2nd Mortgage/HELOC costs

Asked by Damien Samuel, 60640 Mon Jan 5, 2009

So I am in the middle of a refinance, getting an 80% LTV mortgage, and a 10% second mortgage/HELOC. We are structuring it this way primarily to avoid payment of PMI, (total value is approximately $480,000).

Just so you know, I locked in at 4.875% fixed for the first, and prime 3 on the HELOC, so advice telling me to just leave this lender is not all that helpful -- not to mention the difficulty (that I have experienced) finding any other lender willing to provide the 2nd mortgage/HELOC.

At the same time, I feel as though many of the Lender charges are rather extensive, especially those associated with the HELOC. There is a total of $2460 for the first mortgage, and an add'l $1271 for the second (including overlapped closing/escrow fees of $225, and overlapping title insurance of $225. Not to mention a $600 UW, Committment charge that was already charged another $600 on the first.

What can I do to a) not lose this loan, and b) not get ripped off?

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Wayne Beals, Agent, Chicago, IL
Tue Jan 6, 2009
Chris is absolutely correct. Find a lender to compete with the one you have. The charges don't sound exorbitant in the current mortgage climate, and the rate of 4.875 fixed is excellent. You will not know how this rate compares with others unless you check.

I would let the current lender know that you are satisfied with their service and are heavily considering their proposal, but are concerned about fees and that you'd like some time to compare with others. Perhaps the current lender will become more competitive. If the current lender feels another credit inquiry will reduce your score, they can provide you with a copy of the credit report they have (this may be required). You can bring this report to another lender so they can put together a Good Faith Estimate for you.

I'm not a lender so I'm not sure this is the case, but from your description it seems that your first mortgage may be larger than the current limit of $417K to avoid a Jumbo mortgage. Ask your current lender if this is the case. If so, you may have less fees and an even better rate if you keep the first below $417K.

Best of Luck
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Christopher…, Agent, Chicago, IL
Tue Jan 6, 2009
Dear Daniel,

I'd be careful here. The general answer to your question is to find a different lender who you can then price compete against your first. However there is always a possibility that you can or will affect your credit scores by having multiple lenders officially inquiring about your credit history. If you are at or near a credit pricing threshold, 680, 700, 720, etcetera, then even a small change in your middle credit score might affect the pricing of your loan and the interest rate that you receive.

If you are doing this in the Chicago area (and I can't tell based on your zip code designation) I'd suggest contacting Dan Larkin with Professional Mortgage Partners. He has been in the business for a number of years, and he is by far the most consistently great lender that I've worked with over 5+ years of being a real estate agent and 2 years as a residential closer for a title company. Dan can be reached at 312-952-8068 (cell) or 847-277-1781 (office).

Dan and I have no formal arrangements that benefit me when I refer him to clients other than he does not upset my clients nor mess up their deals (as almost every other lender that I have worked with has done at one time or another). Good luck.

Christopher Thomas
Broker Associate, Sudler Sotheby's International Realty
773-418-0640 (cell)
Web Reference:  http://www.myagentchris.com
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