Million Dollar Mortgage Pain

[one_muggle]

Rather than an orderly decline (in business, not rates) the mortgage market appears to be undergoing convulsions. It seems even the rational 20 percent down, fixed rate loans are getting a taste of the Cruciatus Curse.

(from http://www.cnbc.com/id/20107397)
So just for fun, I ran a search on a jumbo 30-year fixed rate mortgage today, for $500,000, with 20% down on my imaginary home, no points on the mortgage. Here’s what I found:
Wells Fargo: 8%
Countrywide: 7.39%
Bank of America: 7.94%
BB&T: 6.88

And,
“They’re pulling themselves out of the market to regroup,” is what one of my mortgage broker buddies told me on the phone this morning when I asked how in the heck Wells Fargo could raise rates on a 30-year jumbo fixed rate mortgage from 6 7/8% to 8% overnight. A jumbo is anything over $417,000, and given today’s home prices, that’s going to hit an awful lot of borrowers.

[Bugs]

I recall a time, not so long ago, when $500k could readily buy a reasonable house in La Jolla. Now it’s barely enough for a 50-year old house in El Cajon.

[beanmaestro]

Okay, but after the dust settles, and the surviving lenders rinse off, don’t you expect that there will be secondary demand for jumbo loans that are otherwise conforming?

In the short term, everyone is covering their head, but in the mid-to-long term, the secondary market should be competing for a prime jumbo loan with full docs and 20% down. And so the jumbo loans should reach a happy medium, no?

[Arraya]

bean,

I agree, there has been a serious disconnect from common sense in the lending industry for a long time and now it seems to be over correcting in the opposite direction leaving many quailified borrowers in the dust.

As you stated in the long term they should find a comfortable medium…IMO

[fromnj]

I am not sure what is right, but it is sure that the rate is getting up…

I chose the highest rate from the quote retruned from the query.

selected 30 year fixed
http://www.amerisave.com

Loan Purpose: Purchase
Property Use: HOME
Property Type: SINGLE
State: CA
Purchase Price: $625,000.00

Combined Loans
Total Loan Amount: $500,000.00
Blended Rate: 7.217%
Blended APR: 7.217%

1st Mortgage Loan
Loan Amount: $416,250.00
Interest Rate: 7.125%
APR: 7.125%
Product: 30 Year Fixed

2nd Mortgage Loan
Loan Amount: $83,750.00
Interest Rate: 7.675%
APR: 7.675%
Product: 15 Year Balloon

[fromnj]

I am not sure what is right, but it is sure that the rate is getting up…

I chose the highest rate from the quote retruned from the query.

selected 30 year fixed
http://www.amerisave.com

Loan Purpose: Purchase
Property Use: HOME
Property Type: SINGLE
State: CA
Purchase Price: $625,000.00

Combined Loans
Total Loan Amount: $500,000.00
Blended Rate: 7.217%
Blended APR: 7.217%

1st Mortgage Loan
Loan Amount: $416,250.00
Interest Rate: 7.125%
APR: 7.125%
Product: 30 Year Fixed

2nd Mortgage Loan
Loan Amount: $83,750.00
Interest Rate: 7.675%
APR: 7.675%
Product: 15 Year Balloon

[Arraya]

bean,

I agree, there has been a serious disconnect from common sense in the lending industry for a long time and now it seems to be over correcting in the opposite direction leaving many quailified borrowers in the dust.

As you stated in the long term they should find a comfortable medium…IMO

[beanmaestro]

Okay, but after the dust settles, and the surviving lenders rinse off, don’t you expect that there will be secondary demand for jumbo loans that are otherwise conforming?

In the short term, everyone is covering their head, but in the mid-to-long term, the secondary market should be competing for a prime jumbo loan with full docs and 20% down. And so the jumbo loans should reach a happy medium, no?

[bsrsharma]

Bugs,

Don’t despair, those times will be back. Without non-conforming mortgages, homes will become shelters rather than “investment properties”. Your $500K will buy a lot again.

[bsrsharma]

Bugs,

Don’t despair, those times will be back. Without non-conforming mortgages, homes will become shelters rather than “investment properties”. Your $500K will buy a lot again.

[Bugs]

I recall a time, not so long ago, when $500k could readily buy a reasonable house in La Jolla. Now it’s barely enough for a 50-year old house in El Cajon.

[HLS]

The questions that are asked on most of these websites are usually just a few basics, and you are purposely MISquoted rates to get you to apply.

Once they get the application, eventually you find out that you don’t qualify for what you think, but they got the lead, and some people stay with them. Sometimes you don’t find out the rate until after you have paid for an appraisal. It borders on fraud IMO.

Without the answers to about 20 questions, it’s not possible to give someone an accurate quote, and even with the answers, it can still be difficult.

The conditions to get loans funded many times are frustrating. Up to the underwriter.

By the way, If you know that you want a 30 year loan, why would you even want a no cost loan ? Worst thing that you could probably do.

Of the OP quotes, BB&T’s are obviously the most misleading.
I don’t believe that rate exists today for a “no cost” jumbo loan, or even close, nor do I believe that Wells would offer 6.875 the previous day.

I’m NOT saying that I don’t believe that is what you saw. I’m saying that I don’t believe they would fund the loan.
Even if they locked it, it prob wouldn’t get approved.
Just my 2c.

[fromnj]

Thanks HLS

My wife looked up the rate from our main bank [Affinity credit union] for 30 year fixed for 500K last night. It was about 6.875% (60 day lock-in) with about $3700 fees or 6.910% APR. As you mentioned, we may not get this rate, but at least we could know the ball park. We used this bank once before and we may use this bank again if we cannot find the better one.

As you mentioned again, it may not be wise to use builder’s mortgage company, but we will check.

[sdrealtor]

FWIW
Lower rates are available for well qualified buyers with good downpayments. I know someone that got 6.4% with 0 points last week with FICO’s above 750 and 30% down.

[HLS]

SDR, That sounds like a conforming rate, not jumbo.. ??

FromNJ, when you are quoted fees does it include ALL
1) Title & Escrow,
2)Lender Underwriting
3) Broker fees

There’s just so much misleading info, and some details often get left out. Even if you get a GFE, it doesn’t have to be accurate, but there is NO REASON that the above 3 charges can’t be almost exact up front.

It raises the hair on my neck when builders REALLY discourages you from getting your own financing.

If they agree to sell to you for $XX, why do they care where you get it from ? ….Because they may be able to influence the appraiser. It’s not in their best interest to save you money on Title & Escrow fees, but they can have a bit of control over the closing date. You can really play the builder hard sometimes, but you do need to be willing to walk. I know that emotions get involved, like buying a car that is just the right color.

Try to negotiate for your upgrades, and constantly bounce back and forth between their financing and outside financing, and continue to ask WHY there is a difference.

Realize that if you don’t have a realtor representing you from the first day that you walked in there, they are probably saving 3% in broker co-op. They aren’t going to give it to you, but it should give you a bit more leverage for upgrades or SOMETHING.

Please let me know if you want another quote.
[email protected]

[sdrealtor]

It was a jumbo from a lender that always has been conservative and should have limited exposure to the mess. They never did Option ARMS or 2/28’s. Most of their loans are 30 year, 15 year, 10/1 and 5/1 arm to high quality borrowers.

[sdrealtor]

It was a jumbo from a lender that always has been conservative and should have limited exposure to the mess. They never did Option ARMS or 2/28’s. Most of their loans are 30 year, 15 year, 10/1 and 5/1 arm to high quality borrowers.

[sdrealtor]

It was a jumbo from a lender that always has been conservative and should have limited exposure to the mess. They never did Option ARMS or 2/28’s. Most of their loans are 30 year, 15 year, 10/1 and 5/1 arm to high quality borrowers.

[fromnj]

Thanks HLS

Regarding the fees, I need to ask my wife. I have no clue.

Anyway, we are planning to buy a house by next spring or so. I told my wife the other day if she can wait for another year and she did not like the idea at all. So, we are currently investigating the plan.

We will definitely contact you when we decide our action, but please give us some more time.

If you have a website like SD Realtor, could you post it here? I can bookmark your website, then contact you whenever I need your help.

[fromnj]

Thanks HLS

Regarding the fees, I need to ask my wife. I have no clue.

Anyway, we are planning to buy a house by next spring or so. I told my wife the other day if she can wait for another year and she did not like the idea at all. So, we are currently investigating the plan.

We will definitely contact you when we decide our action, but please give us some more time.

If you have a website like SD Realtor, could you post it here? I can bookmark your website, then contact you whenever I need your help.

[fromnj]

Thanks HLS

Regarding the fees, I need to ask my wife. I have no clue.

Anyway, we are planning to buy a house by next spring or so. I told my wife the other day if she can wait for another year and she did not like the idea at all. So, we are currently investigating the plan.

We will definitely contact you when we decide our action, but please give us some more time.

If you have a website like SD Realtor, could you post it here? I can bookmark your website, then contact you whenever I need your help.

[HLS]

SDR, That sounds like a conforming rate, not jumbo.. ??

FromNJ, when you are quoted fees does it include ALL
1) Title & Escrow,
2)Lender Underwriting
3) Broker fees

There’s just so much misleading info, and some details often get left out. Even if you get a GFE, it doesn’t have to be accurate, but there is NO REASON that the above 3 charges can’t be almost exact up front.

It raises the hair on my neck when builders REALLY discourages you from getting your own financing.

If they agree to sell to you for $XX, why do they care where you get it from ? ….Because they may be able to influence the appraiser. It’s not in their best interest to save you money on Title & Escrow fees, but they can have a bit of control over the closing date. You can really play the builder hard sometimes, but you do need to be willing to walk. I know that emotions get involved, like buying a car that is just the right color.

Try to negotiate for your upgrades, and constantly bounce back and forth between their financing and outside financing, and continue to ask WHY there is a difference.

Realize that if you don’t have a realtor representing you from the first day that you walked in there, they are probably saving 3% in broker co-op. They aren’t going to give it to you, but it should give you a bit more leverage for upgrades or SOMETHING.

Please let me know if you want another quote.
[email protected]

[HLS]

SDR, That sounds like a conforming rate, not jumbo.. ??

FromNJ, when you are quoted fees does it include ALL
1) Title & Escrow,
2)Lender Underwriting
3) Broker fees

There’s just so much misleading info, and some details often get left out. Even if you get a GFE, it doesn’t have to be accurate, but there is NO REASON that the above 3 charges can’t be almost exact up front.

It raises the hair on my neck when builders REALLY discourages you from getting your own financing.

If they agree to sell to you for $XX, why do they care where you get it from ? ….Because they may be able to influence the appraiser. It’s not in their best interest to save you money on Title & Escrow fees, but they can have a bit of control over the closing date. You can really play the builder hard sometimes, but you do need to be willing to walk. I know that emotions get involved, like buying a car that is just the right color.

Try to negotiate for your upgrades, and constantly bounce back and forth between their financing and outside financing, and continue to ask WHY there is a difference.

Realize that if you don’t have a realtor representing you from the first day that you walked in there, they are probably saving 3% in broker co-op. They aren’t going to give it to you, but it should give you a bit more leverage for upgrades or SOMETHING.

Please let me know if you want another quote.
[email protected]

[sdrealtor]

FWIW
Lower rates are available for well qualified buyers with good downpayments. I know someone that got 6.4% with 0 points last week with FICO’s above 750 and 30% down.

[sdrealtor]

FWIW
Lower rates are available for well qualified buyers with good downpayments. I know someone that got 6.4% with 0 points last week with FICO’s above 750 and 30% down.

[fromnj]

Thanks HLS

My wife looked up the rate from our main bank [Affinity credit union] for 30 year fixed for 500K last night. It was about 6.875% (60 day lock-in) with about $3700 fees or 6.910% APR. As you mentioned, we may not get this rate, but at least we could know the ball park. We used this bank once before and we may use this bank again if we cannot find the better one.

As you mentioned again, it may not be wise to use builder’s mortgage company, but we will check.

[fromnj]

Thanks HLS

My wife looked up the rate from our main bank [Affinity credit union] for 30 year fixed for 500K last night. It was about 6.875% (60 day lock-in) with about $3700 fees or 6.910% APR. As you mentioned, we may not get this rate, but at least we could know the ball park. We used this bank once before and we may use this bank again if we cannot find the better one.

As you mentioned again, it may not be wise to use builder’s mortgage company, but we will check.

[HLS]

The questions that are asked on most of these websites are usually just a few basics, and you are purposely MISquoted rates to get you to apply.

Once they get the application, eventually you find out that you don’t qualify for what you think, but they got the lead, and some people stay with them. Sometimes you don’t find out the rate until after you have paid for an appraisal. It borders on fraud IMO.

Without the answers to about 20 questions, it’s not possible to give someone an accurate quote, and even with the answers, it can still be difficult.

The conditions to get loans funded many times are frustrating. Up to the underwriter.

By the way, If you know that you want a 30 year loan, why would you even want a no cost loan ? Worst thing that you could probably do.

Of the OP quotes, BB&T’s are obviously the most misleading.
I don’t believe that rate exists today for a “no cost” jumbo loan, or even close, nor do I believe that Wells would offer 6.875 the previous day.

I’m NOT saying that I don’t believe that is what you saw. I’m saying that I don’t believe they would fund the loan.
Even if they locked it, it prob wouldn’t get approved.
Just my 2c.

[Coronita]

ouch…and to think a jumbo about 3 years ago was 5.5%

It’s hysterical. Loan agents still cold call me to try refinance. They were touting a great 5/1 at 6.5%ish…

One thing I look forward to. I hope it’s no longer to be sexy to be in the housing industry, so that annoying people will stop bugging me about refinancing, and I’ll stop receiving all this junk mail about new homes and refinancing. I get about 10 solicitations in the mail per week about new homes or refinancing.

[HLS]

5/1 at 6.50% pays them a decent commission on the back end today.

The real PAR rate for a 5/1 today is between 5.75% and 6%, you just need to qualify.

Those cold callers must catch a fish now and then, or they wouldn’t continue….

You’d be amazed at what still goes on in the industry.

[HLS]

5/1 at 6.50% pays them a decent commission on the back end today.

The real PAR rate for a 5/1 today is between 5.75% and 6%, you just need to qualify.

Those cold callers must catch a fish now and then, or they wouldn’t continue….

You’d be amazed at what still goes on in the industry.

[HLS]

5/1 at 6.50% pays them a decent commission on the back end today.

The real PAR rate for a 5/1 today is between 5.75% and 6%, you just need to qualify.

Those cold callers must catch a fish now and then, or they wouldn’t continue….

You’d be amazed at what still goes on in the industry.

[Coronita]

ouch…and to think a jumbo about 3 years ago was 5.5%

It’s hysterical. Loan agents still cold call me to try refinance. They were touting a great 5/1 at 6.5%ish…

One thing I look forward to. I hope it’s no longer to be sexy to be in the housing industry, so that annoying people will stop bugging me about refinancing, and I’ll stop receiving all this junk mail about new homes and refinancing. I get about 10 solicitations in the mail per week about new homes or refinancing.

[Coronita]

ouch…and to think a jumbo about 3 years ago was 5.5%

It’s hysterical. Loan agents still cold call me to try refinance. They were touting a great 5/1 at 6.5%ish…

One thing I look forward to. I hope it’s no longer to be sexy to be in the housing industry, so that annoying people will stop bugging me about refinancing, and I’ll stop receiving all this junk mail about new homes and refinancing. I get about 10 solicitations in the mail per week about new homes or refinancing.

[Author]

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