Expert: liznarr - 8/4/2009

Question
QUESTION: Is it better to go to a bank or mortgage company when securing a mortgage?

ANSWER: Hi Judy,

“Better,” to me would be whichever one will give you a better rate and lower closing costs.  You mentioned mortgage “company;” but just so you know, a mortgage “broker” is usually a third party brokering a deal (between a borrower and a mortgage COMPANY) and could have extra charges built in their package somewhere, simply because they have to cover their expenses and make a profit.

Be sure to compare apples to apples, making sure that you ask all the right questions, including:

1.   Rate
2.   Origination Fee
3.   Any discount points
4.   Closing Costs (related only to the loan; your attorney/title company charges should be the same regardless of which one you use for your mortgage loan)
5.   Are there any, what Realtors refer to as, junk fees such as an underwriting fee or a document prep fee.  Ask the mortgage company or bank what ALL their fees will be.

You can ask for a Truth in Lending disclosure in advance of a transaction when shopping lenders, and also a good faith estimate.  You can go to www.google.com and type in “Truth in Lending disclosure” or “good faith estimate” in the search box and read about these disclosures, which details your charges with a lender.

You may find that some companies will offer NO origination fee, but could have a higher rate.  You would have to do your own calculations in the offset of a potentially-higher monthly mortgage payment with no origination fee to see how long it would take to “make up” the savings of the origination fee in monthly payments over the life of the loan.

Origination fees are negotiable, but many buyers may not realize that.  When shopping lenders, ask the question:  Will they negotiate their origination fee?  Normally, an origination fee is one percent of the mortgage amount, NOT the sales price.

Good luck to you, and feel free to write again if you have additional questions.

Regards,
Elizabeth

---------- FOLLOW-UP ----------

QUESTION: If your credit score is under 700 is it possible to get a 30 fixed loan even if you don't have 20% downpayment?  (we probably have 10% down)

Answer
Judy,
Your follow-up question should properly be addressed to a lender, as I do not try to stay up-to-date with their credit scoring and requirements.  

Sorry I’m not much help with this, but any good lender can answer this for you.

Regards,
Elizabeth