly.  I assume that some of the larger local businesses are able to negotiate rates that us as individuals would have a difficult time getting. 

[Salamok]

I assume that some of the larger local businesses are able to negotiate rates that us as individuals would have a difficult time getting. 

my point exactly.

My comment to Hawkbit was based on the fact that I never said that banks couldn't have a good deal, while hawkbit seems absolutely certain that it is impossible to get a better deal from a broker.  This is just flat out flawed reasoning. 

I've heard more than enough pros and cons of banker vs. broker over the years to realize they both have merits and neither one is ALWAYS the best choice.  I believe my feelings on the matter are not uninformed as I've worked for 1 of the top 200 loan officers in the country for 10 years and my wife has 6 years in at one of the top title companies in the area (and yes I hear plenty of funding stories from her dealing with BOTH banks AND brokers).

The broker I worked for doesn't need to work and certainly doesn't need to steal a few hundred extra bucks from each client, he is however extremely knowledgeable about the business and enjoys helping people.  Unfortunately this isn't the case with every broker out there but that doesn't mean he is the only decent one.

That all said by no means is my opinion the ONLY valid one.

This WAS the case. It's not now for the vast majority of mortgage brokers because of all the bad loans they floated.  We had a special meeting at work because our affiliated mortgage company is the ONLY local lender allowed to offer some of the old rates. This was a decision that had to go all the way to the national level of the underwriter. The only reason we were allowed to do it is because out of nearly 4,000 loans we made during the "boom time" of '03-'06 only 3 are in default - because we as a company decided not to drop our lending standards when everyone else was.

Only very large brokers employ an in house underwriter OR dictate their own lending standards.  The banks buying the paper set the standards.  Of course by lending standards you could mean "hey we decided not to commit fraud and falsify documents so they matched the lenders standards" in which case yay! 

Of course it could also mean you prescreened clients and chose not to do business with them if they had a less than perfect profile, you are not legally allowed to do this and must attempt to assist anyone who you have a suitable lending program for.  This becomes more apparent when you are an FHA lender because the lending programs offered by FHA (through you) dip down into the b paper realm, so you can't really pretend you do not have any of those programs to offer.

P.S. - If you tell a business to stop making sales calls to you they must legally oblige (even if you aren't on the DNC), if they continue just tell them in no uncertain terms that you have asked them to stop calling and the lack of ethics reflected by continuing to call you means you will never consider doing business with them.

[Sky]

Broughden, get to the library now. Or the bookstore. Whatever. You're smart enough to ask here for help, you're smart enough to read up for a week on mortgages and buying homes.

As mentioned, forget ARMs. Forget interest-only. If you don't have a decent downpayment, be very careful. Negotiate, I got a half-percent knocked off because I bitched about it. If the bank says you can afford $200k, that means you can afford $100k. Remember everyone involved is NOT on your side, they all want you to spend as much money as possible so they make a fat commission.

I went with the local bank, I have some pull there (that I didn't even need to use, which was cool). The woman I dealt with was ready for retirement, she couldn't answer shit for questions and was the second most useless person I dealt with through the transaction (the first being my useless fucking agent, I'll never use an agent again). That said, it made it easier to play hardball with her and I'm very satisfied with the deal. Just watch them like a hawk, she kept trying to lock me into the loan package that makes them the most money. I literally stood over her shoulder to make sure she entered the right info into the computer. Even after doing that, she  had to print the paperwork four times. But I was diligent and got a great loan and a good rate and they haven't sold it yet (though it's still pretty new).

Biggest purchase you're likely to make (until the next house, heh), so I go back to my opening statement. Get some books, kick back and do some research. I spent over five years doing research and looking around, but the core of my mortgage research was only a couple weeks of reading maybe a dozen books to get several perspectives (as always, know your author so you know the bias of the book).

USE AN ATTORNEY. My attorney was on a flat fee and was the only person who was completely representing my best interests in the deal. Of course, I also had some pull in their office, too, heh. And I knew the attorney representing the bank and the seller. Money well spent.

[Merusk]

This WAS the case. It's not now for the vast majority of mortgage brokers because of all the bad loans they floated.  We had a special meeting at work because our affiliated mortgage company is the ONLY local lender allowed to offer some of the old rates. This was a decision that had to go all the way to the national level of the underwriter. The only reason we were allowed to do it is because out of nearly 4,000 loans we made during the "boom time" of '03-'06 only 3 are in default - because we as a company decided not to drop our lending standards when everyone else was.

Only very large brokers employ an in house underwriter OR dictate their own lending standards.  The banks buying the paper set the standards.  Of course by lending standards you could mean "hey we decided not to commit fraud and falsify documents so they matched the lenders standards" in which case yay! 

It's both, actually.  When you look at the current fuck-up the big brokers (Fannie/ Freddie, et. al) were bundling up mortgages into investment packages and selling them off so quickly that they kept asking for more.  They began to relax THEIR standards because the guys selling them kept saying, "we don't have any more people to sell to at these requirements."   As that picked-up the smaller guys also began to do the whole liar-loan thing as they realized the big banks weren't checking shit and just wanted more bits to bundle.

  Instead of following the more lax standards the company took the stance that if it was a bad idea to loan to a particular set of circumstances a year earlier, it was still a bad idea.   They weren't pre-screening or denying business, just running under the old standards instead of the ones that fucked everything over.  - At least that's my understanding of things, I don't work in the financial arm and only know as much as I'm told.

As mentioned, forget ARMs. Forget interest-only. If you don't have a decent downpayment, be very careful. Negotiate, I got a half-percent knocked off because I bitched about it. If the bank says you can afford $200k, that means you can afford $100k. Remember everyone involved is NOT on your side, they all want you to spend as much money as possible so they make a fat commission.

This and use an attorney is some fantastic advice.  Know how much you can afford INCLUDING Taxes and Escrow.  DO NOT go over that.  I had a target of $850-$1000 a month maximum because I knew what I could afford and still have money to do other things and not be "house poor."  However, my broker, the bank and the real estate agent we were working with before we decided to build instead of buy all kept trying to push me higher.  "But you're qualified for up to 250k! Why not spend that and get a bigger house?!"  Because I didn't want a fucking $1700 a month mortgage+escrow payment, dickwads.   

Remember they're sales people in the end, and salespeople have quotas and comissions they want to hit.

[Sky]

A couple of my sayings that apply to buying a house: 

Never trust anyone trying to separate you from your money
Don't get used to anything you don't own (motherfuckers love to cut trees)

[Broughden]

A couple of my sayings that apply to buying a house: 

Never trust anyone trying to separate you from your money
Don't get used to anything you don't own (motherfuckers love to cut trees)

Yeah Im taking those two things to heart. Which is why I was asking for the mortgage crash course on here. Ive been on F13 long enough to trust quite a bit of what is said on here...and of course I back check things I dont fully trust any way.

Its not that I wouldnt normally go buy every book in the store on it and read them all...but Im job hunting, and helping rebuild my wife and my in-laws bed and breakfast, and trying to educate myself on the in and outs of starting an adventure travel company. I simply dont have time to read or digest any more at this point.

My wife and I are taking to heart the advice only buy what you need. Not what they want you to spend. Neither of us want to be house poor especially while trying to save money to start our own business. We pre-qualified with her local bank for $400k but are looking around the $250k range because in Louisville that buys you all the house we need.

Keep the advice and stories coming guys and gals. This is some great information. Especially the pitfall  parts!

Thank you!

[Nebu]

The only other advice I'd give is to buy a house based on its bones.  Find a structure that you like with enough room for what your needs are.  You can always improve down the road.  Oh... and LOCATION LOCATION LOCATION!

[Sky]

Yeah, look at the remodeling thread to see what I did to a really odd looking place. We didn't really have to do anything structural and it was (relatively speaking) inexpensive to fix up, and now it's a really nice place. Bones and location are key elements. You can't buy more lot size or a quieter street, but you can always fix up a place.

[Tale]

The only other advice I'd give is to buy a house based on its bones.  Find a structure that you like with enough room for what your needs are.  You can always improve down the road.  Oh... and LOCATION LOCATION LOCATION!

And devote yourself to the task. My boss just got burned I think. In the space of six months he got his job, moved to our city, got married, bought a place and they got pregnant. He bought the place while under pressure at work. I think he fell for the oldest trick in the book: it's up for auction this weekend but the sellers will consider an offer if you get in first. And he got in first, paying probably way more than he would have at auction. Now he's got an overpriced house in a bad area where his pregnant wife is scared to go out the door.

[Broughden]

Now he's got an overpriced house in a bad area where his pregnant wife is scared to go out the door.

Well thankfully my law enforcement background taught me this lesson in NYC. It doesnt matter what a place looks like at 2pm on a Sunday afternoon or 3pm on a Wednesday. It matters if you feel safe coming home alone at 2am on a Friday night or walking to the corner store for milk at 11pm on a Thursday. I ALWAYS check a neighborhood and place out after the sun has set.

I also always check in with the local precinct or department and ask them what they think of the neighborhood.

[Salamok]

Now he's got an overpriced house in a bad area where his pregnant wife is scared to go out the door.

Well thankfully my law enforcement background taught me this lesson in NYC. It doesnt matter what a place looks like at 2pm on a Sunday afternoon or 3pm on a Wednesday. It matters if you feel safe coming home alone at 2am on a Friday night or walking to the corner store for milk at 11pm on a Thursday. I ALWAYS check a neighborhood and place out after the sun has set.

I also always check in with the local precinct or department and ask them what they think of the neighborhood.

If you are still in law enforcement and are willing to roll the dice I think there is a government sponsored urban renewal program for getting VA/FHA foreclosures at 50% off in troubled areas.

[Broughden]

Now he's got an overpriced house in a bad area where his pregnant wife is scared to go out the door.

Well thankfully my law enforcement background taught me this lesson in NYC. It doesnt matter what a place looks like at 2pm on a Sunday afternoon or 3pm on a Wednesday. It matters if you feel safe coming home alone at 2am on a Friday night or walking to the corner store for milk at 11pm on a Thursday. I ALWAYS check a neighborhood and place out after the sun has set.

I also always check in with the local precinct or department and ask them what they think of the neighborhood.

If you are still in law enforcement and are willing to roll the dice I think there is a government sponsored urban renewal program for getting VA/FHA foreclosures at 50% off in troubled areas.

Yeah its available to teachers and police officers and firemen and such. However at this time I am no longer involved in law enforcement. NYC cured me of that.

[UD_Delt]

I just did the mortgage thing myself (see new house thread I just posted).

This was my second time through and I really like my broker the first time around so I just went with him without doing too much shopping around. I basically just checked the rates, saw he was giving me a good current rate and went with it.

Our first mortgage was kind of odd, we did this 4 years ago in the heyday of interesting mortgage options. We did an upside down mortgage. We put 5% down, our actual mortgage was for 5% at 6.5% and the remaining 90% of the house went into a home equity line of credit (HELOC) at 4.9%. The downside was we had a 5 year pre-payment penalty (wasn't a chance of us paying it off in 5 tho) and there's a 15 year balloon payment. It just means we'll need to either pay it off, sell it or refi sometime in the next 10 years.

Our new house we also got sort of creative. Since we weren't selling the other house it would have taken me pretty much scraping together everything we had to get the 20% downpayment that is standard. I could have done it but didn't really want to. We ended up putting 5% down and the other 95% in the mortgage with a prepaid, seller PMI. This pretty much came up as an option during negotiations with both the seller and our mortgage broker.

Houses in our area were going for on average about 10% lower than list price. So, we made the initial offer on the house about 15% under list. The sellers came back at 5% under list. That's when the mortgage broker floated the 5% down idea. We then asked the sellers to go 7% under list and pay 4% toward closing and they agreed. Pretty much covered all the closing costs and we were still fairly close to the market average 10% lower than list.

[Hoax]

Fuck broker's, use them to get an idea of where to start but never pay them shit.  They another part of the broken and stupid real estate puzzle.  Don't get me started on RE agents.........

Basically, you should talk to a broker in the each of the top 3 companies in the area.  Pump them for info, have them explain things.  Take notes.  Lots of notes.  Once you think you know what you want.  Go talk to the bank directly.  This is pretty much how you should always deal with commission based cut throat fucks if you can.  Thats my advice, having never bought a home but having worked in RE related fields for four years.

Some brokers are good people, who do their job right, but since nobody has a personal reference I think my advice is the best advice.  The thing to remember is they aren't working for you, they see it like they are working with you and the bank to make the deal.  They dont care about saving you, what is big money, because it doesn't change their bottom line for shit.  So just use them and throw them away.  Unless you find that a broker did give you a good deal and good advice when you go to the banks.  Then it might be nice to reward them by cutting them back in.  But thats your call.

[Broughden]

A couple we are looking at..
http://www.glarhomes.com/(ziq5cyro4ybdje45v3c3u245)/propertyDetails.aspx?mls=1207144&gateway_la_code=19537

http://www.glarhomes.com/(ziq5cyro4ybdje45v3c3u245)/propertyDetails.aspx?mls=1209623&gateway_la_code=19537