Mortgage - best rates & recommendations (Minnesota)?
I'm in the process of buying a house in the Minneapolis/St.
Paul area (Minnesota), and it's getting time to choose a lender.
Does anyone have recommendations?
Some background info: I'm looking at houses in the 100-150K
range, although I could afford more if I choose to do so. My
credit is perfect, I don't have any long-term debt and my only
short-term debt is one credit card I pay off in full every
month. The lenders I've talked to so far have described me as
a 'drop kick'; since I won't have any trouble qualifying, I
want to focus on finding the best deal. I'll primarily focus
on rates and closing costs, but will look at the big picture
before making a final decision.
I'd like to go through preapproval at little or no cost.
I've been pre-qualified, but haven't decided on a lender yet.
I'd rather not put up the $3-400 most places want committed
to get the ball rolling, in case the purchase doesn't go
through or I get transferred during the process.
The two leading candidates right now are:
My credit union, which has lower rates across the board than
other bankers I've talked to, only 1/2 percent origination fee,
and recent rates of 8.00% no pts 30 yr fixed, 7.625 no pts 15
yr fixed. (Some other rates are $275 appraisal, $250 underwriting
fee, $250 closing fee.) I could get a partial rebate going
through my credit union and a certain realty company. I also
could work it out to pay my own property taxes and insurance
instead of having to escrow. Another good point with the credit
union is that they sold 0% of their loans last year; I've
always been very happy with their service. My closing costs
(including escrow reserves) would probably be under $3000 on
a 120K house.
Second option is American Finance on the net, where they
have good rates, more flexible financing options and a fixed
fee to cover document preparation fee, underwriting fee,
processing fee, flood certification fee and tax service fee.
They claim to not charge any origination fee. Their closing
costs would likely be slightly lower than my credit union, but
I'm still leaning towards the credit union. Recent rates at
American Finance have been 8.00% no pts no origination fee
30 yr fixed, 7.75% no pts no origination fee 7/23, 6.00 %
no pts no origination fee 1 yr ARM.
I've just been through this process myself, and can make some general
observations and recommendations:
Undoubtedly, your credit union will offer better terms than almost any
other mortage company. On the other hand, I had luck with choosing an
arbitrary lender (happened to be recommended to me by my realtor) and
then leveraging a better deal by doing research and comparative
shopping.
Of course, lots of things are possible if you "get creative"... our
mortgage company, Inland Mortgage, responded well to a wide variety of
contingencies. We bought in the 130K range, and found some interesting
possibilities with FHA ARMs (the lynch pin being a substantial
downpayment to qualify for FHA, which has a ceiling of circa 116K).
The more I shopped around, the less there seemed to be substantive
differences in terms... I began to lose interest in nickle-and-dime
differences on such a huge loan, which (I suppose) is precisely what
they want you to do....
(We tried all the major local banks, and found them to be pretty much
identical in terms and costs... TCF, Midway, Edina Realty, Inland
Mortgage, and others. But we didn't have a lot of options for creative
financing, either).
To get the ball rolling, you'll need to at least pay for a credit report
($55-60)and if there is already a property in mind, you'll need to pay
for an appraisal ($275-$300). These fees are charged by outside agencies
(credit bureau and the appraiser) who expect to be paid whether you
settle or not, thus any bank that doesn't wish to go broke is going to
ask you to pay for those up front.,
Some places do want to charge a commitment fee of some kind specificly
for the reason you're trying to avoid paying one; processers and
underwriters need to be paid. If you decide to not get a loan, those
people still need to be paid for the time spent. Your asking for
something but not willing to pay for it?
pre-qualifications are usually free. pre-approval is a misnomer, either
your approved or your not. Approved means the loan has been fully
processed and the underwriter has reviiewed and approved it.
It sounds as if you already know the answer. Your happy and confident
with your credit union, so why go elsewhere? Different fees go by
different names. You'll run into th eappraisal fee anywhere. I'm not
sure how you get any breaks by using one real estate company over
another just because of your bank, kickbacks are very illegal. The
closing fee is simply a title/settlement fee. The u/w fee is in line if
it's the only fee.
The origination fee is simply the name of any points up to the first
point. Anybody can offer no origination fee, simply by having a slightly
higher rate. As for flexible finance options, you're only getting one
type of loan, so unless your CU doesn't offer it stay with them. As for
escrows, most places offer no escrows with 25% down.