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     | Tuesday, April 24, 2001 - 06:26 am  I'm looking to purchase a house by the end of summer. Hubby and I have pulled our three credit reports and corrected any incorrect information. I would like to get pre-approved before house hunting 1) gives me an idea of how much I can afford and 2) sellers usually take pre-approved applicants more seriously (so I have been told). The problem...I have no idea how the pre approval stage works. The mortgage brokers I have spoken with by phone all want us to come in with our W2s, paychecks, 1040s, etc. Should I go to one broker or more? During this stage is this where I should ask for a copy of the wholesale rate sheet? How about a good faith estimate (I'm pretty sure I ask for this after I find a home, but am not sure)? Sorry for all the questions I'm new to all this. Love the site. Dani
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| | Tuesday, April 24, 2001 - 05:41 pm Dani, As a broker, i will tell you to find one that you are comfortable with. Shopping with many will most likely end up having you creditr pulled all over town. Getting the wholesale rate sheet is a waste at this point as you are ways out before you actually ready to lock in a rate. What you need to do is decide what you feel is fair compensation and negociate a fee with the broker. For example, you may be looking to purchase a $100K house. Your credit is excellent, you have money for a down, job time is great, your a slam dunk. Get somebody to do it for .75% to 1.25%. As the challenges increase so shoudl the brokers compensation. What you negociate should be the total compensation including any yield spread premiums. For more info on this search the site www.hud.gov for broker contracts or visit www.mtgprofessor.com As for the pre-approval. Can't be done without w-2',s paystubs, etc. If you must shop, pay one broker for the credit report and GET A COPY while your are there. A 3 bureau report should run about $13-$15 with scores. Then take this around to others and see what they say. Don't let them pull a new report or submit it to anyone who would pull a report without your permission. Ask all of them to provide you with a GFE and a brokerage contract. Also, this site has some good info on getting pre-approved and I'm sure Christine will point you in the right direction.
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| | Tuesday, April 24, 2001 - 07:18 pm Dani, here's the discussion on multiple appliactions. When I still brokered loans I would NOT accept applications from borrowers who wanted to apply with other lenders .... why work without pay? You probably read Shopping for a mortgage since you mention the wholesale rate sheet. I would definitely ask for it at the time they give the quote. The Good Faith Estimate is totally worthless, see Begging for help in Arizona. You need to find a broker who is willing to put THEIR profit in writing BEFORE you apply. When I brokered loans I would not quote until I saw the completed application and credit reports. I couldn't quote until I could estimate how much work a loan will be. Example: Someone has their W-2s and paystubs, had only one employer in the last 2 years, the credit is good, they have the cancelled rent checks for the last 12 months, the ratios are 30/36 and they have 20% down. That's a LOT less work than doing the loan for someone who has to order documents from the IRS and bank, worked 4 jobs, got divorced last year, has a number of lates and collections on the credit, and only 3% down with ratios over 40%. Just because someone offers to do your loan for $500 doesn't mean that's the way to go. So many clients and readers lost literally thousands of dollars and/or the home they wanted to buy because the broker was cheap/lazy/incompetent ... whatever. You need to find someone who you feel comfortable with, who can explain various programs, will prepare a good loan package, AND who will put their profit in writing. Not at closing, when you don't have a choice, but BEFORE you apply. I was going to recommend www.mtgprofessor.com, but that site was down all day, there were listings of brokers who use the upfront mortgage contract. I highly recommend that you print out the Quote Request, try to get some answers over the phone before you set up appointments. You don't have to ask EVERY question, but if a broker refuses to disclose their compensation you can end the conversation right there. Offer to fax your credit reports and completed UNSIGNED application (write "do NOT run credit" in the signature space.) If someone sounds really good, set up the appointment. Getting you to come to the office is the number 1 goal of any sales person. As I learned in the mortgage class, just about everybody will LOW QUOTE to get that appointment set up. Once in their office, they will most likely try to get your signature on the application and run your credit. One very good reason is that they'll need to see your 3 scores. Do NOT do this unless you really want to work with that broker. I recently had a client who ended up with 7 inquiries after applying with 3 brokers. I wished this was easier, but unfortunately you just have to put in the hours to learn everything yourself or you'll most likely end up with a lot of problems like many of the readers who posted here.
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| | Tuesday, April 24, 2001 - 07:28 pm Just saw Don's posting and he said pretty much the same as I did, just shorter and without the links for all the reading. The reason why I mention the wholesale ratesheet is that it substantiates the broker's quote. Say everybody quotes you 8% with 1 point for the broker compensation. One broker quotes 7.5% because he has "special lender relationships." I'd ask for THAT rate sheet for sure. Also, I did not base my fee on a percentage at all. I was looking for $1,500 to $2,000 per "average" loan. It so happened that many of my loans were around $200,000. It made NO difference to me whether that loan was $50,000 or $2,000,000. It was the EXACT SAME WORK for me.
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| | Wednesday, April 25, 2001 - 03:22 am Thank you for your advice Don and Christine. I think I understand a little bit better. I will definitely check out the sites both of you suggested. Take care. Dani
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