Money Matters
BG09
member
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
New Mortgage: What to ask the banks?
We are going to be signing on a mortgage for our new home soon, and know that we should "shop around" for a bank.
Many of the banks I've already talked to have the same interest rates so, in that case, does it really matter which one we go with if their interest rate is the same?What are the other questions we should be asking in order to help decide which bank we should go with?
Thanks for your help!
Re: New Mortgage: What to ask the banks?
Ask if the bank sells their mortgages if you care who you're sending your payment to. The terms of the loan doesn't change, but who you're dealing with might.
My first home loan was through Wachovia and within six months was sold to Chase. As far as I can tell, Chase doesn't sell their mortgages or at least has never sold any of mine.
Also, as about origination fees and points. Even with identical interest rates, these can cause you to pay more/less.
Agree with pp. Ask about closing costs/fees. Some waive certain fees, others don't. I agree that when we first applied for a mortgage, they were all approximately the same rate.
For me, our mortgage rep was awesome and that was so important to me. He really walked us through the process, as a first time home buyer we really didn't know that much about the process, the lingo, which option would benefit us (ex: paying for points = lower interest rate, but is that really worth it over the long run?). Having someone I felt comfortable wih and returned my calls/emails in a reasonable amount of time was great. Also someone who is organized. I had a friend who missed a closing deadline because her mortgage lender did not get a document to the title company on time. He is the guy we still call/email with questions throughout the years, and the guy who worked really hard to help us refinance in a kind of complicated situation. I know the interest rates and all of that are probably most important, but after that, I would definitely say the mortgage rep made a huge difference for us.I would argue that the mortgage rep was more important than our realtor, as we deal with him on an ongoing basis, as opposed to our realtor who we really just dealt with during the homebuying process.
Definitely find out what their practice is for selling the loans. I was under the impression that the very small local banks/credit unions typically sell the mortgages. We went with mid size bank, small enough (only in 2 states) that we don't have to deal with calling a customer service line (instead just call our mortgage rep who we know), but not so small that they sell your loan anyway.
Also, others may know more about this than me, but isn't it true you are supposed to compare APRs and not interest rates? I don't specifically remember why, anyone know?
And also the interest rates (or APR?) are important but also consider how long you'll have the loan (vs. selling the house or refinancing, etc.). If you don't think you'll keep the mortgage for the life of the loan (which I think would be rare to do), then having a low interest rates but high upfront costs (fees, buying points, etc.) may not be worth it, whereas if you keep the loan for a longer time, then the amount you save on a slightly lower interst rate may offset the higher upfront costs. On the other hand, you may actually pay less in the long run for a loan with lower up front costs and a slightly higher interest, if you don't keep the loan for that long. We took a slighly higher interest rate in order to "borrow points" (meaning, reduce the up front costs) when we originally took out the loan, and we refinanced 2 years later, meaning we saved money by taking the slighly higher interest rate in the beginning (and thus, lower out of pocket up front costs), since we only had the original loan for 2 years.
Moral of the story, the interest rate does not tell the whole picture.