Real Estate Closing Costs--how to shop for a loan

[jay santos]

Originally Posted by BlueHair

I think cheap loans can be found. If you paid 1/2 point total, you got a screaming deal. Mortgage companies could not operate on that margin if they gave that deal to everyone. Most companies need at least 2 points to stay in business. My point is most mortgage companies will offer 1/2 point origination to get you in the door, then charge more for something else to make up the difference.

To me not hiring a realtor is like changing your own oil or fixing your own car. It can be done, but why bother? Sure, you have to pay a mechanic $50 an hour (which seems steep), but it would take me 10 hours to do what he can do in one. Like I said, if you know what you are doing, go for it. I think the average person would be better off hiring a professional.

Of course mortgage companies will offer you 1/2 point origination to get you in the door and charge you something else. That something else is called yield spread. If someone goes into the deal fulling understand my original post, they won't get taken for that extra 2 points. If you feel guilty making your loan officer do your loan for 1/2 point, then give him one point or even two points. The principle is to agree in advance and not let him take you unfairly. Loan officers can't make a living on 1/2 point because their volume is too low. It only takes 8 hours of work to close a loan. As a consumer, I'm not excited about paying someone six grand for one hard day's work.

As for paying a realtor: I wouldn't try to sell a home on my own. The MLS sells your home quickly and for more than you'll make selling your home on your own on average. There are major anti-consumer dynamics in that industry, but for now there's not much the consumer can do to fight it.

[MikeWaters]

Jay I thought there were some discount broker services that allow your home to be on MLS for a lot cheaper.

[jay santos]

Originally Posted by MikeWaters

Jay I thought there were some discount broker services that allow your home to be on MLS for a lot cheaper.

I'm sure there are some options available. I know some realtors will ignore those listings out of principle. I think the best you might find is to cut your commission from the standard 6% down to 4% by finding a listing agent who will keep 1% and offer the buyer's agent the standard 3%.

[BlueHair]

Maybe I should use these money saving principles in the rest of my life. When I go to pay my restaurant bill - Ask the owner to see the actual prices of the food, figure the actual time the chef spent in cooking my food, then negotiate what I will pay. I figure I could also save some cash on the tip. $60 dinner X .20 % = $12. The waitress spent maximum of 10 minutes on me. That's $72 per hour. What a rip off! I could have gotten that drink refill on my own. Man, restaurants screw you. They spend way too much money advertising. Their volume must be too low. Too many restaurants. Hopefully the market will correct itself and drive some of these restaurants out of business so we can have lower prices. We all know less competition equals lower prices.

[MikeWaters]

Originally Posted by BlueHair

Maybe I should use these money saving principles in the rest of my life. When I go to pay my restaurant bill - Ask the owner to see the actual prices of the food, figure the actual time the chef spent in cooking my food, then negotiate what I will pay. I figure I could also save some cash on the tip. $60 dinner X .20 % = $12. The waitress spent maximum of 10 minutes on me. That's $72 per hour. What a rip off! I could have gotten that drink refill on my own. Man, restaurants screw you. They spend way too much money advertising. Their volume must be too low. Too many restaurants. Hopefully the market will correct itself and drive some of these restaurants out of business so we can have lower prices. We all know less competition equals lower prices.

are you aware of the number of restaurants that go out of business every year?

THe great thing is we now live in the information age, and people that profited based on other people's ignorance, and lack of access to information, are going to be in a world of hurt. Realtors are among those people.

[jay santos]

Originally Posted by BlueHair

Maybe I should use these money saving principles in the rest of my life. When I go to pay my restaurant bill - Ask the owner to see the actual prices of the food, figure the actual time the chef spent in cooking my food, then negotiate what I will pay. I figure I could also save some cash on the tip. $60 dinner X .20 % = $12. The waitress spent maximum of 10 minutes on me. That's $72 per hour. What a rip off! I could have gotten that drink refill on my own. Man, restaurants screw you. They spend way too much money advertising. Their volume must be too low. Too many restaurants. Hopefully the market will correct itself and drive some of these restaurants out of business so we can have lower prices. We all know less competition equals lower prices.

Someone making $72 I can live with. I've paid plumbers $200 an hour, which is tough, but sometimes you're stuck. I paid a doctor $1,200 for a 20 minute surgery. That's tough, too, but what can you do? I'm not going to pay a loan officer $6,000 for a day's worth of work if I have other options.

[Donuthole]

So, as someone who is going to be closing on a house within the next 2 weeks, your recommendation is what?

Start calling lenders and asking them if they'll do my loan for 1/2 a point?

[jay santos]

Originally Posted by Donuthole

So, as someone who is going to be closing on a house within the next 2 weeks, your recommendation is what?

Start calling lenders and asking them if they'll do my loan for 1/2 a point?

You're closing in two weeks or getting ready to make an offer in two weeks? Closing in two weeks, you must already have your loan started, I would think. If you're getting ready to buy, I would suggest just what I said in first post in this thread. Tell him you have great credit, all the documentation ready, and this is a slam dunk loan for him. You're going to call people to see who will give you the best deal. Tell him you understand yield spread and want to go over the good faith in detail. Tell him you're calling 4 or 5 loan officers to see who will give you the best deal and let him offer an amount. If you get a guy doing it for a point, the next guy might offer to do it for a half point.

[Donuthole]

Originally Posted by jay santos

You're closing in two weeks or getting ready to make an offer in two weeks? Closing in two weeks, you must already have your loan started, I would think. If you're getting ready to buy, I would suggest just what I said in first post in this thread. Tell him you have great credit, all the documentation ready, and this is a slam dunk loan for him. You're going to call people to see who will give you the best deal. Tell him you understand yield spread and want to go over the good faith in detail. Tell him you're calling 4 or 5 loan officers to see who will give you the best deal and let him offer an amount. If you get a guy doing it for a point, the next guy might offer to do it for a half point.

We built through a builder, but we're not required to use a specific lender. We have been working with the suggested lender from the builder, but we've had enough problems and difficulty in communication with them that I'd like to look elsewhere. Is it possible to go to someone and get a loan and close on it in a 2 week time period?

[jay santos]

Originally Posted by Donuthole

We built through a builder, but we're not required to use a specific lender. We have been working with the suggested lender from the builder, but we've had enough problems and difficulty in communication with them that I'd like to look elsewhere. Is it possible to go to someone and get a loan and close on it in a 2 week time period?

Possible. But probably takes away your negotiating position.