Post of the Day
March 9, 1999
Buying a Home Folder
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Subject: Internet loan via Quicken
Thursday, 4 March, 1999, we closed on a loan we obtained via the internet. Although we have bought many things off the internet over the past 2 years, we were more than a little nervous�and skeptical�about something as large as a loan. Since I couldn't find any anecdotal information when researching internet loans, I'd like to share our experience. Sorry for the very long post.
We decided to refinance in order to eliminate our PMI (private mortgage insurance) and lower our rate. We may be living in our house for another 6 months or for years, so the payback time had to be essentially nil. I began looking at rates on the internet, played with several "loan finders", and discovered that some lenders were giving rebates on loans. This didn't exactly make sense, but several apparently legitimate places were offering them, so I decided to take them at their word but proceed cautiously.
I talked to our current lender (with whom we've been quite happy), but they were not able to come close to the terms offered by several internet lenders. I considered calling around to everyone in town, but the internet organizes all the details in one place and I don't have to talk to anyone�big plusses from my point of view.
Looked at loans from Quicken, HomeShark, e-loan, and The Lending Tree.
� The Lending Tree takes your information and allows lenders to look at it and decide whether or not to work with you. This might work for some, but I wanted the details presented to me up front.
� HomeShark had a loan with what appeared to be better terms than what we ended up with, but their rebate could not be applied to pre-paid charges.
� E-loan had had a slightly better loan several months ago, but that was several months ago.
� Ended up going through Quicken. The rebate offered could be used to offset any cost listed on the settlement statement.
Following is the history of our loan.
� Sunday, 7 February. Fill out an on-line application for a loan from American Finance that was advertised on Quicken. The loan had listed a rebate of 1.875%, but turned out to be a full 2%.
� Monday, 8 February. Application confirmed by Quicken. Contacted by lender to clarify and amplify some information from the application. Here I had my first scare�the e-mail address for the mortgage consultant was NOT American Finance, but 1st Mortgage. I called the Quicken Mortgage contact and the American Finance contact and verified that 1st Mortgage and American Finance were the same. Talked with the mortgage consultant and gave him my credit card number for the credit report and appraisal and hoped that I hadn't overlooked something.
� Wednesday, 17 February. Contacted by the case manager on our loan. Had second scare�as we were going through required documentation he told me we'd have to show $8200 available for closing. I explained that this was to be a no-cost closing. He said he'd go check it out. Called back later that day to say everything was as I had anticipated.
� Friday morning, 19 February. Received packet of papers to sign, with full set of copies for us. No surprises, nothing unusual, very standard forms. We read and signed everything and collected the additional documentation. On Monday we FedEx'd it back in the mailer provided.
� Also on Friday, 19 February, the appraiser came. We received a complete, free copy of the appraisal at closing. A nice report, all done on computer so all legible, good-quality digital color photos of our house and the comps, explanations for his reasoning on some things.
� The appraisal took a couple days longer than anticipated to arrive, so we were not able to close at the end of February. We closed on 4 March�the earliest the title company could do it.
� At the closing on 4 March, our closing agent was very complimentary about the lender. It was her first internet loan, so she was quite interested in how it would go. She commented that all the forms were standard, nothing at all unusual; that everything was complete and arrived with plenty of time for her to do her job properly. When she did call the lender's loan closer, she said the closer was knowledgeable and prompt.
As for the bottom line, the following numbers are off our final settlement charges statement:
� Rebate________________3088.00 � Appraisal fee__________300.00 � Credit report___________55.00 � Underwriting fee_______400.00 � Processing fee_________300.00 � Tax svc. contract_______79.00 � Flood cert. fee_________21.50 � Closing fee____________160.00 � Title ins binder________50.00 � Title insurance________501.00 � Fed Ex chgs_____________20.00 � Recording fees__________39.00[Sorry these columns don't line up better.]
Leaving $1,162.50 to put toward insurance, taxes, and interest. Furthermore, our escrow account can have as little as one month's worth of funds, rather than the four that the bank required!! We went from 8.25% to 7.25% (a savings of $124/month), eliminated our PMI ($101/month), and got $1,162 to put toward costs that we would have had to pay even if we hadn't refinanced.
We think it's "too good to be true", but neither we nor the title company could find any problems. We did have to provide more documentation than we did on our original loan through the local bank, but the local bank knew us and our property. And the things they asked for were things I would want to see if I were loaning someone a pile of money�nothing out of line.
I'd still recommend caution using the internet for loans, but our experience with Quicken Mortgage and First Mortgage Network, Inc. (dba American Finance & Investment) was excellent. And Emmanuel Ayala, Andres Lopez, and Valerie Angelini (loan closer) were easy to work with�courteous, knowledgeable, and responsive.
P.S. Other than making out like bandits on our loan, we are receiving nothing for writing this.
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