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Mortgage scenario. 750k house, got 75k cash, MD

Hi folks,
I'm looking for a single family house in Montgomery county, MD for around 750k. Got 75k cash for closing, good credit history for both spouses (750-760), two car loans (total 550/month), stable jobs, good current income (total 185k/year; was lower previous years, around 150k).

What kind of mortgage/rate can I expect?
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November 14 2012 - Rockville
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Answers (31)

I will either come back here gloating or crying in a few weeks.
=========================
and?


btw: 
Personally I thought the price was a bit high but I'm in the minority with that opinion.
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January 03 2013
Just a note about transfer and recordation taxtes in Maryland. The Maryland real estate contract states these will be split evenly between buyer and seller unless negociated otherwise.
3.75% seems about right on a 90& ltv with score above 740
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January 03 2013
Presently we offer 3.75% with a 3.79% apr for 30 year fixed jumbo purchase with 0 points. To get to 90% we would need to create a tandem Heloc as well.
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December 22 2012
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True Norm about agents signing away 1st time buyer's rights.

After referring to the relevant code section numbers and stating what they say, my contract immediately adds an exception saying something like "AS IS CUSTOMARY, seller and buyer will split the cost of tax and recordation". I should have read the contract more carefully and pushed the agent.

Clay,
You're the third person to say terms are too good to be true. I will either come back here gloating or crying in a few weeks.
As I said my relative (who is a penny pincher like you've never seen before; that's probably why he now owns 7 properties after starting from exactly zero wealth and a regular job 15 years ago)...this relative has used the banker/bank multiple times, so I am not hitting the panic button on this one.
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November 30 2012
County tax and recordation tax is to be paid by the *seller* [ Section 14-104(c) of Real Property Article ].
============================
I agree, however that applies "unless otherwise negotiated in the contract".

Its been my experience that in Md the agents are not looking our for their first time buyers and negotiate away their buyer's rights.  

read your contract.
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November 30 2012
It sure looks like they priced your loan as a Conforming loan without the word "Super" in front of "Conforming". I doubt they can do this at 3.625% with only $865 Origination and no MI so I am jumping in with the other lenders that think it's too good, just saying.  
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November 30 2012
Profile picture for user106552
Original poster again.
county tax 3,475; state recordation 2,528; origin. fee 865

Monthly payment: 3,347 = 2,853 (P+I) + 419 (Tax) + 75 (Hazard Insurance)
Closing Cost: 10,868 (Origin. fee 865, Tax/recordation around 6,000 )
Prepaid, Excrows: 5,590

The tax amount in monthly payment is based on assessment before 1.5 floor was added to the house last year, so it will likely go up by 100 or 200, so you're right about the monthly payment being close to 3600.
---
About why the taxes/recordation portion of closing cost is low.

Just reread the contract, and this is what I have to say to all of you loan officers out there:
Know the rules of the state/county where the property is, or your quotes may unnecessarily look uncompetitive to buyers.

MD has special breaks for first time home buyers. State Transfer Tax is halved to 0.25% [ Section 13-203(b) of Tax Property Annotated Code of Maryland ], and is to be paid by the *seller*. County tax and recordation tax is to be paid by the *seller* [ Section 14-104(c) of Real Property Article ]. Isn't that sweet?

Lows do allow for mutually agreed exception to seller paying all of this, and it turns out in my contract I'm splitting the cost half and half with the seller. If I had known what the laws say (or rather, recommend), I would have pushed to have sellers pay the cost.
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November 30 2012
OP, are you getting a closing cost concession from the seller? If not, the taxes charged to you will be aprx $12,600 leaving $3400 to cover the Closing Agent's fee, Lender/Owner Title Insurance, and any junk fees. When I said the $16K was typical I was thinking Title Charges / Taxes so if you are not getting a concession from the Seller that would mean the Lender is not charging you an Origination Fee. If that is the case then I would have to agree with the other 2 Lenders that a rate of 3.625% is too low for no Origination / No MI.....    

BTW, the payment of $3350 looks way off, you mentioned below the taxes and insurance would be $750/mo so when you add that to the P & I the total payment will be more like $3602.  
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November 30 2012
OP, the max loan amount / interest rate says they are using an Agency loan, the fact there is no MI suggests the lender is covering a Single Premium Policy with a lender credit. I think the other 2 Lenders that questioned the terms have a hard time believing they can do that at a rate of 3.625%. The cheapest Single Premium MI policy I see cost about 140 BPS ( 25% coverage ) so DU findings probably allowed for 12% coverage which would cost much less and enable the Lender to cover the MI at 3.625%. The Closing Costs of $16K are typical, good luck with your appraisal/closing.      
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November 30 2012
Profile picture for user106552
Original poster here. Got a very good deal from a local bank:
I'm buying a 695k property with 10% down. Got lucky, as the loan amount, 625.5k is the max they would allow for the terms I got, which are:

30 yr fixed, 3.625% interest rate, 0 point, no mortgage insurance (not up front, not  monthly). After taxes and hazard insurance, monthly payment comes to around $3350. Closing cost is around 16k. I also had the option to have 3.75% rate and around 3k in credit, but I chose the lower rate.

Inspections done, waiting for appraisal.

Thanks to all who responded. I am glad to give my business to a local bank. Two other lenders I talked to said the terms appear too good to be true for 90% LTV, but I am not worried as the bank and the banker came highly recommended by a relative who owns multiple properties and has used the bank (Eagle) and the banker many times.
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November 29 2012
80-10-10
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November 21 2012
These are all options

However if you want a great option you can deal with a local lender like myself; we have a portfolio product up to 90% LTV with no PMI for borrowers in Maryland. I work for a community bank based out of Annapolis.

FHA has an upfront funding fee of 1.75% and a monthly MIP of 1.2% of your loan amount. You can get qouted low FHA rates all day long but factor in the monthly MIP and your 3.25 rate ends up being close to 4.5+

Please feel free to contact me [Phone removed by Zillow moderator. Please see our Good Neighbor Policy for more information.]
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November 20 2012
Here are 2 more options, first is if you don't plan to keep the property more than 10 Years and have a high credit score :

Jumbo Loan, No MI, 10/1 Arm - P & I Payment almost identical to the 80/10 but rate/payment is fixed for 10 years, no 2ND mortgage Closing Costs and no 2nd mortgage Underwriter or Appraisal review.

2nd Option: Since you mentioned possibly borrowing $20K from your 401K, if you can borrower $50K from the 401K then you can create your own 2nd mortgage for $50K and get a High Balance Conforming first mortgage for $625K.   
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November 17 2012
You can get much better terms on the FHA option, I am thinking over $20K in lender premium at a lower rate. The 2nd Mortgage on option 2 is very ugly, it is a 10 year loan that will adjust after 5 years. Since you show the payment at $500/month that means you will have a balloon payment of $64,843 in 10 years, that is if the rate doesn't change. It most likely has a floor of 6.99% so can only go up when it becomes adjustable after 60 payments. If you are going to do an 80/10/10 get a better 2ND mortgage. If you are going to sell or move in 5-7 years then you are better off with an 80/10/10 ( assuming you get a better 2nd mortgage ). If you hold it longer term then the FHA loan ( w/10% down ) will turn into a lower monthly payment when the annual MI stops.  
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November 17 2012
On option #1 you should be at 3.25% with at least a $8000 credit towards your closing costs.  I am assuming that is the credit being given from the two scenarios given.

Option 2 sounds fair

As for raising the sales price to $770k to cover the closing costs.  Two things to keep in mind.  The first is any additional transfer taxes the seller may have to pay because of the increase in sales price.  You may have to pay that difference.  The second and most important is that the house has to appraise for the $770k
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November 17 2012
Profile picture for user106552

Thanks all for your input so far.

Here are two options I have been quoted for a 750k house in montgomery county, MD. Please let me know if these are reasonable:

1) FHA
30 YR fixed loan at 3.5%, 4.49% APR
Loan $722k + Cash at closing : $40k down+$12k closing cost
Monthly payment: $4800 ($3250+ $1550 for PMI, taxes, hazard insurance)

2) Conventional 80/10/10
30 Yr Fixed at 3.5%
$600k conforming Loan + $75k down + $75k second loan + $20k closing cost
Monthly payment: $3950 ($2700 + $500 for 2nd loan + $750 for taxes hazard insurance)

Second loan for $75k is at 6.99%, 10 Yearr ARM, floats after 5 years

Cash at closing with this option: $75k+$20k, so I will need to borrow $20k from 401k account

Am I getting reasonable deals?

One last question. With #2, I have been given the option to add the $20k to the loan to avoid borrowing from my 401k account. If I understand how this works, the purchase price is inflated to $770k from $750k.
I was told seller gets the same net amount so they don't care, but I have also been told that it does affect the seller. Does this option make me a less competitive buyer in seller's eyes?

Thanks.

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November 17 2012

I'm guessing in the low to mid 3s if you're talking 30 year fixed, depending on the program that ends up making the most sense.  There's more info needed. 

Feel free to click on me and get in contact with me if you like me to look at it in greater detail and give you an actual offer. 

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November 16 2012
Profile picture for Go Huskers
"once again, I said from the start, to inquire with a loan officer to get all the details. "
----
They did, that's why they posted the question in the MORTGAGE section. If you don't have the knowledge to answer it, then why are you doing so? It's completely useless to interject in the mortgage area with advice to contact a mortgage person. Duhh!

Clay (a loan officer) had already answered when you decided to contradict him with this: "Should be a pretty good rate..but I would not go FHA because you have almost 10% down."

Since you don't know the mortgage limits why would you think it's ok to steer the OP to something that doesn't exist? Even when you were told it didn't exist you persisted with the misinformation. 

What you really were trying to do is make a buck from doing nothing: 

"Let me know if you want me to refer you a Realtor in your area from our referral partner data-base--I will earn a little bit of the Selling Agent's commission,"
----
WOW, you are going to refer a borrower you never met, never spoke to and did nothing but answer a question incorrectly and take part of the commission? 

Nice gig you got going there!
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November 15 2012
so figuring 5% down on $750k shouldn't be difficult.
=====

Your point in all of this?  5% is less than 75k.  The 5% program does exist, but it appears to not be a viable option for this person due to loan limits--once again, I said from the start, to inquire with a loan officer to get all the details.  Just as some FHA Program exists where the buyer can come in with as little as .5% down (per the loan officer I spoke to, she said it is better to plan on 1% down), but do I know all the rules behind it?  NO. I just know that the programs exist, and I tell people to ask their loan officers about them because I am not a Jack of all Trades lol.

Best wishes from So-Cal and good luck
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November 15 2012
I only mentioned a 5% down
===================
But you do know how to use a calculator, correct?  I'm sure you can figure your commission to the penny in your head so figuring 5% down on $750k shouldn't be difficult.
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November 15 2012
All spoken here is true regarding loan limits.  I am not a loan officer--nor do I pretend to be--I only mentioned a 5% down Conventional product does exist with lender paid MI and to speak to a loan officer about it...

Loan limits, and the such, would be things to discuss with a loan officer.  

Cheers
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November 15 2012
Profile picture for Go Huskers
"and at the loan amount I mentioned , I can't have a conventional loan?"
----
Not correct but sort of since like most consumers you have confused conventional with conforming. You may have a conventional loan, (non government guaranteed/endorsed)  just not a conforming  one. A Jumbo loan is an option (non conforming) but you are not going to get a true jumbo with 5% down and LPMI.

Unfortunately agents routinely answer questions here that there are not qualified to answer.
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November 14 2012
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If I understand the gurus,  FHA loan is the way to go, because at less than 20% down (I have 10% cash, but after paying closing cost, there will be less than 10% left for downpayment) and at the loan amount I mentioned , I can't have a conventional loan?
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November 14 2012
.

Roll Tide
Go Gators
Go Huskers
Go Trojans, Longhorns, Cardinals, and especially the Beavers!!! Where is Dunes, I need a Beavers Cap.
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November 14 2012
would pursue a 5% down Conventional product with lender paid MI 
======================
The Declaration of Independence guarantees us the pusuit of happiness. It does not guarantee you will obtain it, but you can pursue it.

Stuart has taken this to a new level and wants to pursue a pipe dream.

5% down on $750k makes a loan amount of $712.5k; jumbo in Rockville (Jumbo in all of California also), at least 20% down required on most jumbo (sometimes less if you make  more money and have a lot more cash in the bank)
 

  
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November 14 2012
.
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November 14 2012
Profile picture for Go Huskers
"It does in California, and I have a few clients in the pipeline that have been pre-qualified using that sort of financing...I figured it could exist in other places."
----
No it does not exist in California!

Where exactly do you have financing above $625,500 at 95% LTV with LPMI in California?

"I would pursue a 5% down Conventional product with lender paid MI (ie no monthly PMI)."
----
If you have clients "prequalified" for such a program you and the loan officer you are working with are smoking something!
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November 14 2012
Clay,

It does in California, and I have a few clients in the pipeline that have been pre-qualified using that sort of financing...I figured it could exist in other places.

It doesn't hurt to ask is the point :)

Best wishes from So-Cal and good luck
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November 14 2012
Stuart, the loan you suggested does not exist.
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November 14 2012
Should be a pretty good rate..but I would not go FHA because you have almost 10% down.

I would pursue a 5% down Conventional product with lender paid MI (ie no monthly PMI).  Your rate will be slightly higher than FHA, but your monthly payment should be lower.  Ask a local lender if you qualify for that loan product.

Let me know if you want me to refer you a Realtor in your area from our referral partner data-base--I will earn a little bit of the Selling Agent's commission, but it will cost you nothing.

Best wishes from So-Cal and good luck
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November 14 2012
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