Refinancing my house, I need opinions on the lender.

[MT Wallet]

I went looking for a refinance on my investment house and am working with MJ Bradley Mortgage Capital LLC. Anyone have any experience with them or know of their reputation? I just looked at the disclosures they sent me and the fees ar higher than the verbal representations made-for example an appraisal fee of $799.00, a title search for 950.00. My last appraisal was about 300.00 and title work 450.00 and I thought the title search then was a rip-off because nothing had changed. Any thoughts?

[eddd]

It would seem you answered your own question about these people. I would look elsewhere.

[Paul Mihalka]

This sounds like a motorcycle dealer who advertises a low sale price, the wants to charge $400 for delivery, $300 for setup, and $200 for documentation.

[Kathy R]

I went looking for a refinance on my investment house and am working with MJ Bradley Mortgage Capital LLC. Anyone have any experience with them or know of their reputation? I just looked at the disclosures they sent me and the fees ar higher than the verbal representations made-for example an appraisal fee of $799.00, a title search for 950.00. My last appraisal was about 300.00 and title work 450.00 and I thought the title search then was a rip-off because nothing had changed. Any thoughts?

 

I was in that industry for 20 years. If someone quotes you one price but prints another you should walk.

 

Those written prices seem very high. I'd be inclined to hear them out before walking. If it's a Good faith Estimate it's not anything more than that, an estimate. But the costs of the Appraisal and the Title Search are KNOWN by the lender and there should be no need to jack them up in an estimate or a GFE.

 

Your previous Title Search was not a rip off. It is necessary for the lender to know that you haven't caused any changes that they aren't aware of. And it also let's you know if someone put, say, a mechanics lean against title without your knowledge. There are many reasons for a Title search, too many to mention here.

 

MJ Bradley Mortgage Capital LLC has only been around since 2003, before the fall of the industry, but late to the party. They are not a nationwide firm

[Quinn]

Reminds me of the North Face jacket on Ebay for $100; shipping and handling was $400.

 

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[Gregori]

Sounds like a blatant ripoff to me.

 

A residential appraisal shouldn't run much over $500, and even that'd be unusually high. (Around here, $400 is about average.) The costs are much higher if it's commercial property (a business building, shopping mall, gas station, 5+ unit apartment complexes, etc.) but it sounds like a single family rental home you're discussing?

 

I would absolutely talk to different lenders. Often the lender who currently holds the note will refinance with fewer closing costs than a new one, but not always! (They SHOULD, as their expenses are actually lower than originating a new loan, but many see it as an opportunity to tag you with more fees.)

 

Good luck!

 

 

[Kathy R]

I would absolutely talk to different lenders. Often the lender who currently holds the note will refinance with fewer closing costs than a new one, but not always! (They SHOULD, as their expenses are actually lower than originating a new loan, but many see it as an opportunity to tag you with more fees.)

 

Respectfully, I will point out that unless a lender is holding your loan on their shelf - in their portfolio - your comment is not accurate. It is rare for a lender to portfolio a loan, so it is common to accept the following as fact:

 

There is no cost savings to a lender when they refinance an *existing mortgage*. Why? Because once your loan closes your banker or mortgage banker sells the loan (the paper) into the secondary market (wall street). The reason you think your lender is *holding* your mortgage on the shelf if because you make your payment to *them*, but they are merely *servicing* the loan for the secondary market. IF you refinance your loan through a *Broker* instead of a bank or mortgage bank you are adding a middleman. When your loan is closed you immediately begin to send your payments to whatever institution is *servicing* your loan.

 

When any lender works with you and sees you through a mortgage process all you have if you come back to them is a familiar face. They have to start from scratch, as if they'd never worked with you. They have to recreate all of the paperwork, ask you all the same questions, gather all the same documentation and go through all the steps. They may lead you to believe you have an advantage going with them, but you don't really. They may cut you a deal, but that is up to them. It comes out of their bottom line, as there is no *savings* to them when they work with a past client.

 

It is most common for the *holder of your note* to be far removed from you, the consumer. The *holder of the note* is not involved in originating mortgage loans. Most of the industry - the bank, the mortgage banker, the mortgage broker - are in the business to *originate the loan*, but they do not *hold the note*.

 

It's a wonderful industry, in spite of what happened. I loved working in it for much of my adult life. I miss the Realtors and all the good people *who are in the majority* who work with home buyers and sellers.

 

Oops, I better fall off this soap box....

[Gregori]

Thanks for the clarification, Kathy - I should have been more concise...

Yes, the mortgage servicer is often different from the note holder. As a Realtor, I don't generally have much to do with refinancing, but the folks that I DO talk to about it seem to have had some luck doing the re-fi with their existing lenders. (In some cases, even a "no-fee" refi, which is awesome!)

 

 

[MT Wallet]

Thanks Cathy and Greg for that clarification. I decided NOT to go with MJ Bradley. Too many red flags. I did talk to the current mortgage holder, my bank, they hold the paper and don't sell it. But, they are offering a 15 yr conventional fixed rate 3.85% or a 25 yr adjustable at 3.85% which readjusts every 5 years. The bank manager claims they don't have a 30yr. This sounds a little goofy to me but in the context of an investment property it may be valid. I am not getting a break on the closing costs as far as I can see. I'm still getting tagged with a ~$1200.00 origination fee and some other stuff which will come out to ~$3600.00. I just don't feel the love in this transaction. If I turn the property in less than 5 years the readjusted rate might not mean anything because I won't own the house unless I use it as a rental. What are your thoughts all? P.S. My credit isn't an issue.

[Kathy R]

I did talk to the current mortgage holder, my bank, they hold the paper and don't sell it. But, they are offering a 15 yr conventional fixed rate 3.85% or a 25 yr adjustable at 3.85% which readjusts every 5 years. The bank manager claims they don't have a 30yr. This sounds a little goofy to me but in the context of an investment property it may be valid. I am not getting a break on the closing costs as far as I can see. I'm still getting tagged with a ~$1200.00 origination fee and some other stuff which will come out to ~$3600.00. I just don't feel the love in this transaction. If I turn the property in less than 5 years the readjusted rate might not mean anything because I won't own the house unless I use it as a rental. What are your thoughts all? P.S. My credit isn't an issue.

 

 

Some of that $3600 if avoidable and some is not. Separate out what is charged by the appraiser, title company (title search and title work), taxes, escrow, state fees, federal fees, from those fees charged by the lender, like *Origination*. Some are apples and some are oranges.

 

Most banks that *hold the paper* do not offer 30 years fixed rate loans because they do not want to tie up their money for a potential 30 years. There are more reasons behind their thinking, but that one always stands out.

 

(An aside: I have also heard of loan officers who claim their bank held the paper when they in fact do not. Not that it really matters, but I was always a stickler for the truth and dealing with people who truly knew the mortgage business. It is hard to know if they really know what *holding the loan* entails and making payments to a bank is not proof. Knowing FOR SURE if it's on the shelf or not allows you to understand the pricing better and to understand what is and is not an add on fee)

 

Those rates are historically spectacular for a loan on a non owner occupied piece of real estate. Depending on the balance mortgaged, increments of 1/8, 1/4 and even 1/5 of a percentage rate are not critical when you compare them to your other motivations. Do the math. You are paying very little per $1000 per 1/8 jump in rate.

 

Fixed is an ideal way to go when rates are at historic lows and your goal is to keep the property.

ARMs are a great way to go when you aren't sure you are keeping the property and also when rates are high.

 

Every time you refinance you spend money. It may not seem like it, but these transactions cost the consumer money. Sometimes it may be *free* refinance, no fees, no closing costs........but unless you have knowledge of what the spread is you don't know what the lender if making. And in most instances at the very least you are increasing *The Term of Your Mortgage Loan*. This adds interest. Your out of pocket when all is said and done is how you measure the cost effectiveness of a refinance. I have talked people out of refinancing for this very reason.

 

If term (30 year, 25 year) is your most important factor then it carries more weight for you and your circumstances. There is no universal right way to refinance, only a right way for you.

 

The *Origination Fee* is prepaid interest, plain and simple. On a home that is non owner occupied that is not uncommon. From the banks perspective, they are going to hold your note on their shelf for 15 or 25 years. Through the interest portion of your payment you are going to pay them a small return on their money. You could turn around and pay them off before the term of the loan expires. For those reasons and others, they are going to charge you a fee or prepaid interest in order to give you that rate and in order to make something on the deal for their trouble. Now, if you can find that rate with the same terms with no Origination or Discount Points (both are forms of prepaid interest) then you can do better. But if not, that is not a bad deal - because non owner occupied real estate loans are much more risky than owner occupied mortgage loans, err, at least they always used to be. Most people will default on a loan that is tied to an investment before they will default on the loan that provides their shelter.

 

Can you find a No Point loan, with similar closing costs, for your property? If not, nobody wants your loan without getting paid an upfront fee or *Origination fee* (or Origination point if you will)

 

Vanilla mortgages (single family residential owner occupied) provide for the best rates and terms.

As you become less vanilla the rates and terms are less attractive.

 

Keep shopping around if you have the time and patience. If it's too good to be true and a far better deal than what any other institution is offering beware. I'm not saying someone might not have a better deal, but it's a very competitive business. If someone wants your business they will give you the best deal they can, but they want to stay in business. I've seen lenders go out of business giving too much away and I've seen some take advantage of their clients. Things have certainly changed. There are many new rules and in most regions there are less competitors.

[Kathy R]

Yes, the mortgage servicer is often different from the note holder. As a Realtor, I don't generally have much to do with refinancing, but the folks that I DO talk to about it seem to have had some luck doing the re-fi with their existing lenders. (In some cases, even a "no-fee" refi, which is awesome!)

 

 

You have seen a lot, no doubt!

 

I know that refinancing with a current lender may feel easier but believe me there is no *no fee* loan. These costs are rolled in one way or another and you can't always see it. Most times it's built into the interest rate. What you don't see can't cause you pain, so it's perceived as easy and inexpensive and for most practical purposes it is if you are talking immediate cash out of pocket. But someone else will give you a lower rate and charge you the fee's. It's 6 of 1 and 1/2 dozen of another, as Mom always said.

 

All in all, the clients perception of *Was this a good deal for me?* is paramount, but a good lender/salesman asks a bundle of questions and then they help the client understand why a particular product, rate and terms may be the best way to go. You know all this well. That's why you have been a Realtor for a long time.

 

I hate car shopping too, but a good car salesman once told me why they ask what color car do I want. Once I started to understand that business better I learned how to buy a car.

[Quinn]

Am I correct in thinking that, with a refinance, your equity will build much slower because the first bunch of payments will be mostly interest? That's a good thing for tax deductions unless tax reform hits them, but a bad thing for selling the property.

 

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