Posted by Richard (NC) on January 10, 2001 at 20:14:09:
Gene,
I understand and don’t have problems with changes. It just seemed going from 7.375%/0 points to 6.75%/2.5 points was a little extreme. Thanks for the input…
Richard (NC)
Bait and switch (long) - Posted by Richard (NC)
Posted by Richard (NC) on January 09, 2001 at 19:57:42:
I recently applied for a mortgage on an investment property using Lendingtree. Because my credit is good I received several good offers for a mortgage on an investment property with 10% down.
Well I decided to go with one offer that was quoted at 7.375 percent no points. Everything was fine, I received the commitment letter and was all ready to go.
I received a call from the broker stating that he had just talked to the lender and could not do the mortgage at those terms. Lender said that they had to do an investor loan at 6.75% with 2.5 points. Broker said that he tried to get the mortgage under a second home program but because the house is on the same block/street as my primary residence the second home program was a no go. It must be an investor loan which is what I asked for in the first place.
Since this is my first time dealing with a broker, I’m not sure that he tried to do a bait and switch or the lender offered better fees to the broker on the new terms on the new loan and that’s why I can’t get the loan at the original terms.
What do you guys think? I have a commitment letter from the lender with the original terms, should I push the issue or pay the points upfront and enjoy a larger positive cash flow on the rental? (Payments will be $50 lower per month…) Have you ever encountered this before?
Thanks!
Richard (NC)
Re: Bait and switch (long) update… - Posted by Richard (NC)
Posted by Richard (NC) on January 10, 2001 at 11:58:29:
I decided to challenge the broker because I think he was playing games and I haven’t spent any money yet. Oh how the story changed!!!
Here are my options:
Loan amount: $108,900
6.75% with 2.5 points
6.875% with 2 points
7% with 1.5 points
7.125% with 1 point
7.25% with .5 of a point
7.375% 0 points
Now I considering dropping the broker. He is playing games. Any option I pick will result in a min. positive cash flow of $400 per month as a rental.
If the name of the game is getting control of property with a min amount of money, should I go for the 0 points?
Richard (NC)
Re: Bait and switch (long) - Posted by Ed Garcia
Posted by Ed Garcia on January 09, 2001 at 20:53:33:
Richard,
I’d like to tell you that I’ve never heard of such a thing, but I’m afraid these things do happen. If rates were going up, I would defend the broker, because these things can honestly happen. While rates on the decline, I think you’re broker is playing games or just reneged. When I look at the cost going in, I think the broker lowed balled you to begin with. You don’t tell us the loan amount. That also could have something to do with it. If you change brokers Richard, you may not do any better.
Ed Garcia
Re: Bait and switch (long) - Posted by Richard (NC)
Posted by Richard (NC) on January 09, 2001 at 21:02:20:
Ed,
Here are the specifics:
Original Terms:
108,900 - 7.375% - 0 points
New Terms:
108,900 - 6.75% - 2.5 points
Contract price is $121,000 and I’m putting 10% down. Comps are around $139K.
Ed, I think he lured me in with the 7.375% and then did the switch…
Richard
Re: Bait and switch (long) - Posted by Ed Garcia
Posted by Ed Garcia on January 09, 2001 at 21:15:23:
Richard,
I can tell you one thing, if you go back and offer 2 points, he’ll take it.
The rate is outstanding for a NOO, if it’s fixed for 30 years.
Ed Garcia
Re: Bait and switch (long) - Posted by Richard (NC)
Posted by Richard (NC) on January 09, 2001 at 21:17:14:
Ed,
That rate is for a NOO mortgage fixed for 30 yrs. I’m thinking about negotiating the points…
Richard (NC)
Re: Bait and switch - Posted by gene
Posted by gene on January 10, 2001 at 19:47:51:
He didnt pull any kind of bait and switch any conforming loan out there is sold subject to discount and yeild. I do loans everyday where the points and fees change if the rate goes up or down. I am in NC as well and if you got that rate on NOO go with it.