I am a 25 year old female looking to purchase my first townhome for $70,000 in south florida. I am putting down 20% and getting a 30 year fixed rate conventional loan. I got preapproved and a GFE today with Guaranteed Rate for 5.3% interest rate. I heard they are a good mortgage company through referrals and they do not charge fees or discount points. I had a quote from a mortgage broker affiliated with Wells Fargo and the closing costs were more but he gave me a 5.1% interest rate. However the monthly payments were only about $13 difference in price. The Wells Fargo guy is not willing to work with me and told me to shop if I want to. Everyone is telling me (family and friends) that since this loan is so small ($56,000) my monthly payment and closing costs will not make much difference in price. Guaranteed Rate is charging me less for appraisal fees and some other fees when I compare to the Wells Fargo rate but who knows. I barely understand this stuff and am not paying an attorney to look at it. I’m not sure what to do. I was going to try getting a quote with Bank of America but I heard they don’t process anything in house so the closings are usually delayed and they charge discount points. I am new to this and don’t really understand any of it so any advice would be much appreciated. Should I use Guaranteed Rate Mortgage Co. or keep shopping? My closing is Feb 28. We are already under contract.
Asked by:girl1985
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please poke around for a much lower rate than that. use GFE info to make them all crawl to their knees.. pick a much lower fixed rate.
You pay for this loan somehow, and I do not care what BS they are shoveling, there are fees and closing costs associated with this loan. Ask to see a good faith estimate of what you are going to be up against with this Guaranteed Loan, which I have never heard of before clicking on your question.
Typically, the best deals are from local brokers and lenders, who care about you being happy and closing on time without hassles.
First, don’t confuse discount points and origination points. Discount points are an option that is available that permits you to “buy” a lower than par interest rate. You get benefit from this and you make the choice whether you want to do it. Origination points are the fee the originator or loan officer is charging to do your loan. Always compare rates at par (which means 0 discount points). Origination fees are like trying to compare a lawyer or doctor’s per hour price, some charge more than they are worth, some do little for what they charge and some are worth every penny they charge; you can’t really put a value on a service because it is very individualistic.
Your family is right, the small loan amount will mean that, unless drastically different, the interest rate is going to have only a small impact on your monthly pmt. Your best tool for comparison shopping are the Truth In Lending with its stated APR and total loan cost over the life of the loan and your Good Faith Estimate which lists the associated costs (as of Jan 1, legal measures have been taken to prevent lenders from overstating or understating loan costs on this form). Page 2 of the GFE will provide the items you are being charged, some will be the same no matter what lender you choose such as transfer taxes, court stamps, recording fees…bu the others are what is negotiable. Only the “optional” fees are used to calculate the APR on the TIL so that is how you can get a true interest rate. Also, the new form for the GFE has a 3rd page which gives more info on comparison shopping. When you look at the Wells Fargo annual percentage rate (APR) it will be higher than the Guaranty one even though they have a lower stated rate because of those higher fees.
I now do independent auditing for mortgage companies, but I know this stuff in and out. If you have more questions or problems, go ahead and email me and I will help you. I have had a couple of nervous firat time buyers do that. Go to my info page and Yahoo will send it through.