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Originally Posted by mikeyj23
2. I'd be extremely wary of a loan salesman who makes you feel committed once he gives you a GFE. I made the mistake of talking to someone just like that at a big mortgage company (Quicken Loans), and he was extremely rude after I chose not to go with him, even though he'd never actually sent me a GFE. He personally insulted me for going with someone else, since he'd given me such "personal service," "confidence," etc. Load of bull, in my opinion. Avoid Quicken like the plague. They even make you pay $500 upfront to "start doing business." With the sheer number of mortgage companies out there, you can afford to avoid them.
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While the guy wasn't rude to me, Quicken tried to pull the same stuff with me. They wanted a $500 "deposit" before they would give me a GFE. They insisted it would go to closing costs. I asked them what happened if we paid it and then decided to go with another lender. He said it wouldn't be refunded. I laughed and hung up. Called a few other lenders and they were all willing to provide a GFE within minutes at no cost.
If you get a good real estate agent, he or she can probably hook you up with recommendations to lenders, etc. That is what we did (my wife and I just bought 6 months ago). The realtor gave us some names - I called around and told them I was shopping for the best rate and best costs. They gave me their offers and we picked the best one. We ended up with a nice rate.
I think you're around my age - you may not have 20% to put down. You can get an FHA loan where you only have to put down 3.5%. More is better, but keep in mind that closing costs are going to be higher than you think (10-15k depending on whether you pay points to bring your interest rate down) and you will need cash on hand for moving, doing any initial work to the house before you move in, etc. Its a far more expensive process than I originally anticipated when I was doing the financial planning. There is also a lot less variety out there with FHA loans - they are government insured, so the FHA loan offered by Bank of America is not going to differ dramatically from that issued by Chase, for example.
As for what you should expect to pay, that is going to depend a lot on the area and what type of property you are buying. You can choose between buying a foreclosure, a short sale or from a non-distressed buyer. Foreclosures tend to be priced around where the bank is willing to accept offers and there is less wiggle room on the price. If its a good deal, it is going to attract multiple buyers. I actually saw a few foreclosed homes going for more than they were listed after a few potential buyers put in bids. A short sale has similarities with a foreclosure in that the bank ultimately has to decide what to accept. The trouble is, you don't know if the asking price, which is set by the homeowner, is something the bank would accept. You would have to look into that. Also, a short sale is a misnomer - they take months from initial offer to the closing table. We bought a short sale and it took 4 months to close. The banks move slowly in deciding what to accept or reject. We got a great deal so it was worth the wait, but you have to be prepared to wait.
Good luck - it can be a fun process. We looked at probably 40 houses before finding "the one". And it was true what they say - you know when you walk in that it's "the one". I didn't buy it, but that's what happened to us.