So I just added external accounts (for bank-to-bank ACH transfers) at two different bank sites, and my external accounts were verified instantly – without the trial deposits, and without my credentials for the external bank’s website (one of the dumbest ideas ever conceived IMO). I did this at two different banks and both worked instantly. This made me wonder if there’s some new regulation or ACH feature that was recently enabled. Anyone know?
I have also noticed very few bank use trial deposits anymore.
I am unaware of instant verifications except in two instances:
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If you provide the bank doing the verifying your login credentials at the bank you are attempting to verify.
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If the bank you are wanting to verify had been successfully verified in the past but subsequently was removed from your link list.
However (and this is speculation):
If we are in the realm here of the larger money center banks, things could be different. Those banks have certain ties, and other mutual trust arrangements, which might facilitate instant verification.
Personally I do not operate in that realm. Trial deposits, for me, remain de rigueur.
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I’ve never experienced an ‘instant link’ without requiring either a login or a trial deposit. Was it a previously linked and later removed bank like Shinobi suggested?
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No, it wasn’t a previously linked account, but a brand new Wells Fargo checking acct. I linked from Wells Fargo to Chase, and from Discover to Wells Fargo, and both were instant. All three banks support Zelle, so that could be something (perhaps Zelle also provides some instant verification service in addition to the instant transfers, but I’m just speculating).
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Hello! To introduce myself, I was pretty active on Fatwallet deal side and occasionally got valuable/useful tips on the Finance area (e.g. how to negotiate on car prices, etc).
Anyway, we’re in thinking of buying our first house in the near-ish future and I thought folks here might be able to provide valuable insight around mortgage shopping. I saw this thread but was hoping to get a bit more since I feel like I’m clueless.
In case it helps, here’s my situation:
- Location: SF bay area (target zip: 94070)
- Target price: $1.6M ~ $2M
- Available for downpayment: ~$1.2M
- FICO: >820
- Income: $200k
Questions:
- Where do I begin for mortgage shopping? I looked at Zillow years ago, but when I looked recently, I see almost nothing: Sebonic, Zillow and NBKC
- What are advantages/disadvantages of getting mortgage from different types of institutions like Credit Unions, Big banks, Small banks, brokers, etc? I’m not even sure what all my options are.
- Any advice on putting 20% down vs more? As you can see above, I think I could put down a sizable downpayment, but with interest rates so low, I’m tempted to put only 20% down and keep the rest of it liquid to invest elsewhere.
- If I request a pre-approval from multiple lenders to try to get the best rate, will they do multiple hard credit pulls?
- Is there any way to take advantage of my high credit score? Everything I’ve seen seem to be “>760” as the highest tier.
Thank you in advance! Let me know if I should create a thread instead of asking here.
Your scenario is interesting. The super conforming loan limit in the SF Bay Area is $765,600. Anything above that is a jumbo loan. Anything below $510,400 would be a traditional conforming loan. The cheapest option is very likely the conforming loan. Super conforming loans will certainly be more expensive and incur risk-based charges from Fannie/Freddie. Jumbo loans can be cheaper depending on the lender and the parameters. It pays to run your numbers through online quotes to see what comes up and understand the kind of loan you want.
The other thing – you are in a hyper competitive market. Putting more money down will make your offer more competitive. If you’re going against another bidder that is putting 20% down and relying on approval of a jumbo loan, while you’re putting more down and only need a conventional loan, the buyer is gonna pick you.
Your biggest issue with higher loan amounts, and thus higher monthly payments, is going to be income. It sounds crazy, I know, but $200k in the SF Bay Area is not a lot of income when you’re talking about houses in the $1.6MM-$2MM range.
In terms of where to go, if this is your first purchase, I would highly advise going with a local broker. You need to get a feel for the process and have in-person help if something goes awry. Close with a higher rate in exchange for credits towards closing costs. Six months after close, start looking to refi with an online lender with 0 closing costs (the usual suspects for cheap loans in this category are Box, LenderFi, Provident, and the Zillow fly-by-nighters). They will almost always offer a better rate.
In terms of hard pulls, pre-approval almost always triggers a hard pull. All mortgage hard pulls within 30 days count as a single pull for score purposes. However, with your score, it really doesn’t matter if you have a few of these on your credit report. Two separate pulls more than 30 days apart will maybe take 10 points off for a brief period of time.
Your credit score, since it is above 760, is meaningless, unless you go with a Jumbo loan that isn’t government backed. Those have different credit parameters and are not bound by Fannie/Freddie rules.
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Thank you, sullim4, this is SUPER helpful. It really is a crazy market here.
Two quick follow-up if I may:
- Regarding:
In terms of where to go, if this is your first purchase, I would highly advise going with a local broker. You need to get a feel for the process and have in-person help if something goes awry. Close with a higher rate in exchange for credits towards closing costs. Six months after close, start looking to refi with an online lender with 0 closing costs (the usual suspects for cheap loans in this category are Box, LenderFi, Provident, and the Zillow fly-by-nighters). They will almost always offer a better rate.
Is there something magical about the 6-months mark, or is that just meant as a ballpark amount of time to get used to the process?
- Are there any risks associated with those “Zillow fly-by-nighters” and other cheap loans that I should be aware of?
Six months is when your loan becomes “seasoned” in the case of conforming, government backed loans. Your lender gets paid one of two ways, either directly from a GSE (Fannie/Freddie), or indirectly with a GSE’s money through a correspondent program. A lot of credit unions and online lenders use warehouse lines of credit to fund your loan. A few days after close, they sell your loan to a larger wholesale lender via a correspondent program and pay off their warehouse line with the proceeds. That large bank turns around and sells it to Fannie or Freddie.
Fannie/Freddie pays the bank a nice chunk of money for funding the loan. If you refi before the 6 month clock runs out, they will take their money back and your bank will actually lose money on your mortgage. While there is nothing legally or morally wrong with doing this, it screws the people you originally got the loan with, so if you care about that, you will want to wait the 6 months for your loan to season.
The risk with the fly-by-nighters is sort of what I was alluding to in my original post. They are not good hand holders, and can do stupid things that put your purchase at risk. Examples include printing the wrong paperwork for the closing agent, enforcing draconian paperwork conditions to close, and running out the clock for your rate lock period. None of these really matter for a refi because you still have your original loan, but in a purchase transaction, it can be the difference between completing a deal and having it blow up.
I’ve purchased two homes in my life, but gone through the mortgage process six times with six different lenders. My first purchase was with a local credit union and they were expensive, but easy peasy to get a loan with. I risked my second purchase by going through Provident for a lower rate. While they were fine, I would say that I worked the system and knew the answers the underwriters were looking for when I saw each condition. Other people who do not know how this process works might find that daunting and confusing, thus putting the loan at risk. It’s up to you – but my advice would be to stick with a local lender or broker for your first time just so you can understand how the process works.
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Sebonic is pretty competitive (at least for conforming mortgages, i.e. <= $510K, not sure about higher amounts). The zillow marketplace at least gives you something to compare to. There aren’t many other comparison sites like it. There’s bankrate, but in my experience the offers there are never as good as zillow.
None at all. Generally if you go directly to a bank, they’ll sell you one of their own (meaning they will hold the note and service it), but they’ll also charge you a lot more (in both fees and interest) than a broker (who gets much cheaper, wholesale offers from many lenders, including your bank). In my experience big banks are the worst / most expensive if you go to them directly, even if you have a special relationship discount via high deposits, like CPC. If you go through a broker you could still end up with a loan serviced by a big bank, but it’ll cost much less to get that loan. For me this is a purely financial decision and I’ll go where the cost is lowest. I’m not making a political statement by going to a CU vs a big bank vs a mortgage broker.
In addition to what @sullim4 wrote above regarding conforming, super conforming and jumbo loan products and their likely costs – there are certain Loan-to-Value (LTV) thresholds that make a small-ish difference in cost, so they should be considered if you are right on the border. The big one obviously is 80%, because any higher and you’ll need to pay PMI. The next one I believe is 60% – getting a loan <= 60% LTV can save thousands over a loan that’s just $1 above that threshold.
You’ll have to compare all the different choices to see what it’s worth to you. If you can get 80% at a reasonably low rate/cost, then it’s probably a good idea.
Yes. IIRC a pre-qualification doesn’t require a credit pull, but a pre-approval does. Also you don’t need multiple to make an offer, just one should be enough. Once your offer is accepted you can still look for a better loan.
Nothing I can think of for a single mortgage. There are other things you can do with your score, like churning credit cards for fun and profit, but I wouldn’t do that until after you buy your house.
You can write one thing in the offer but fund it any way you want. The buyer is not going to know or care about HOW you financed, as long as financing goes through – the buyer get paid the same amount either way. But if the higher financing falls through, you’d better be able to get the lower financing as mentioned in the offer.
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I too have purchased twice and refinanced four times now. I used box (boxhomeloans.com) for my first purchase, the other five times I used brokers I found on Zillow. Thre aren’t many fly-by-night-s there, especially those with hundreds or thousands of reviews. I read A LOT about the home buying process before I went through it, so I didn’t need too much hand-holding on the loan side.
There’s no such thing as a “cheap loan” as far as I know. Don’t go for ARM, those are terrible right now and the rates are the same as a 30-yr fixed. The 25, 20, and 15 year fixed loans have very slightly lower rates right now (cause all the rates are super low, the difference between them is very small), but the monthly payment is much higher.
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Your avatar was Baymax, yes? 
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This is a gray area and likely depends on the P&S agreement used for the offer. Most MLS standard forms that include a financing contingency will include clauses that require the buyer to inform the seller about any changes, and also gives the seller the right to inquire as to the status of financing. If the buyer does not say anything about changes, the closing agent will certainly notice it if they are worth their salt and inform the seller’s agent.
Again, depending on the terms, how far along you are in the process, etc… it could give the seller the right to terminate and keep the earnest money. I checked the NWMLS forms used for my transactions and they all included language to this affect. I personally would not change financing unless I had to.
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Close! It was “Marvin the Paranoid Android” from Hitchhiker’s Guide to the Galaxy, which come to think of it, does look a like Baymax. Good memory!
Well, @sullim4 and @scripta, this has been so helpful and educational. I really appreciate it.
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Although I don’t have that much experience with my 2 purchases (plus 2 contracts from which I backed out), it has been my understanding that it is very difficult for the prospective buyer to actually lose the earnest money deposit in California when using the standard CAR (CA Assoc of Realtors) forms. The buyer could back out at the last minute for any reason and keep the EMD. I think the EMD only exists because of tradition, and sellers don’t know or care that it is meaningless.
IIRC many investors advise making the EMD no more than $1K (was it SIS who advised this in his RE thread back on FWF? I can’t remember). This may not work in a competitive market or where sellers just don’t know any better.
You may be right about the gray area, but I’ve read plenty of examples and advice where buyers waive the financing contingency, then get financing anyway. I guess it’s not the same as keeping the contingency with different terms.
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Can anyone recommend a site that lists the best auto loan rates? I have been checking local and national credit unions already for rates. Wondering if there is a reputable site that aggregates this information already. TIA!
From what I recall, a 10-year ARM was the same as a 30-year-fixed rate anyway, or close enough to make almost no difference. I’d always take the 30-year-fixed if you can swing the down payment.
Hello Smart People! I’m back with more mortgage related questions (tagging @scripta and @sullim4 since you guys were so helpful last time).
Good news: we just had an offer on a house accepted. Based on @sullim4’s recommendation from last time, we looked around various lenders, but ultimately found a local lender generate a pre-approval letter and I’m most likely going to go with them. I compared with BoxHomeLoan and terms were fairly comparable.
Anyway, we have a couple of options and I’m hoping you guys can help me better understand the differences.
Purchase: $1,765,000 (offer: $765,000 down, $1MM loan).
Product 1:
3.25% – par ($0) – $4352.06/mo
3.125% – 0.498%pt ($4980) – $4283.75/mo
3.0% – 0.998% ($9980) – $4216.04/mo
Product2:
3.125% – par ($0) – $4283.75/mo
3.0% – 0.306% ($3060) – $4216.04/mo
However, Product2 has two restrictions. First, because of minimum credit-line requirements the loan would be under my name only and will not include my wife. Second, it includes an impound account.
From my research, the single-spouse mortgage doesn’t seem to be that big of an issue here in CA since it’s a Community Property state. As I understand it, it just means my wife won’t build credit off this load. If we can’t pay off the mortgage, it’ll hurt my credit but not hers.
I’m less certain about the Impound Account requirement. As I understand it, we’re basically pre-paying property tax / insurance on a monthly basis (instead of twice-a-year) for the remainder of the loan. Not sure if it’s worth it.
Any thoughts/advice/additional info would be appreciated. Thanks!!
I’m in CA and my spouse is not on any of our mortgages, but is on all the titles. It’s called a “titled non-borrowing spouse”. I’ve only found one lender that does not allow this (Provident). All others have no problem with this. I tried to explain to Provident that we’re in a community property state and it shouldn’t make any difference legally. They wanted a quit claim deed from the non-borrowing spouse. They presented me with an actual written policy that contained their rules for all the states. Interestingly enough if you go through a broker that resells to Provident they don’t care about this, they only care if you apply through them directly. In terms of legal differences, the only thing I found is that if the borrower passes away and the spouse misses a payment, the lender may recall the loan (ask to be paid in full or refinanced). They should not be able to recall if payments continue on time. Other legal protections (like titling into a family trust) don’t care about the loan, only about the title.
The impound account (aka escrow account or escrows) is not a big deal. Personally I prefer to avoid it, because taxes and insurance are the homeowners responsibility (and there are a few rare horror stories online of lenders missing those payments), and because I’d rather use a rewards credit card (or Visa/MC gift cards that work as debit and have lower fees than credit cards) to make those payments myself last minute. It is still possible to pay those expenses yourself in advance, then request a refund from the escrow account. I’ve done it both ways, but IMO having to ask for escrow reimbursement 2-4 times a year is time-consuming. The loans with escrows are usually cheaper than those without escrows. I’ve seen one lender whose difference was only $150, but almost all others charge a quarter point to remove escrows (that’s $2500 in your case). You can ask Product2 what the cost difference would be to remove escrows and decide for yourself if it’s worth it. Personally I would avoid escrows if it only costs maybe $300, but if having escrows saves me more than $300, I’d be fine with it.
It’s also possible to ask the lender to remove escrows later on. They might have some requirements, such as low LTV (which you might have already) and a year of timely payments. But they could also charge a fee for doing this – a few lenders I’ve looked at charge that same 0.25% of the remaining principal balance. Another way to get out of this is to refinance, but you may have to wait 6-12 months from the initial purchase due to “seasoning” requirements (I believe most lenders seasoning requierement is 12-mo after initial purchase and 6-mo after last refi).
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Thank you again; this helps. “Titled non-borrowing spouse” didn’t bother me much but it’s good to get confirmation that it really isn’t that big of a deal. What bothered me about the impound/escrow account is the idea of prepaying property tax. At ~$1700/mo in property tax, it seems like a lot of money sitting in escrow not doing anything for me.