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sburugu · Joined: 23 Feb 2011 Posts: 15 4.34 Dollars($)

Hi,
Very new to this forum, please advise me i am posting something wrong here.
1) I am looking for mortgage for first time, i am considering options of 30yr fixed and 7yr/arm. Pretty new to this concept but i am assuming 7yr arm mean for 7yr, interest rate will remain same and after that rate will be variable according to the 2018 market rates. I am trying to find advantage for each of these option or there are better mortgage products i am missing.
2) usually what are most reputed mortgage companies which can do preapproval for free ( when i approched citi bank they told its 500$(appplied when if loan is taken with them), but recently around 10 of my friends said that they shopped with atleast 3-4 mortgage companies and they did not charged anyamount for pre approval
3) for that current week for state of virginia, if i opt for fha loan with 3% down, i have excellent credit( around 790-805) and around 80k-85k income/around 3000$ lease amoutn remaining/no other debt. what kind of rate i can expect for a mortagage say 320-350k.

brian1 · Posted: Wed Feb 23, 2011 2:13 pm Post subject:

Welcome to the forum - The choices is simply a matter of security vs. risk
If you are sure you will sale or refinance before 7 years are up there is no risk in doing an adjustable rate mortgage (which you understood based on your description) The down side is if you stay longer than 7 years and rates have gone up you could suddenly be faced with a higher rate. Since rates are still at very good all time lows I would advise against an adjustable if you know you will be staying. If you find a broker instead of a bank they should be able to do a preapproval for free or at most the cost of the credit report - there is no cost to them so there should be no cost to you. Banks like CITI want you to pay $500 because they know you will not back out and will use them since they have your money up front.
Right now rates are still very good - Assuming your scores and that loan amount with 3.5% down (the required amount) you should be looking at a rate in the 4.625%-4.75% range with NO points - You will still have costs but there should be no charge for that rate -
Another good feature with FHA is you can still get a seller credit for closing costs - If you negotiate for the seller to pay the costs when offering it is possible to buy a home with just the 3.5% down and maybe the appraisal fee out of pocket. If you do not get the seller to agree you should prepare to have 2-3% of the loan amount for costs - This would include the money for your first years insurance as well as the costs to start your impound account for taxes.
Hope this helps - let us know if you have any other questions
Brian

sburugu · Joined: 23 Feb 2011 Posts: 15 4.34 Dollars($)

1) Thank you so much for your detailed explaination, usually where can i find the broker?, How are they different than bank? So do they still go to bac/citi/wachovia for actual loan?
2) I was advised by some friend to reach out to 3-4 lenders ( or brokers as you mentioned is the best choice) with a weeks time so as to get best possible rate/costs.
3) Do i need to go to a broker physically and through online is it fine? and also is there any way to say that particular broker is geniune and not fraud

Thanks so much

brian1 · Posted: Wed Feb 23, 2011 4:05 pm Post subject:

There are brokers everywhere - I would maybe ask friends and family if they know of anyone - I would be careful of just finding someone online by searching google - you never know what you will get - there are other better ways to find brokers/bankers online - and there is nothing wrong with a bank - just do not get trapped by paying fees upfront.
You can look at 3-4 lenders but do not let them all pull credit it is unnecessary =- get a copy of your report from the first and then take it to anyone else for a quote.
Good Luck
B

sburugu · Joined: 23 Feb 2011 Posts: 15 4.34 Dollars($)

Thank you so much Brian

brian1 · Posted: Wed Feb 23, 2011 6:19 pm Post subject:

Welcome - good luck

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