Mortgage Shopping
I’ve only had two mortgages in my life and they were both for small amounts of money and during pleasant financial times. Since the sub-prime market collapsed several months ago though, getting a loan has become much, much more difficult. My credit is great and I have a strong cash position, but even so, getting a jumbo loan is seemingly 10x more difficult than it has historically been.
Shopping for mortgages is not a pleasant process either. Most companies want you to give them all sorts of personal information before they even hint at what rates they can get you. Even places like Lending Tree that purport to streamline the process are little more than information-selling lead-generators that put your personal information in hands you may not be comfortable with.
One service that seems to stand above the rest, however, is the recently introduced Zillow Mortgage Marketplace. The great thing about Zillow is that you simply enter as much or as little info and you want, and mortgage brokers simply send you offers through the Zillow website. They don’t know your name, your contact info, or anything else you may not want them to know. They only know what you decide to tell them. In my case, income, net worth, desired loan style, and a few other things. Within an hour of filling in some info, I got ten mortgage offers via my Zillow inbox, at least a few of which would have been great to go forward with.
In the end, since I have such a small closing window (July 31st), I felt more comfortable going with a local institution who underwrote their own loans. I went with Wells Fargo and loan officer Steve Altchech, upon the personal recommendation of my real estate agent (UPDATE: 5/30/09: I no longer recommend Mr. Altchech). He got me the following terms, which are crazy-good in this tough market. Even my previous mortgage guy who wanted my business again said “Take it!”:
- 1st Mortgage: 5/1 ARM at 5.85%
- 2nd Mortgage: HELOC at 4.75%, indexed to prime minus .25%
- No points and no fees other than title, escrow, etc.
Once the mortgage market settles down again, I can think about refinancing to a fixed mortgage, but for now, I’ll take the cheap money.
All set to close on the 31st!
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I went to M&I and applied for a construction loan so that I can track all the expenses with building my new house. The have great rates and will roll the construction loan into a permanent loan without incurring any additional fees. Their quoted rate was prime -.25% for a 5/1 arm.
I thought you must get a “Construction” loan. Will they allow your home to be demolished and then rebuilt with that loan? I guess I’m not up on all this, though my wife and I are moving forward with a new building ourselves. Our builder has talked about tracking the expenses we have already spent (e.g. design, permits, reviews, etc.) so that this information is used with a construction loan.
Are you using a construction loan? If not, how can you do that?
1badboy: I’m not getting a construction loan, mainly because they are much more of a hassle. You need to document everything you are going to spend money on and then the bank doles out funds step-by-step along the way. If I had to get a construction loan, I would, but since I don’t, I’m not going to. Also, not sure about the specifics of demolition with such a loan, but I know you can do it.
Hi Mike. The reason I ask is that my wife and I, as I mentioned in my earlier post, are near the beginning of a new home construction project. I *think* we have enough money to complete the project, but based on all things I’ve read, we will most likely be a bit short (maybe not). There are some areas we can cut back on or even leave unfinished initially (e.g. basement) if needed. But my dilemma is that we currently have a loan on our home. Our project calls for complete demolition of the building and garage before building the new home with garage (foundation and all as it is more than 80 years old). Plus the orientation of our home when built is perpendicular to the street in front of our house and we are changing that so the house is parallel to the street. I’ve also been told that home loans have provisions to “not diminish the value of the home”. With that in mind, our project will ultimately “increase” the value of our home. But it’s the process in the middle (house gets demo’d *before* new structure gets put in place) that concerns me. I had one refinance guy at Countrywide tell me that his view is that we are increasing the value, so he didn’t think it was an issue at all. I also had a neighbor (general contractor) tell me that he thought that would put us at odds with the bank and they *might* call our loan (I guess if they find out). But I [over] think most things, so I have wondered about this a lot. After reading your initial post above makes me think you currently have a loan on your home too (maybe I’m wrong about this). I wondered if you had more information about this topic that you could share. I know your situation is a bit different than mine in that you are retaining your foundation, and maybe that makes a difference – we cannot do that.
1BadBoy: Ok, yes, I’m in a similar situation and I wondering the same thing, so I called my mortgage guy at Wells Fargo (where my loan is) and asked him that exact question. In other words, am I *allowed* to demolish my house considering that the bank technically owns it? He said “yep, no problem”… but I would *definitely* make sure your bank feels the same way before doing anything.
Hi Mike. I’ve been reluctant to call Wells Fargo as I wasn’t sure what their reaction would be, and I don’t have a mortgage guy with them. We have our loan with Wells Fargo, but it was handled by a broker. I did ask the broker when we got our loan about doing “major” remodeling (I said we might go down to the foundation, but I did not say we would remove it), and through the broker’s interaction with Wells Fargo I was told that it would not be a problem. However, I still wonder. But since we are at the same institution, I am thinking it could be okay. Maybe I’ll make a call to Wells Fargo’s loan department to ask the question without providing my name, but I’m not sure if that would do much good, though it might ease my consious :-). I’m not sure this would be appropriate, but could you share your Wells Fargo’s mortgage guy’s name and number (though probably not through this comment method)? I still would not want to share my name, but maybe he could explain their loan provisions regarding remodeling/demo construction.
This was a great help to me so thanks for the advice!