Buying condo direct from seller

D · Joined: 09 Oct 2006 Posts: 4

Hi all. I'm in a period were I will need to secure a mortgage in about a month to buy a condo directly from the owner that I have currently been renting for a couple years. It's an "as-is" deal and I have no representation and would rather not have any if possible.

What is involved in doing an inside deal like this that I should expect?
Can someone walk me through the every step of how this happens?
Securing a mortgae shouldn't be a problem, what I'm concerned with is dodging uneccessary fees that ignorance may lead me to fall victim to.

The condo is in Philadelphia, and for what I know the fees involved will be that for the title, transfer tax and the mortgage itself. Anything else I should look out for?

And also, where does one obtain a sales contract if he or she wanted to sell directly to a buyer without an agent or broker, as in this case?

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Quote: And also, where does one obtain a sales contract if he or she wanted to sell directly to a buyer without an agent or broker, as in this case?

Staples.

Quote: It's an "as-is" deal

Are there concerns about the property? You may want to consider a renovation loan if so.

Quote: Anything else I should look out for?

Well, once again it's hard to say because every market is different. Your cost isn't going to be any less because you're going straight to the seller than it would be if you were buying through a realtor. You're going to have Appraisal, Title, Escrow, Flood Cert, any inspection fees that are required, probably an underwriting/processing/commitment fee, tax service fee, etc. As I mentioned to someone else earlier, you could be looking at $2000 to $xxxx, depending on points and your market.

D · Joined: 09 Oct 2006 Posts: 4

Thanks for such a fast response, Haplo.

As for your inquiries, no there is no concern about the property conditon. I've had conversations with the person I'm buying the condo from and he told me that we could downlaod a sales contract and go from there. Could I get one on-line to use as a point of reference?

Also, would an appraisal be necessary since we have already agreed on a price?

One more thing. I heard it is best to contact a direct lender for a mortgage for obvious reasons. My plan is to simply open the yellow pages and contact lenders and ask them questions in order to get the best rate. What I wanted to know is is there a better advantage to my bargaining prospects since I'm going to put 30% down and my credit and income are good? Would they want my business more than the person who doesn't seem so secure? Will they give me a better rate if my profile seems good?

D · Joined: 09 Oct 2006 Posts: 4

I guess what I'm asking is what would you do if you were in my shoes given the profile of my situation as I have stated?

Can you walk me through the whole process of what I'll be running into from securing a loan to actually transfering the property in my name?

Thank you in advance.

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Quote: Also, would an appraisal be necessary since we have already agreed on a price?

The appraisal is not for you, it's for the lender. An appraisal on a purchase in most cases is a justification of the sales price. The home inspection is for you, so that you know what potential problems may be hiding.

Quote: I heard it is best to contact a direct lender for a mortgage for obvious reasons

Haha, I don't disagree entirely with this statement, seeing as how we're a lender ;) However there are advantages either way.

At the end of the day, the bottom line in most cases is that brokers *usually* have a slightly higher cost (they are being charged to do your loan, so they pass that off to you) but *may* have a lower rate. In some cases in order to get that rate you are likely to be placed with a company that's going to bounce your loan around more than a superball.

Quote: My plan is to simply open the yellow pages and contact lenders and ask them questions in order to get the best rate.

Anyone can quote you a rate. Everyone is going to quote you their best rate. If you're going to call around and shop, look for someone knowledgeable about their product, not just someone that wants to make a quick buck.

Quote: since I'm going to put 30% down and my credit and income are good

Most likely you would be best served in a conventional product, and are likely to get a standard rate with that product (i.e. you're not looking at a higher rate due to having higher risk.) Part of it will depend on your loan amount, because some companies have a minimum, and most will cut their price in order to score a big deal.

Quote: I guess what I'm asking is what would you do if you were in my shoes given the profile of my situation as I have stated?

If I were in your shoes, I would look for someone as previously described. Knowledgeable and looking out for your best interest. There is a lot to be said however about someone that keeps their company in mind on a deal. We are not in business to give money away (I know it sounds like it!) and nobody will stay in business long, especially in this market, if they're under cutting the house on every deal. If you want a potentially long-standing relationship with this company/individual, sometimes it might cost you a little more.

Quote: Can you walk me through the whole process of what I'll be running into from securing a loan to actually transfering the property in my name?

Yes, but that would take a ton of time. Here's the basic overview:

Inquiry --> Credit --> Application --> Underwriting (borrower) --> Underwriting (Property) --> Closing

If you want more detail than that give me a call this afternoon. I've got a lot of conference calls this A.M. :)

chow's evil twin · Joined: 11 May 2006 Posts: 40 Location: The Brickyard

egads....Let me put my Broker hat on here.

Quote:
I heard it is best to contact a direct lender for a mortgage for obvious reasons

Haha, I don't disagree entirely with this statement, seeing as how we're a lender However there are advantages either way.

At the end of the day, the bottom line in most cases is that brokers *usually* have a slightly higher cost (they are being charged to do your loan, so they pass that off to you) but *may* have a lower rate. In some cases in order to get that rate you are likely to be placed with a company that's going to bounce your loan around more than a superball.

In some cases in order to get that rate you are likely to be placed with a company that's going to bounce your loan around more than a superball.

oh Puleeze :roll:

(and may m2c just roll out of his chair when he reads this debate!)

Sir Haplo,

The street rate for brokers is better than the in house bank rates any day of the week. I suggest you retract this statement. If people think I'm the FHA's poster child (as suggested by m2c, *YOU* are really a poster child!) :wink:

m2c · Joined: 03 Aug 2005 Posts: 937

Well, evil one, not sure why this thread is taking this tangent but ….

There is not reason why a broker cannot offer as low a rate as a lender but I suspect there are corporate culture and greed factors with SOME brokers. Pricing structure has to be established for there is a neutral incentive/disincentive posture. Do think you get more underwriting flexibility from lenders. I think this is what you were saying in the first portion of your reply but appears you went 180 degree at the end.

The bouncing ball simile (euphemism for hot potato or, more cynically, nobody’s going to catch me if I fudge application data mentality) is worth considering.

The party may be over – see WSJ today:

http://online.wsj.com/article/SB116035800558486464.html

chow · Posted: Mon Oct 09, 2006 3:35 pm Post subject:

For the life of me I couldn't understand why when given a choice to shop and compare apples to apples-one wouldn't do it.

Now, let us examine Snake Oil Sales......

Now face it:

All of the loans are sold to someone else-IE Fannie, Freddie, Monna Hoochie Mae, and maybe even Gennie Mae..
If a person has a problem telling you who your servicer will be-well, e all would because even the big dogs sell loans off!

ohmygawd, all those HECM's FHA does are sold to Fannie???? :shock: All the while I thought FHA was holding my mortgage!

What got me on a tanget? READ ABOVE!

You can't go around saying a "Direct lender is best."

Mac, I need a little back up here!

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Quote: The street rate for brokers is better than the in house bank rates any day of the week. I suggest you retract this statement. If people think I'm the FHA's poster child (as suggested by m2c, *YOU* are really a poster child!)

I'm not retracting anything :P

Mortgage brokers frequently can beat the rate of a large lender like us. We have high costs we have to cover for each and every loan, so it's tough to just rip out a 5% rate. All I was saying is that they usually aren't any lower than the banks are (so they make a bigger paycheck, giving the customer what they expect) however they do have the capability to.

I'm missing where I said anything wrong?

chow · Posted: Mon Oct 09, 2006 4:26 pm Post subject:

Haplo wrote: Quote: The street rate for brokers is better than the in house bank rates any day of the week. I suggest you retract this statement. If people think I'm the FHA's poster child (as suggested by m2c, *YOU* are really a poster child!)

I'm not retracting anything :P

Mortgage brokers frequently can beat the rate of a large lender like us. We have high costs we have to cover for each and every loan, so it's tough to just rip out a 5% rate. All I was saying is that they usually aren't any lower than the banks are (so they make a bigger paycheck, giving the customer what they expect) however they do have the capability to.

I'm missing where I said anything wrong?

Other than the fact the good broker would still beat the pants off of you... :wink: *you know where I come from*

I'm just a sage.

And...... remember I still love every side of a good discussion that we can educate a borrower in! (Even if Haplo is wrong!) :P

chow · Posted: Mon Oct 09, 2006 4:40 pm Post subject:

Do think you get more underwriting flexibility from lenders. I think this is what you were saying in the first portion of your reply but appears you went 180 degree at the end.

Well let me put it to you this way....

If a GSE wants to market a product and ...put's a ton of money in a contract to market it...Would it not be in the buyer's best interest to find a lender who was going to meet the wants and needs of the product?

The big house is closing up for brokered loans. Who is going to be the conduit for the needs?

:wink:

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

How am I wrong, I completely agreed with what you said :P

chow · Posted: Mon Oct 09, 2006 5:12 pm Post subject:

I KNOW U DID, but that is mortgage speak! :roll:

m2c · Joined: 03 Aug 2005 Posts: 937

Going back over this thread I can’t find where the assertion that “Direct lender is best” by anyone other than those saying it wasn’t true. Hap alluded to “usually” and “slightly” but I don’t agree on the root cause of cost.

Aside to Chow – hope you didn’t take my post child comment to heart. I was meant to be humorous. Again, you need more “smiling face” icons. Also is “evil twin” really you. I DID think it was a separate person you knew rather than an alter ego.

As far as pricing to potential borrower, in a perfect world direct lender versus broker should be a wash. Exceptions are usually small, sleepy banks who for all I know might be pricing “correctly” with higher rates but only time will tell.

What’s a broker? Semantics, semantics. NAMB wants a wide definition of brokers so in their they can up the percentage under their tent. Your point that a large percentage (not all) of mortgages are “sold” via securities, etc. What surprises me is the apparent increase in velocity and number of servicing transfers. We do sell some product servicing released both by product category and when a wholesaler is pricing a particular note rate aggressively. Years ago there was typically only one servicing transfer; now it seems one per year or 6-month period is more the standard.

The advantage and “old fashioned” direct lender (originate, securitize and then service) can offer include flexibility in underwriting, a potential pricing edge via GFs, and negotiated MI pricing. Brokers can obtain some of these advantages to a degree via wholesalers. Broker do offer particular creative advantages as witnessed by the current Indiana-Virginia mess Countrywide and others have.

D · Joined: 09 Oct 2006 Posts: 4

What I've gathered thru your exchange is that at any time a direct lender or a broker could offer you a better rate given the fact that lenders often sell the loan to someone else and make their money off the overage they charged their original customer--a practice that is standard amongst brokers, correct?

I know that this site shuns solicitation, but could anyone recommend a reputable lender who could give me a good/fair deal?

Thanks again.

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