Loan terms - what do I need to ask?

Question

I'm no expert when it comes to loans.  Below is what I got from my credit union.  Is there any thing below you would ask more questions about or be suspicious of?  Seems like relatively good terms to me, but I don't know if there's something I'm missing.

Our rate today for the 30-year fixed is 6.125%.  With a credit score over 700 and 10% down (20% for jumbo), you also qualify for our 15/15 adjustable-rate mortgage.   This is a 30-year loan with a fixed rate for the first 15 years and will adjust based on market rates on year 16.  The rate today for the 15/15 ARM is 5.125%.

• Since we are a credit union, we are exempt from intangible taxes.  An intangible recording tax is a borrower closing cost calculated at the rate of $1.50 per each $500.00.  For example, with a purchase price of $500,000, you will save $1,500 in closing costs.
• We also pay about $200 in other fees including credit report fee, flood certification and real estate tracking fee.
• Our origination fee is 1% of the loan amount and it is capped at $5,000.

Dave Skow · Answer

@Doug Davis...1) ask them if the closing fees  include  100% of the  costs  (  appraisal / title insurance / settleement  are these included )  2)  ask for  several other  rate  / fee  options ..you should be able to pay  more in loan fee to buy the rate down  if interested  3)  if you want to put  less down - you should be able to get a higher loan amt ...max  is  85% loan to value  fvor many lenders  4) if you are  emailing specific loan officers - great ...if you are   simply emailing a   generic  website at these  credit unions -  you likely  will not get a  detailed reply ....I would recommend  contacting  these credit unions and any other  people you are  shopping  via  phone  or  to  their direct ermails .....no need to  get  8 quotes ...3 or  4  should be plenty

John O'Leary · Answer

Hey Doug,

What purpose do you intend to use the loan? Is it for your primary residence, a long-term rental, a short-term rental, or something else? Traditional loan products typically offer lower interest rates but require qualification based on your Debt-to-Income (DTI) ratio. To secure a traditional loan, you will be asked to provide various documents, including tax returns, proof of employment, and pay stubs from the last 30 days, as well as W-2 forms covering the past two years, among others.

On the other hand, a DSCR loan is designed for investors seeking a 30-year fixed-rate mortgage but do not meet the DTI requirements or wish to avoid extensive paperwork and bureaucracy. With a DSCR loan, qualification is based on the property's income and payment capacity, and the interest rate is determined by your credit score and Loan-to-Value (LTV) ratio. This option offers flexibility for investors who prioritize property cash flow and wish to streamline the loan approval process.

Derek Brickley · Answer

Hey Doug!  I think there is more behind this.  Totally agree with Chris that getting a loan estimate is a great step to compare.  Rates/fees are almost always a trade-off, so seeing a side-by-side comparison may be beneficial.

Chris Watkins · Answer

Doug,

What state are you in? I'm not familiar with 'intangible taxes', but that may be specific to your location. As John said, there are a lot of variables that you haven't listed here that will make a big difference on your loan terms. I've found the best way to compare apples to apples is to give a lender a scenario (house listing or price & DP amount) and have them put together an initial Loan Estimate that will detail out all the expected fees and closing costs. Know that rates change more than daily, so the estimate is just that, but you'll be able to see where lenders differ in their costs pretty easily. Some may advertise lower rates or origination, but charge more discount points to get there, so an LE will spell all of that out plainly.

Good luck!

Jeff Chisum · Answer

Is this for a primary residence?

Erik Estrada · Answer

Pretty solid terms

Dave Skow · Answer

@Doug Davis-  contact  several lenders  on the same day ...use the  same  criteria ( purchase price / loan amt / loan program / credit score ) ...provide these to lenders - ask for several  quotes  from  each lender and  ask them to  send  something to you in writing so you can review ...make a  decsion  after  reviewing all options  ....fyi - many lenders  will only mention their costs and not mention other 3rd party costs that are  involved with a transaction ...this is why getting a full  loan cost worksheet upfront is important  so you get  educated

Doug Davis · Answer

So, it looks like they sent me the wrong info via email, even though I made it clear I was looking for a loan for an investment property. Going through the application process, it showed these terms:

$300,000 loan:

25% down minimumRate 7%APR 7.15Points: 0.25%Closing Fees: $6,130.50Payment: $1,496.93

Not sure what the disconnect was.

Thanks for the advice.  I will try to get all of the information they can provide up front and look at all the possible options.So far, I emailed about eight credit unions in the area.  For most I was either not eligible for or they didn't have a product for me.

For this loan, it would be a house in Georgia, long term or mid term (no short-term).

Loan terms - what do I need to ask?

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