shopping for a mortgage
8 Replies
Darryl Jennings
Rental Property Investor from Winthrop, MA
posted about 1 year ago
I'm going to be purchasing my first property soon and I'm currently shopping for a mortgage. What are the top or most important questions to ask a mortgage specialist? In addition, how many days can you get pre approvals from multiple mortgage companies and have it count as only 1 credit inquiry?
Chris Mason
(Moderator) -
Lender from Oakland, CA
replied about 1 year ago
A quick google search tells me that mid to higher priced homes for that market is in the independent mortgage broker sweet spot.
TLDR:
The theory on why a direct lender is best will prove accurate if you're looking for the cheapest home in that area, and you have to do the old fashioned shopping to get a good deal. Note that all the LOs on this forum in Ohio and Nebraska, etc, are mostly direct lenders. That's why, they are doing $50k and $125k loans, loan amounts drive revenue but # of loans drive expenses, so you need the economy of scale of those expenses being spread out as widely as possible, here you WANT your loan lumped in with a bunch of $400k and $650k loans, they are subsidizing you.
The theory on why an independent mortgage broker is best will prove accurate for mid to high range homes in the area, no need to do the shopping yourself. The loan amounts will drive the wholesale pricing, and flat per loan costs will be minimal relative to those typical loan amounts, short of cross selling this will typically be the best route (as a "median" customer, you really aren't seen by the big banks as worth taking a hit in the mortgage division to cross sell you other financial services, you're just a "median" customer and a number to them). Notice that almost every LO on this forum in California is a broker? This is why. And also note that none of us are licensed in other states, a bunch of people calling me from Nebraska for $75k loans would start to screw up my economy of scale and wholesale relationships, so "coincidentally" I don't maintain licensing in such areas to simply nip that problem in the bud. It looks like your area, at a casual glance, has more in common with the populated areas of California than it does with rural Montana, in terms of what we're talking about here.
The theory on why calling a big national bank for the best deal will prove accurate for the top 10% of sales price ranges, true luxury homes in that area. Big bank will break even on the mortgage to earn your loyalty, cross selling is now a factor. 20% down on a $1m home given the 'normal' sales prices in the area, no one's going to touch the big banks, just be ready to be spammed by for 10 million other financial services you might not need or want.
Alex Olson
Real Estate Agent from kansas City, MO area
replied about 1 year ago
@Darryl Jennings I would suggest searching for two local mortage companies that have completed loans for friends or family. Then, I would also suggest finding a very local bank that is more classical in nature. Having these three as resources will guide you into what is right and which bank is the correct way to go. If you want further, more in depth advice, just PM me.
Account Closed
replied about 1 year agoOriginally posted by @Chris Mason :A quick google search tells me that mid to higher priced homes for that market is in the independent mortgage broker sweet spot.
@Chris Mason Do you happen to know the answer to the following?
I'm selling a property that has 1,532' main house and a 960' outbuilding of brick that was used for HVAC repair. It has a bathroom, sink, water, electricity, AC and is being converted into a 3 bed 1 1/2 bath apartment. The buyer is a veteran, will live in the house and will rent out the apartment when it is completed which will be about 30 days after closing.
Will VA give credit for the outbuilding in it's appraisal?
If so, will it be treated as completed space ?
Comps are very hard to find.
Chris Mason
(Moderator) -
Lender from Oakland, CA
replied about 1 year ago
Originally posted by @Account Closed :Originally posted by @Chris Mason:A quick google search tells me that mid to higher priced homes for that market is in the independent mortgage broker sweet spot.
@Chris Mason Do you happen to know the answer to the following?
I'm selling a property that has 1,532' main house and a 960' outbuilding of brick that was used for HVAC repair. It has a bathroom, sink, water, electricity, AC and is being converted into a 3 bed 1 1/2 bath apartment. The buyer is a veteran, will live in the house and will rent out the apartment when it is completed which will be about 30 days after closing.
Will VA give credit for the outbuilding in it's appraisal?
If so, will it be treated as completed space ?Comps are very hard to find.
Credit, in terms of opinion of value:
It looks like it's being converted into an ADU. A detached ADU will not add to gross living area, but that's not a big deal since appraisers do not care nearly as much about price per square feet as the general public thinks, they basically don't care at all in reality, except maybe as a final sanity check when the appraisal report is otherwise completed.
The ADU will be treated as a "feature," like a hot tub or giant unicorn statue. In terms of the impact on value, that depends on how much more properties with that same feature sell for, compared to otherwise similar properties lacking that feature.
In Arizona, an outdoor unheated swimming pool will add more value than an outdoor swimming pool in Alaska, since an evaluation of market data will show that buyers are willing to pay a bit of a premium in Arizona, but not in Alaska (in fact, the market data might say that an outdoor unheated swimming pool HURTS value, in Alaska). In the Land of Oz, same thing, market data will likely indicate that giant unicorn statues add value in the eyes of lollipop guild (EDIT: lollipop guild was the chocolate factory movie, what were the little fellows called in Wizard of Oz???) homebuyers, but not so much in Oakland. Supply and demand. Using a silly example to demonstrate that the exact type of "feature" isn't relevant, the same logic applies no matter the "feature" type.
Credit, in terms of 'counting' projected ADU rental income: None.
Account Closed
replied about 1 year agoOriginally posted by @Chris Mason :Originally posted by @Mike M.:Originally posted by @Chris Mason:A quick google search tells me that mid to higher priced homes for that market is in the independent mortgage broker sweet spot.
@Chris Mason Do you happen to know the answer to the following?
I'm selling a property that has 1,532' main house and a 960' outbuilding of brick that was used for HVAC repair. It has a bathroom, sink, water, electricity, AC and is being converted into a 3 bed 1 1/2 bath apartment. The buyer is a veteran, will live in the house and will rent out the apartment when it is completed which will be about 30 days after closing.
Will VA give credit for the outbuilding in it's appraisal?
If so, will it be treated as completed space ?Comps are very hard to find.
Credit, in terms of opinion of value:
It looks like it's being converted into an ADU. A detached ADU will not add to gross living area, but that's not a big deal since appraisers do not care nearly as much about price per square feet as the general public thinks, they basically don't care at all in reality, except maybe as a final sanity check when the appraisal report is otherwise completed.
The ADU will be treated as a "feature," like a hot tub or giant unicorn statue. In terms of the impact on value, that depends on how much more properties with that same feature sell for, compared to otherwise similar properties lacking that feature.
In Arizona, an outdoor unheated swimming pool will add more value than an outdoor swimming pool in Alaska, since an evaluation of market data will show that buyers are willing to pay a bit of a premium in Arizona, but not in Alaska (in fact, the market data might say that an outdoor unheated swimming pool HURTS value, in Alaska). In the Land of Oz, same thing, market data will likely indicate that giant unicorn statues add value in the eyes of
lollipop guild(EDIT: lollipop guild was the chocolate factory movie, what were the little fellows called in Wizard of Oz???) homebuyers, but not so much in Oakland. Supply and demand. Using a silly example to demonstrate that the exact type of "feature" isn't relevant, the same logic applies no matter the "feature" type.Credit, in terms of 'counting' projected ADU rental income: None.
Thanks @Chris it's a little different than what I thought, but good information.
Pamela Sandberg
Realtor / Attorney from Phoenix, AZ
replied about 1 year ago
@Darryl Jennings : you can talk to lenders and get a general sense of who you are/aren't comfortable working with before allowing them to pull your credit. This will reduce the number of inquiries you actually authorize.
Elise Marquette
Lender from Tampa, FL
replied about 1 year ago
@Darryl Jennings 30 day span for the credit pulls to have it all be one- but I always tell my clients that a lot of credit pulls for a mortgage may make an underwriter wonder why you’re shopping around so much and if you’re having issues getting approved. We place a huge focus on service and customizing your mortgage to fit your needs and investment goals. I’m more than happy to connect you with our LOs in your area
Melvin List
Lender from Tampa, Florida
replied about 1 year ago
@Darryl Jennings I would always suggest getting at least one quote from an independent mortgage broker.