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%APR and closing cost difference for a detached house vs condo (Portland, OR) ?

Hi,

We are trying to figure out the difference in mortgages for a condo vs a house (with less than 25% down). One lender told us that the condo will cost more either 0.75% of the purchase price in closing costs OR an increase of 0.25% in APR.

The second lender is saying that it'll depend on the "risk level" of the condo and we can get a better estimate once we send in the condo address. 

Then we learned about Fannie Mae guidelines for condo mortgages in terms of extra risk and thus extra fees or APR increase.... This is in line with what the first lender told us. 

We got confused since the first lender seemed to be pretty rigid about what the cost difference will be. The second lender seems to be more vague about it. I have a feeling that with the second lender, there is a more possibility of higher fees coming in at the last minute.

Will be a lender (a big bank in this case) knowing that one wants to (desperately) close on a house/condo, maximize the fees and increase the APR rates at the last minute? Let's say, if they can offer 3.5% rate, can they legally bump that up to 3.75% to maximize their profits? 

Thanks. 





 






 
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May 09 2013 - Portland
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1) if  putting  20% down on a condo ....pricing  for  a loan will EITHER be  .75%  in loan fee higher  or  .125%-.25%  higher in the interest rate  as compared to putting  25% down  


2) most lenders are  needing to have the condo complex approved  as well as you having to be approved as buyers .....this means  reviewing all data such as bylaws / budget / insurance  policy  etc...on a complex ....not as simple as  it once was
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May 09 2013
There's nothing wrong with "shopping" lenders.  Don't be ridiculous about shopping 10 because you will only confuse yourself, but three would not be out of line.  

A better choice might be a mortgage broker, who works with many lenders, each of which has different rates, fees, and loan programs and can select the best one for you (credit score, down payment, debt to income ratio, etc) and the home you want (detached, condo, etc.). 

A third option is a mortgage banker (not a bank) who makes the loan with their own money (though they most often later sell it to another lender)

I can recommend a couple of Portland pros I work with - one mortgage broker and one mortgage banker if you want to drop me a line. 



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May 09 2013

Well, in Oregon the Division of Finance and Corporate Securities would lay the hammer down on a lender that disclosed a particular rate and fees on the Good Faith Estimate and came to the closing table with different numbers.  If there is a change of circumstances the lender would need to notify you.  Bait and switch tactics were rampant at one time, but new legislation now protects consumers more.  If they violated regulations the state will penalize them, that is if they got caught or were reported.  I hope that gives you a little more peace of mind.  And regarding condos they can be challenging to lend on times as you need to get the project approved. The rate/fees will be slightly higher, but I wouldn't be focusing on that if it's a property you want to buy.

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May 09 2013
 
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