Can someone please advise on the best way to get a loan? We are told that going through a mortgage broker will cost up to 1 point of the loan, and in our case means up to $7K (loan=700K). Some background:
Husband/wife credit scores: 810s and 820s.
Loan preference: well, that's our question #2 below.
So here are our questions:
1- What are the advantages of using a broker vs doing-it-yourself? We have enough to put 20% down, have no bad credit history, and are not afraid to dug up our tax returns and fill in some forms.
2- Our first starter home was bought with a traditional 30-yr fixed (10% down). Our 2nd home we used the homebuilder's mortgage broker and went with a 5-yr fixed/25 ARM (20% down). Well, I think I need a multiple-part question here:
2a- It seems a traditional 30-yr fixed @ 7.25% will have paid $287K after 5 yrs ($247K interest + $40K principal). A 5-yr fixed interest -only loan @ 6.25% will have paid $222K after 5 yrs (all interest). So in order to build the $40K in equity from the first loan, we will pay an extra $65K ($287K - $222K). Is this why everyone does interest-only loans nowadays? (By the way, the 7.25% and 6.25% were numbers told to us by our agent, not sure if they are reliable)
2b- What are the down sides to IO loans, aside from your property being worth less when you sell which forces you to make up the difference? I mean, doesn't this also apply to using 30-yr fixed mortgages?
3- Are there websites that show reliable current mortgage rates?
4- Are there any banks (local or web) that are famous for giving competitive quotes?
Thank you very much. We do appreciate different viewpoints from risk-takers and risk-averser.
Husband/wife credit scores: 810s and 820s.
Loan preference: well, that's our question #2 below.
So here are our questions:
1- What are the advantages of using a broker vs doing-it-yourself? We have enough to put 20% down, have no bad credit history, and are not afraid to dug up our tax returns and fill in some forms.
2- Our first starter home was bought with a traditional 30-yr fixed (10% down). Our 2nd home we used the homebuilder's mortgage broker and went with a 5-yr fixed/25 ARM (20% down). Well, I think I need a multiple-part question here:
2a- It seems a traditional 30-yr fixed @ 7.25% will have paid $287K after 5 yrs ($247K interest + $40K principal). A 5-yr fixed interest -only loan @ 6.25% will have paid $222K after 5 yrs (all interest). So in order to build the $40K in equity from the first loan, we will pay an extra $65K ($287K - $222K). Is this why everyone does interest-only loans nowadays? (By the way, the 7.25% and 6.25% were numbers told to us by our agent, not sure if they are reliable)
2b- What are the down sides to IO loans, aside from your property being worth less when you sell which forces you to make up the difference? I mean, doesn't this also apply to using 30-yr fixed mortgages?
3- Are there websites that show reliable current mortgage rates?
4- Are there any banks (local or web) that are famous for giving competitive quotes?
Thank you very much. We do appreciate different viewpoints from risk-takers and risk-averser.