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Established Member
Posts: 24
Registered: ‎11-02-2012
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Broker or Bank

I plan to start the mortgage process (FHA) in a few weeks. The home I'll be purchasing is $82,500 .I plan to go 15 yr. fixed.  I have the 3.5 down , the required credit score, and am good  as far as taxable income earned and the required DTI limit.  I'm looking ahead and my one concern now is closing costs (or  the not knowing).  I'm in a lease purchase agreement and I gave the owner $,1000 as earnest money about a year ago-so I have that to help out. Getting to my question: Would it be wiser to work with a broker and let them know upfront to search for the lender who will provide  the lowest closing costs for my situation, or try obtaining the mortgage thru my bank (Regions) which iv'e had an account with for about 3 years . I'm guessing broker for the "variety"  , but would really appreciate other opinions especialy from the one's who do this for a living. Thanks so much...

Community Leader
Super Contributor
Posts: 5,329
Registered: ‎03-06-2010
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Re: Broker or Bank

Given the info you posted, go with either a mortgage banker  or a mortgage broker. Each one has access to various lenders. The difference between the two is that a mortgage banker funds the loan and then sells it either at closing or shortly thereafter where a mortgage broker never funds the loan.

 

Regions will be limited to just their programs. You are tight on closing funds. You will need to make sure that 1) you have as much seller paid closing costs as you can negotiate into the contract (6% is the FHA maximum contribution allowed and should be plenty for a purchase). Or 2) you have the lender paid cc if the seller won't contribute enough for you.

Established Member
Posts: 24
Registered: ‎11-02-2012
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Re: Broker or Bank

Thanks. It was originaly agreed upon that I would pay all closing costs (outside of the $1,000 earnest money).  Are there lenders out there who will actualy pay a portion of the closing costs in return for the business?  This is good to know.

Established Member
Posts: 24
Registered: ‎11-02-2012
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Re: Broker or Bank

I'm really hoping (given the low amount of the mortgage) that closing costs will be no more than $2,500-$2,800.  I believe Iv'e read on the forum that purchasing price is a factor in closing costs....

Valued Contributor
Posts: 3,302
Registered: ‎06-09-2010
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Re: Broker or Bank

Just a little insight...

 

While there are Lenders that will give you credits for closing cost, you just have to understand you are still actually paying the closing cost.

 

You either pay it upfront or you pay it long term.

 

No matter which scenario, you still end up paying.

 

The upfront will cost you much less overall.

Good Luck
May all your dreams and wishes become a reality!
Community Leader
Super Contributor
Posts: 5,329
Registered: ‎03-06-2010
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Re: Broker or Bank

^^^ Agreed. If the lender pays some of your costs they are going to bump the interest rate for the term of the loan.

If you get the costs paid by the seller, then you are rolling the closing costs into the purchase price.

 

Naturally, IMO, its best to roll the costs into the purchase price, but not all sellers will do that. Can you get a gift from someone or renegotiate your contract?

Frequent Contributor
Posts: 263
Registered: ‎08-14-2011
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Re: Broker or Bank

I'm in the process of re-financing my mortgage now.

 

I am getting a 15 year fixed @ 2.875% for a "no cost" loan where the lender will pay CC with the exception of pre-paids for interest and escrow.

 

If I were to pay the CC, I would have been eligable for 2.75% so it is costing me 1/8 of a point.   If I've done my math right, that 1/8th of a point will probably end up costing me about $1,000 to $1500 over the closing costs that will be paid for the life of the loan.  The break even won't occur until something like the 100th month.

 

Since I'm coming down from a 20 year fixed at 4.375%, the $1K doesn't really bother me as the new loan will be saving me about $20K!

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Established Member
Posts: 24
Registered: ‎11-02-2012
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Re: Broker or Bank

I appreciate all your responses. Thanks. Iv'e read so much  info regarding no cost mortgages the past day or so. The way I'm looking at it is (if I'm "forced" to go this route), as low as interest rates presently are,  and given thats it's a 15 yr. loan, my rate (hopefuly) will still be below 3% -as is the case of the previous post by "bobebob". I can accept paying  the couple of thousand or so over the life of the loan in return for the peace of mind ....

Super Contributor
Posts: 6,496
Registered: ‎07-03-2007
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Re: Broker or Bank

we are all pretty close on rates and fees

 

if someone offers lower costs, it is in the rate.

 

if someone offers the best rate, the deal os a full fee deal.

 

rates & fees go hand in hand..... and if you are dealing with a professional loan officer and not an order taker at a brick & mortar bank.... the loan officer can offer a range of deals with different credits towards your fees based on your rate.

 

 

* While I try to visit the forum often, please feel free to contact me directly with a link to your post if I fail to answer a follow up question.

* Lending across the entire 'Great State of Texas' since 2004
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