Hi Kevin,
One of them took it with Collective Bank (which has since been purchased by Summit Bank). This was a 7/30 product. The other took it recently with Somerset Savings Bank. His loan officer was Frank Papa and the phone # of the Bank is 800-225-2176. He got a 5/30 product with an intro rate of 6.875 % (for the 1st 5 years) and then pegged to an index (1-year treasury bill). At the time he took out the loan, in July 97, the rates were 20-35 basis points higher. The other banks that he also considered was Axia Bank (???) and Trust Company Bank (???).
Both of them told me that the best way to shop for a mortgage was to decide how long you intend staying (this will not only help you choose product - fixed, 1/30, 3/30, 5/30, 7/30. balloon - but also help you compare no point loans to loans with points. If you want to compare such loans, you might wish to calculate the effective APR in each case. (Effective APR is the rate on the actual money you are borrowing i.e loan amount less points, other closing costs, fees etc). You can calculate APR with this calculator mtg2.com
Usually loans with points work out slightly better than loans without points, because they are effectively making sure that if you prepay too early, it hurts you. However in the present environment of low interest rates, prepayment is not as big a fear as it used to be and hence the difference is less stark.
After you have an approximate idea of the product, the best way to shop for rates is to buy a Sunday edition of The Star-Ledger, and start calling all the banks listed in the mortgage portion of the real-estate section. Also make sure that after they quote you their best rate, you ask them whether they can make an exception (reducing the points or the rate on the program) for you with reasons like having them match other banks, because of one's excellent credit or other blah-blah-blah. Even though many usually quote their standard product rate, most computer systems have this sales tool (exceptions) for loan officers.
Also, I was wondering if you perused this. Here Clint has a section on his theory about how the market progresses vis-a-vis MF. It is pertinent because I remember discussions about the effectiveness of MF in different market conditions on TSO.
techstocks.com
Regards
Shivu |
