New home mortgage(update)

Cisco sYWM76
Jun 6 38 Comments

I have the 20% downpayment and good credit. This will be my first home purchase.
What banks would you all recommend for getting the best rates?
Does it make sense to take a 401k loan when I can manage the downpayment through other sources?

Thanks!
Update: after shopping around with 4-5 banks, 7/1 - 2.85-3.25%, 10/1 - 3-3.4%, fixed -3.4-3.8%. All 30 year term with 0 points. Some have credits towards closing.

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TOP 38 Comments
  • Accenture rjfowjy
    newbie here

    what is 7/1 and 10/1? and what is 0 points?

    what's the downside/upside of not going fixed rate?
    Jun 7 15
    • New / Other
      DuQvV7y

      New Other

      BIO
      Did stuff. Hustled hard. Retired
      DuQvV7ymore
      ARMs are not interest-only.
      Jun 11
    • AppOnboard anon818
      True, but I think the amount of principal you are paying down is so low over that period that it doesn’t benefit you much, right? Unless you pay more provided there are no early payment penalties.
      Jun 11
    • New / Other
      DuQvV7y

      New Other

      BIO
      Did stuff. Hustled hard. Retired
      DuQvV7ymore
      That’s just the principal decay rate in an amortization calculation.

      On a 30 year loan, after 5 years of payment you typically have paid less than 5% of the loan.
      Jun 11
    • AppOnboard anon818
      When I look at rates, they seem to be close enough that there isn’t much of a benefit to the ARM v Fixed these days.
      Jun 11
    • New / Other
      DuQvV7y

      New Other

      BIO
      Did stuff. Hustled hard. Retired
      DuQvV7ymore
      There isn’t. My first mortgage 22 years ago was 11+%. 5 year ARMs were around 8%. That’s a difference.

      At 3% vs 4% there’s no earthly reason (IMHO) to risk the certainty of a fixed rate for an adjustable rate.

      But maybe that’s just me.
      Jun 11
  • Unity / R&D
    htLv4Wxz

    Unity R&D

    PRE
    WP Engine
    htLv4Wxzmore
    You can call banks and ask what their current rates are and compare that way. You can also seek out a mortgage broker that can shop around and help guide you through the process.

    I wouldn't touch your 401k if possible, as that is long term earnings that you will be missing out on. You'll also either need to pay that back quickly or take a tax hit if you opt not to.
    Jun 6 0
  • Monster unholy!
    All of the above. Also find out if you qualify for any first time home buyer credits
    Jun 6 4
    • Barefoot Networks yzzz
      How do you that?
      Jun 6
    • Qualcomm orionho
      Ask
      Jun 6
    • Cisco sYWM76
      OP
      We have to mention whether this mortgage is a first one on all applications. I will check if that option gives any credits.
      Jun 7
    • Monster unholy!
      Yup ask the real estate agent, mortgage people, your bank. I'm in MA, so we have a state tax credit thing
      Jun 7
  • AppOnboard anon818
    How much money are you looking to borrow and what part of the country are you looking to buy a home? Weird thing about the market right now is that some larger loans are getting better rates than smaller ones. I can explain more with the other questions answered.
    Jun 6 3
    • Cisco sYWM76
      OP
      I am looking for a 700-800k mortgage in CA. Thanks!
      Jun 6
    • AppOnboard anon818
      Got it. The best rates I’ve seen have been from BofA. You don’t get any better rates after you reach 15% equity. But the loan needs to be non-conforming, so over $760K to qualify for the lowest rates, around 3.8% for 30 year fixed. Conforming loans go through Freddie and Fannie and end up closer to 4.1% since banks have to sell those loans back to the gov’t. Banks will write big loans to generate the income as well as sell you ancillary services (checking, saving, etc).
      Jun 6
    • Zillow Group Croissants
      If you have 500k in assets with WF. They give you good rate discounts. No seasoning required.
      Jun 6
  • Cisco sYWM76
    OP
    Update: after shopping around with 4-5 banks, 7/1 - 2.85-3.25%, 10/1 - 3-3.4%, fixed -3.4-3.8%. All 30 year term with 0 points. Some have credits towards closing.
    Jun 7 2
    • Credit Karma PrinceAli
      What's ur credit score like? Which bank is it. Sounds like a really good deal. I got 10/1 3.875 6 months ago
      Jun 8
    • Cisco sYWM76
      OP
      Mortgage rates have dropped in the last 3-4 months
      Jun 8
  • Qualcomm orionho
    401k loan won’t count as debt which helps you get a higher mortgage/lower down payment. Only downside is if your plan’s documents state that you have to pay back within 60 days of leaving the company. Many big tech companies have plans that let you pay back to term after you leave the company giving it virtually no downside .. hope this helps bud
    Jun 6 2
    • Zillow Group Croissants
      Double taxation
      Jun 6
    • Qualcomm orionho
      .. of the interest. Big deal.
      Jun 6
  • Microsoft Yx74h
    Who had the best 7/1 rates? I'm looking to do the same and will reach out to them.
    Jun 10 1
    • Cisco sYWM76
      OP
      Most banks are in the range. You may get credits and better rates if you have a relationship with them. Try any of these -Bofa, US bank, Citi, HSBC
      Jun 10
  • Cisco sYWM76
    OP
    Thank you all!
    Jun 7 0
  • Clover Health sses
    Credit unions will usually have the best rates.
    Jun 6 0
  • PayPal atlm
    Keep in mind, even after 20% down, you need to show cash reserves for at least 6-9 months (bank/vested stocks/401k, shouldn’t be gifted from family or friends)
    Jun 6 0
  • Zillow Group Croissants
    Check out Zillow mortgage and bankrate. They do the comparisons for you. If you have the down payment don't take 401k loan because of the double taxation on the interest that you're paying.
    Jun 6 0