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Why should I pay any fee's if my credit is perfect and I want a 50% loan to value?

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January 19 2009 - Tavares
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mcooperatl  If you wish to learn, here's your chance. Brokers access "wholesale" rates from banks and direct lenders. Brokers then have flexibility to deliver rate as-is or to "mark up" in return for a YSP (i.e. commission) from lender. The higher the rate, the higher the YSP. With a "no cost" loan, rate needs to be raised enough so YSP can cover all expenses. Now...broker comp comes from either the bank, the borrower or a combo of the two. A good loan agent will consult w/ client and structure deal based on what's best for the client. If client is cash poor or if client doesn't plan to own home long enough to breakeven on costs, it makes sense to take the higher rate and have costs paid by lender. However, if client wishes to maximize long-run interest savings and has plenty of cash, it often makes sense to pay the costs out-of-pocket.

A simplified example may be a Costco wholesale club vs your local supermarket. In theory, you pay a Costco membership fee out-of-pocket to access wholesale prices on items.  Whereas w/ the local supermarket, there's no membership fee. However, you pay retail prices. Neither is right or wrong. It's just a matter of preference and what works best for your circumstances.

tchau  No offense intended...but what qualifies you to speak of pricing and rates?  Unless you're a mortgage pro tracking&pricing on a daily basis, it's virtually impossible to stay on top of rates and spreads. Just curious so I know where you're coming from. It just seems you're often misinformed yet quite confident in your answers. The combo of the two really kills the integrity of an "advice" board. In reality, a rate could conceivably jump 1-2% depending on loan amount. On a loan amt of $100k, the jump in rate could be well in excess of 2%.
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January 19 2009
4.75-5% is about as reasonable as it gets right now, rates have been volatile the last few days.  Hopefully they'll calm down and go lower. 
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January 20 2009
Profile picture for tchau_99
I am a consumer...I am just a typical borrow.

Trying to make sense here..... Why on earth would one borrow mortgage at an outrageous rates.

5% IS NOT REASONABLE in my terms...... So, If BANK tries to raise to 6%or 7% from a normal borrower....... I CAN SAY RIGHT NOW --------

BANKS = BANKRUPTCY

This is exactly what is happening in our economy right now.......


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January 20 2009
Profile picture for dioggi
To Greg D.-I don't even understand your sentence,if it is even a sentence.
Justin and Andrew- I wanted the refi on my primary home, which is free and clear.That is the way I filled out Zillow's form. So investor rates or guidelines should not enter into the picture.
dioggi
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January 20 2009
Andrew,
Just dogging you!  You have my respect.
Dioggi,
When you post something like you did, didn't think before you posted, nor know but thought you did, expect what you received from here.

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January 20 2009
Short term real estate project sounds to me like an investment property.

Much of the Zillow quotes given are automated quotes and the lenders who provide automated quotes typically do not quote on investment property, so that likely explains why you only got one quote.

It is pretty much not possible right now to get a low or no cost loan for investment property, even if you were to accept a high interest rate.  If you have the resources to finance the project privately, that is very likely to be your best move.
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January 20 2009

dioggi,

I am still trying to figure out what exactly you were looking for.  Zillow could connect you with competetive lenders but in order to compete lenders would need to know what you are looking for..

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January 20 2009
Profile picture for dioggi
To all,
Thanks to all of you who gave me thoughtful advice. Sorry if I upset some of you who thought I wanted "something for nothing".
I was trying to get a quote on a very low loan to value refi, for a short term real estate project. Someone told me Zillow could put me together with competitive lenders in my area. I thought that would be a good way to see what is out there, in addition to what I had seen at local lenders I checked myself.However, the only quote I received was for a rate which wasn't competitive at 1 1/5 points. By the way, I do understand that property values have dropped alot in my location, I had already taken that into consideration.This has certainly been an entertaining and illuminating experience.I think that I may just fund the project out of pocket. There is a limit to how much time I am willing to give this refi endeavor.
dioggi
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January 20 2009

Lmao.....

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January 20 2009
Profile picture for oldskoolballr
Hey dioggi,

You are about as cool as aids.  You got called out on a stupid question and now you are bashing the loan officers.
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January 20 2009
dioggi,
if you've been in the mortgage business many years you should have already known the answer to the question. So what was the point of your post?
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January 20 2009
Profile picture for dioggi
From dioggi,
Barb Van Duyn, sensible, informative, and above all respectful.
Rudi- Yup, I sure am glad I asked. Nothing has changed, there are still alot of losers in the mortgage game.
Doug Hutchins-You have a serious case of hoof in mouth disease...Idiot.
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January 20 2009
dioggi

 Maybe next time you post something you give a little background as to why you are asking the question.  From the original post, it is easy to assume that you were a borrower looking for a "free" loan.
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January 20 2009
You can't teach an old dioggi new tricks, can you? Especially one that bites helping hands.
 
Reread you question dioggi, apparently you forgot what you wrote. Good luck to you. A man of your characcter deserves the best.
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January 20 2009

Dioggi....Why should I pay any fee's....

How else is someone to interpret that statement other than I want a loan with no fees?

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January 20 2009
Profile picture for dioggi

You guys all kill me. I did not ask for a loan with no fees at the same rate as a loan with fees. I have worked in the mortgage business for many years, the real estate and building business for many more. I know that you do not get something for nothing.
Some of your sneering, vitriolic answers amazed me. By the way, geniuses, It is not worthwhile to pay points, unless you are going to maintain the balance for a long time.
By the number of replies I received, I guessed that you people are not too busy. What a surprise, given your great customer service  skills.
I guess all of you brilliant fellows  were some of the people who wrote, and/or approved the loans that have brought the mortgage business, and the country, to the place it is now.
dioggi

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January 20 2009
Lay what to rest Greg....Simply pointing out that a lot of folks on the boards are misinformed.

And no I do not work for a national bank, I am not blowing my horn.  I actually think I am one of the more impartial folks to give advice.  Not sure how saying banker or broker are the same is tooting one horn over another....
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January 20 2009
tchau - I forgot to mention that your intentions seem to be good.  However, I'm certain everyone would appreciate your answers based solely on facts unless you clarify that you're stating opinion.  The same would go for me.
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January 19 2009
Dioggi dog,
It doesn't matter what your scores are and you LTV, you will pay fees for a good rate.  It is plain and simple.  To do otherwise is discrimination.  What makes you better than anyone else?  Refinance and you pay the usual and customary closing costs.  Geeeeeez.
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January 19 2009
AA,
Lay it to rest.  Banks and brokers can do the same thing.  Are you a national bank?  Do you lend in all 50 states?  If you do you won't for much longer.
Stop blowing your horn.  The horn is tarnished and broken.
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January 19 2009
Drew, now that is some smoooooth spamming my friend!

I realize this is your first contribution, but keep the spamming and self promotion to a minimum-a minimum like NONE!

Welcome to Zillow!

Good post Gregorio.
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January 19 2009
Due to several factors, the banking industry is squeezing out the ability to do "no-cost" refinances.

Read why on my blog:
http://drewsmortgagenews.blogspot.com
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January 19 2009
I find this to be quite interesting. For all the "informed" consumers out there it sure seems like they really don't understand what is happening in the market these days. If you think you can get a "no cost" loan at a decent rate with spreads the way they are, you are sadly mistaken. A fraction of a percent? Try pricing a $250,000 loan at no cost what-so-ever and see what rate you get compared to what you could get at par. Then come back and and say "Why should I have to pay (Insert rate here) if my credit is perfect and I want a 50% loan to value?
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January 19 2009
speaking of misinformed!
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January 19 2009
Tchau, then how in the world do you get a no closing costs loan if the rate does not go up to cover them?????  Please enlighten me. 
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January 19 2009
Jason,

I work for a bank and have the ability to broker to the exact same sources as you.....so yes I say that there is no difference.
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January 19 2009
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rate does not go up 1-2% higher for no fees.... if does, skip this mortgage company and continue shopping until you find one. 
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January 19 2009
I think there's a reading problem on this thread.........Did anyone say they can always beat a bank? I said that in many cases, a bank can get "blown out of the water." I'll gladly stand behind that statement. It is completely incorrect to say "There is no difference between an LO working for a bank and a broker." Andrew, surely you've been in this business too long not to know the difference between a bank and a broker. Come on, now!
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January 19 2009

Paying fees could mean that you save money in the long run.  Look at the difference between a payment at a "no cost" loan and and a payment with closing costs.  Take your closing costs and divide it by the difference in payments, that will be the number of months it takes to break-even on your closing costs.

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January 19 2009

For all the brokers saying they can always beat a bank....I say you are as misinformed as someone thinking a bank will lend someone money with no fees...It's ridiculous!

AA, I totally agree with you!!!

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January 19 2009
Related Questions
Why should I pay any fee's if my credit is perfect and I want a 50% loan to value?
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Latest answer by Tammy Stockdale
January 20 2009 | 50 answers
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