Ren…
Unfortunately, perhaps you have been talking to the wrong people for your information.
You have got to understand that “BANKS” are often the worst place to get mortgage information and loans from. BANKS are nothing more than mortgage brokers, unless they are doing portfolio loans.
Portfolio loans carry a lot of risk. A few of the largest portfolio lenders failed. (WAMU, DOWNEY SAVINGS, WACHOVIA-WORLD SAVINGS)
You are often dealing with an uneducated BANK employee who knows nothing more than what they are told in sales meetings and sit at a computer screen offering products/information that ONLY that BANK offers.
Many of the employees have a crappy credit score and have never qualified for a loan themselves. They often give out wrong information because they dont understand a question.
They may tell borrowers that the BANK doesn’t charge any points/fees. This is what they are told to say. It’s a LIE. Many people believe this and think that they are getting a free loan.
In reality the borrower is paying a higher rate and higher monthly payment FOR THE LIFE OF THAT LOAN.
In the long run, the no point loan can cost tens of thousands of dollars.
What they don’t often don’t know is how to offer any sound advice.
GSE’s set the requirements for loans for 15/30 YR fixed. (+ others)
Loan pricing is a matrix table, based on credit score, equity and property type. Pricing can also be higher when you take cash out on a REFI OR pay off a 2nd or HELOC.
Minimum down payment for rental property is 20% down. At origination, with 20% down you will pay a pricing hit of 3.00% of the loan amount more OR take a higher interest rate than if it was a primary residence.
With 25% down the pricing hit drops to 1.75%.
It doesn’t get any better than that.
There are addtional pricing hits for 2-4 unit properties.
It is possible to currently get 5% rates on rental property, by paying the hits up front and having a lower rate/payment fixed for 30 years. Many don’t know/understand this.
Many “mortgage brokers” are just as ignorant as bank employees. To generalize that either is the way to always get the best loan is just ignorant.
(So is shopping by rate)
Most BANKS are nothing more than “mortgage brokers”
Even if the service loans, they don’t own the loans.
Getting a “no cost” loan from a bank was the worst financial decision of their lives that many people made. Bad mortgage advice can be really expensive, (even though it’s free)
Uneducated consumers dealing with uneducated sales people for the largest transaction of their lives helped contribute to the biggest bubble in the history of the world.
The govt allowed it to happen and now wants to pretend like they can fix it…. HLS
