Mortgages: Cash Flow Programs vs. ARMS

As for the incentive, i bought a courtyards home in march 2005. Single family home.

 

Heres some info i found about interest rates and apr on ING website.

Why are the APR and Interest Rate different?
Here's a quick lesson. The government requires us, and all banks, to report both the Interest Rate and the Annual Percentage Rate on a loan. That's a good thing. We think consumers should know exactly what they are being charged but sometimes it gets confusing. So what's the difference between interest rate and APR?

The Interest Rate is the rate used to calculate the interest that you will pay on the loan. The Interest Rate on the Orange Mortgage is adjustable after 3, 5 or 7 years (depending on the term you choose) so the rate will most likely change over time. It may go up or down depending on market conditions. The Annual Percentage Rate, or APR, starts with the Interest Rate and then adds in other costs such as points and other fees that, along with interest, are called "finance charges". Generally, APRs are higher than Interest Rates because all finance charges, not just interest, are used to calculate the APR. This lets you see the true cost of borrowing so that banks can't hide behind a low rate and pile on fees and points that you may not realize add to the cost of the loan. When deciding between loan choices, be sure to pay attention to the APR and the "rate."

 

Do you use Northwest? http://www.northwestfcu.org

Do you guys use Pen Fed? https://www.penfed.org

Do they sell your loan and then you're not sure who to make your payment to?
What are your loan experiences?
How much does refinancing usually cost (if we go w/ builder's lender and refinance right after?) ?
Are there any no closing cost refinancing programs?

 

(From the PenFed website)

The Federal Truth in Lending law requires that all financial institutions disclose the APR when they advertise a rate. The APR is designed to present the actual cost of obtaining financing, by requiring that some, but not all, closing fees are included in the APR calculation. These fees in addition to the interest rate determine the estimated cost of financing over the full term of the loan. Since most people do not keep the mortgage for the entire loan term, it may be misleading to spread the effect of some of these up front costs over the entire loan term.
Also, unfortunately, the APR doesn't include all the closing fees and lenders are allowed to interpret which fees they include. Fees for things like appraisals, title work, and document preparation are not included even though you'll probably have to pay them.

For adjustable rate mortgages, the APR can be even more confusing. Since no one knows exactly what market conditions will be in the future, assumptions must be made regarding future rate adjustments.

You can use the APR as a guideline to shop for loans but you should not depend solely on the APR in choosing the loan program that's best for you. Look at total fees, possible rate adjustments in the future if you're comparing adjustable rate mortgages, and consider the length of time that you plan on having the mortgage.

Don't forget that the APR is an effective interest rate--not the actual interest rate. Your monthly payments will be based on the actual interest rate, the amount you borrow, and the term of your loan.



[/quote]Neighbor, based on this link: http://www.answers.com/topic/annual-percentage-rate , I would have to disagree with you. I am just learning this myself, but it would appear that the "interest rate" is really not the measure of what you pay the lender. The APR is a better indicator, and PFCU's APR's are pretty comparable to those of everyone else.
[/quote]

 

The important language is: you should not depend solely on the APR in choosing the loan program that's best for you!

The APR is a hypothetical rate. You must go by the actual rate. They do not use the APR for calculating payment.

 

peace,

Our mortgage broker works with over 350 lenders, including the large banks such as Wells Fargo and Countrywide among others, and can help to get you the most competitive rates based on your objectives. As others have stated, the whole mortgage industry has changed with the low interest rates in recent years, and now offer many different programs to fit your needs. With the many choices, also can lead to confusion for the consumer. Brokers get wholesale interest rate, so its better than going straight to the lender. If you need any help, just email me at tim_nguyen9@yahoo.com

 

pentagon fed has decent rates, but their 30yr jumbo is 5.907APR... my CU (apple federal) has the 30yr for 5.629% I think apple is for school teachers and families, etc...

Tim, how much do brokers usually charge for their part of the deal? I presume they get a kickback from whatever bank they steer the customer to? Do they also charge the customer points? Wouldn't that negate any "wholesale" advantage? It seems to me mortgage brokers might be a better option for people that are not very savvy or are used to doing things the old-fashioned way. Just my 0.02$

 

boomertsfx,

Mortgage brokers rates will always beat the bank's rates PERIOD. There is a small spread built into the wholesale interest rate already, but offered rates still are lower than retail rates. Brokers also have access to multiple lenders that have multiple programs, which means choice of programs and competitive rates. For example, if you walk into a Bank of America, your choice is only BOA.

Points are always negotiable. The broker's job is to give available options, so in the end it will be a win-win situation for everyone.

 

Keep in mind that you don't know what company/s you will end up with at first. Although generally it doesn't matter, I am currently having a really hard time trying to fix a problem that occured when the company to whom Intercoastal sold my mortgage resold it again (and didn't include the principal I had paid them in the balance transfer). These huge mortgage companies leave a lot to be desired in the customer service department.

I don't know if Credit Unions resell mortgages, or if you can expect to stay with them...

Pam D.

 

Pen Fed has not sold my loans.

Brokers rates may beat bank rates, but CU's probably beat them all. I doubt a broker can "negotiate" points when the competition is offering a 5/1 Jumbo for 4.375 ZERO points and waived closing costs. No I do not work for PenFed, I just have shopped around and done years of research.

SNIP from https://www.penfed.org/productsAndRates/mortgages/closingCosts.asp


For a limited time, we will pay many of the fees you would pay other lenders.*
Apply now for a new mortgage and we will waive:

Processing Fee
Underwriting Fee
Application Fee
Credit Report Fee
Appraisal fee
Tax Service Fee
Flood Certification Fee
Closing Fee**

Free 90 day rate Lock!

Anyone got a better published rate from a reputable lender?

 

Hey Lefty- shouldn't you be studying for the bar??? I didn't know you were so knowledgeable about mortgages!

 

neighbor,

The rates for the 5/1 ARM for conforming and non-conforming (Jumbo) seem to be the same on PenFed's website. This seems odd. Remember when banks are going to give a loan to a homebuyer, they take a look at all the risk they are taking on, including loan amount. In terms of waiving certain fees, just remember there is NO FREE LUNCH. It will almost always be made up somewhere else. Banks are in the business of making money. That's why they give you a low rate of return on your checking/savings and generate revenues by credit cards, mortgages, etc. If someone has been able to take advantage of PenFed's rates, then please come back and share your experience. I took a look at the Fixed loans, and it is just as competitive if not higher than broker rates.

As to points, it is up to the broker to offer different options for the client. It has nothing to do with the broker's wholesale rates with the lender/bank. The spread and rates change every day, sometime multiple times. Points will only affect the bottom line of the broker (commission). Like I said, brokers have room to work with you because they can offer wholesale rates. Yes, rates is very important as a consumer, but I will tell you that a major factor for people these days is that what is what is promised is DELIVERED ON, and is ON TIME. Ever had things changed at the closing table?[:0] Not very funny, huh?

 

We just closed on a 30-year fixed jumbo from Penfed, no points. They waived the $450 for the appraisal, etc. and the $300 fee for their title company. Leaving us w/ the interest for the first month, escrow, $200 to title co. for title search, plus title insurance and grantee tax (?).

Service was good, friendly, helpful, and the title company comes to your house to close. Plus, they have an online application. Painless.





Pam D.

 

loudoun_terp,
As for the 5/1 Jumbo and Conforming being the same, it seems to be their "trademark." They have always been the same (for years). They try to keep the Jumbo 5/1 low. Sometimes they offer significantly lower than market rates for the 5/1. (for example I have seen the 5/1 lower than the 3/1). As for the fees, they do not make it up anywhere else. The fees are labeled as such and they must follow the TILA (truth in lending act). As for points, if you offer a 5/1 with the same rate and no points, you will not get a commission? How can you compete with that? The only way that I have ever seen a lender compete is if they are linked to the builder and the builder offers a kickback to the buyer with a breakeven way down the road. In other words, the lender would have to offer a huge incentive. Trust me, these $4500 kickbacks are not enough. You figure even 1 point on $450,000. is $4500 and zap there goes your incentive. Unless you are buying condo, your loan amount will probably be more than $450K. I hope that people educate themselves before making the biggest purchase of their lives. No need to spend additional money on some brokers commission.

 

pamD, glad I could help

 

Actually, we had already applied for the loan before this thread started... we already recognized a good thing. Just wish we hadn't locked, because it went down and then back up again.

Edited to add: We also have our car loans with them... good stuff all around.

Pam D.

 

pamD,

Thanks for reporting back on PenFed program. It is a very good rate, and your application was probably very strong. Not everyone is in the same situation as you.

neighbor,
There's no need to go back and forth on these discussions. After all, it's your money and you should do with what you are comfortable. You don't work for PenFed? Can we see your W-2? Just kidding! Bottom line, if the broker will not eat any commission, then it WILL be the lender.

 

neighbor,

To reiterate, points are optional and some commission is already built into the spread (part of the Rate being offered). Anyone can opt for a no point rate, but it will be slightly higher.

And yes, builders do offer incentives if you go with their lender. They don't always disclose that their "preferred" lender is part of their same company, specializing in mortgages. If the builder incentives are good enough, then take it. But realize, that builders already make a lot of money from the homebuyer, so the closing incentives are false money. They just want us to think that the incentives is something they're throwing in for free.[8D]

 

pamD,

What rate did you get for your Jumbo 30year Fix at PenFed.

 

We got 5.875. Could be better, but it worked for us.

Pam D.