Mortgages for Coops

A good mortgage broker can save you tens of thousands of dollars over the life of your loan by getting you a better rate than you otherwise could have secured on your own through the bank.

really? I don't find that at all unless you have bad credit.

A good mortgage broker can make tens of thousands of dollars in commission if their services are utilized. A mortgage shopper with a good credit history and making a straight forward purchase should be able to find competitive rates on their own.

"A mortgage shopper with a good credit history and making a straight forward purchase should be able to find competitive rates on their own."

You'd think, but it really doesn't work that way.

I'm a loan officer at Chase. You're just Joe Schmo who wants a mortgage. I quote you a good rate because you have a "good credit history".

An hour later, Flo Fabulous, a mortgage broker who brought me about a gazillion dollars' worth of business last year, calls me for a quote for her client, HARRY Schmo. I quote him a much better rate, because he's with Flo.

Get the picture?

The picture is one of the current housing crisis. Mortgages created, pushed, sold with one goal. Blind greed - i.e. gazillion dollars. Thanks for clarifying it even further. It is also the manner in which Flo Fabulous got people to invest with Bernie. Keep up the good work.

"Mortgages created, pushed, sold with one goal. Blind greed - i.e. gazillion dollars."

It's not like Flo was twisting anyone's arm to get a mortgage.

It takes two to tango, honey.

NYCMatt - I'm using a mortgage broker, so I've got no principled objection to them. But your logic can easily be countered. Picking up your example, Chase will have to pay the broker a $10,000 commission on 30-year fixed rate $729,500 mortgage. If I approach Chase myself, not a dime in commission is paid. On that basis, Chase clearly prefers to deal with me sans broker.

I'm no expert in this matter but I know our own recent (6 months ago) experience. We met with 2 different mortgage brokers who did a kind of hand-wringing about how tough the credit markets were and how difficult this was going to be. Both came up with adjustable rate instruments in the low 7% range. I couldn't believe this was our only option since we were buying into an established coop, had excellent (800+) credit scores, and were not getting a jumbo.

So instead, we went directly to several banks, all of which offered us 30-year fixed loans at around 5%. We ended up at 4.875% 30-year fixed with zero points and the fees were miniscule. We turned down the 7.25% 3-year adjustable with 2 points that the mortgage broker said was our only option.

My advice is to consider the mortgage broker a resource of last resort after you do your own research and see if you can do it on your own. The worst is that you have to organize all your own paperwork, but you'll have to do most of this for the mortgage broker, too. Check Citi, Chase, B of A, TD Bank, Wachovia, and your own bank. A quick phone call to each will get you current rates. Don't overlook small banks, including the savings banks around NYC. Make sure your coop is on the "qualified" list -- meaning it's an established coop with more than 80% owner-occupied; any one of the banks should be able to tell you this in your initial call plus your broker and the coop's managing agent. Another early place to look is Acris which will show you which banks have recently done loans at the coop. Pull your own credit report to make sure there are no errors (it won't affect your score to pull it yourself plus it's free 3 times a year). And ask your lawyer and broker for ideas.

Another point: several of the bigger banks have recently stopped doing mortgages with the brokers. A quick Google search should tell you which banks have opted out. I want to say Chase and Citi but I may not be 100% right on this.

Mortgage brokers can be extremely helpful, especially if you've got a non-qualified coop, or a credit score problem, or need a jumbo. But someone has to pay them and odds are it will somehow come out of your loan. If your circumstances at all regular and mainstream, you should be able to get a much better deal on your own. Good luck.

I have found that mortgage BANKERS can get you better rates than dealing with the banks directly. They don't have as much overhead. I just got a call from WC Lending that gave me a fabulous rate. I'm going to cross check it with a bank just to make sure it's legit.

Many of the large banks no longer work with mortgage brokers. To get the best deal you need to shop a couple mortgage brokers and then each of the large banks (BoA, Chase, Citi, Wells Fargo, etc). Pre-cash, I got better rates from the mortgage broker. Post-crash, the direct bank quotes were 50 to 100 bps lower.

Coop mortgage rates shouldnt be much different than for single family. Cant say the same for condos. You should talk to a bank and a mortgage banker. Compare rates and cost and then you can make a decision. It should be very easy for an estimate on a coop. Please dont forget to ask whether they will provide financing on your particular coop. Remember that not only the borrower must qualify but the condo or coop has to be approved as well. sunny.hong@bankofamerica.com

wells fargo has same rate for condo and co-op.

hi sorry to jump here but i have a related question:

I just locked in a rate of 5.125 for a co op in forest hills - purchase price 105k, 20% down. After the fact (which i regret) i find articles and posts like this one, saying you can negotiate a lower rate if you have a good credit score , and w/o paying points.

I feel like a chump since I never knew i could do this before and no one i spoke to about this really suggested this either.

i guess now there's nopoint since im locked in but what could have i done? If i shopped arround for rates will they have to check my credit at every place i get a quote??

ugh.

5.125% is an excellent rate in this market. It's extremely doubtful you could have done any better anywhere else.

You can shop around, why not? They will check your credit at every place you ask, but it's not a big deal.

Have there been any changes to mortgages for coops? I am currently shopping and have contacted Chase only. They are quote 3.625% with -0.625% points. Not that I understand the credit points. Should I check mortgage brokers? If I decide to go with Chase do they have the latitude to adjust the Intrest Rate, or give me a credit, or reduce their fees?

Not enough information. Loan amount? How much is the property worth? Term? How much are Chase's fees?

Try using the quote tool on TD Bank's website and see where they price out.