First time home buyers. A few questions.

[wmarat]

Hi, all!

I've been pre approved by 2 institutions; BOA and Coldwell Bankers.

BOA pre approved me for their no fee morgage at 7.3175%

Coldwell preapproved at 5.5% and higher sum.

How is Coldwell Bankers as a morgage lender? Are they considered prime or subprime (Should I expect AA from Amex if I get morgage from Coldwell?)?

Does a preapproval letter mean that I get morgage.

How to negotiate price of property? Should I start with lowball offer?

Any input is highly appreciated.

[Anonymous]

My theory on offers:

Asking 150K... last home in neighborhood sold for 150K.  You offer 140 and they accept (desperate!) - okay you are ahead by 10K FOR NOW.

Next month someone else buys and they see your 140K purchase  and they want to pay that or less even - SPLAT - you are no longer ahead.  Property value is now 140K (or less)....

Make an offer based on recent sales (last 30 days if possible, no more than last 90 days) and have an appraisal contingency in the contract  WHY?????  You can ask to reduce the sales price to the appraised price (if it's lower).  If seller refuses they need to disclose the appraisal price to future interested buyers for the next 6 months (it's a material fact just like a leaky basement or roof) and they have in their minds that they have 'sold' the house so the incentive is there to just sell it and take the 'loss'.  Flip side is seller needs to be able to close (i.e. have enough money in the house to clear all liens) -- some states have this available online (yes, I can research who has what loan, since when and for how much on the property).

ALSO,  I am seeing articles that say foreclosures will continue thru 2011... IF (and that is a BIG IF) the market stabilizes shortly afterwards, you may still see devaluation over the short term (next 1-3 years) and then a small yearly gain in value  for several years as it settles.  Do not expect yearly double digit gains that outpace income.  In fact, deflation is probably the watchword for the next few years.

Ask for a Seller concession (closing help) to offset your out of pocket on the CB loan.  Also CB may 'match' the costs on the BOA - so ASK!!! Any closing help figures into the offer price (it is a balancing act to frame the offer with many varying terms)

CB loans are generally prime.... as are BOA with a few exceptions (usually community re-investment).  It's not so much who writes it, but who it gets sold to down the road (if any are even selling).  CB  has been holding their own paper as of late (not selling it).

If you have been thru underwiting (DU for both lenders unless manual needed) and have the backup documentation they need,  then yes - unless something unforeseable happens, you will get the loan.

Message Edited by Lady_Scarlet on 12-11-2008 08:47 PM

[wmarat]

Mylady!

I highly appreciate your reply. But...

1. Last property in neibourhood was sold in August 2007! And in August they asked less than now, therefore I have no facts to compare. A seller has time till July, so do I. So, in this particular case I have decided not to go into negotiations and wait till April-May and wait/look for another property in the same neibourhood. I live in zip code with very low foreclosure rate, middle-upper middle class, but I think (and I am really sorry, but life is life) that in January - March people will have to sell their property because of massive lay offs.

Could you please deleberate a little more regarding Seller concession. I have no idea what it is. According to BOA estimation my closing cost will be about $2500, while closing cost by Coldwell will be about $9000.

I preapproved by both. I do not know. I live in this country less than 3 years, can I negotiate closing cost with a lender?

Message Edited by wmarat on 12-11-2008 05:52 PM

[Anonymous]

(1) What about in the same zip code (a similar size house and lot) as a comp.  Also - look at what prices were in 2002/2003... we are at about those levels right now.  Not scientific, but accurate.

(2) Okay, CB is probably quoting points (which is why the lower rate) - so ask them to match the BOA in costs... and I seem to remember a low cost loan from them.  I would need to know what is on both GFEs to know for sure (these are very educated guesses though) BOA may have a concession already calculated in and the CB may not.  I can't be sure w/o seeing the GFEs.

(3) And yes, you can ask the seller to contribute to YOUR closing costs (average and acceptable is about 3% of sale price but varies with developemnt and what the loan program allows)  Language is something like Seller will credit 3% of sales price at closing  to buyer to assit buyer  with his closing costs which will include, but is  not limited to,  orig fee, pre-paids, points, inspections, etc.

[anca21bi]

wmarat, can I ask what are your fico scores?

[wmarat]

Thanks for your reply.

What GFE stands for?

Is there any resourse to check prices in 2000-2005?

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@Anonymous wrote:

(1) What about in the same zip code (a similar size house and lot) as a comp.  Also - look at what prices were in 2002/2003... we are at about those levels right now.  Not scientific, but accurate.

(2) Okay, CB is probably quoting points (which is why the lower rate) - so ask them to match the BOA in costs... and I seem to remember a low cost loan from them.  I would need to know what is on both GFEs to know for sure (these are very educated guesses though) BOA may have a concession already calculated in and the CB may not.  I can't be sure w/o seeing the GFEs.

(3) And yes, you can ask the seller to contribute to YOUR closing costs (average and acceptable is about 3% of sale price but varies with developemnt and what the loan program allows)  Language is something like Seller will credit 3% of sales price at closing  to buyer to assit buyer  with his closing costs which will include, but is  not limited to,  orig fee, pre-paids, points, inspections, etc.

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[wmarat]

EX 722, EQ 728, TU 726

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@anca21bi wrote:

wmarat, can I ask what are your fico scores?

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[Anonymous]

GFE = Good Faith Estimate or a HUD-1  it lists alll your 'costs' in purchasing

Tax Records can get you purchase prices in any year... might take some time to wade thru them

[ShanetheMortgageMan]

The way interest rates & fees work on mortgages basically is the more you pay in fees, the lower your rate should be.  That is why BofA's offer has low closing costs/high rate, and CB's has low rate/high closing costs.  Which is better would depend on what your plans are with the home & mortgage, and what will cost you less over the term of your plan.

A $300,000 loan amount at 7.3175% the payment is $2060.28, at 5.5% it's $1703.37, or a $356.91 difference.  Let's say your plan was to stay in the home & mortgage for 5 years, and the difference in fees is $9,000.  5 years, or 60 months, of $356.91 is $21,414.60.  Even factoring in inflation, you are going to be well ahead if you take the lower rate/higher fee offer in that example.  Now let's say you were only going to be in the mortgage for 2 years, then you'd only have 24 months of $356.91 savings, or $8,565.84 you'd save in payments over that time, and that's not even equal to the $9k more that loan costs in fees.

The best way to compare apples to apples is ask for GFE's for various interest rates - ask both BofA & CB for GFE's with the rates of 5.250, 5.375, 5.500, 5.625, etc. and then you know what the exact differences are without having to factor in the rate as well.

Lastly, check out the many stickies in this section and search/browse other threads, there is a lot of info you can education yourself with about mortgages.