Loan officer didn’t tell me we were pre-approved for ARM and not fixed
We’re in the Bay Area - my wife and I have been working with a loan officer that came recommended by our realtor. I have one house which I’ve lived in since 2018 and plan to sell after we buy a new home. Home had 600k remaining on mortgage and it’s estimated 1.4m on Redfin. After getting pre-approved and even after making offers on houses that were later rejected, I found out that the loan terms were for an ARM loan. I asked them why they decided this for us, since I had mentioned many times during the process that I wanted a fixed rate 30 year. The loan officer is trying to tell me that arm is better in this env but I am thinking it’s just a way to make more on commission?
OP - your loan officer is legally obligated to provide a loan estimate which includes loan terms, duration, and the cost (including origination fee). I have found mortgage brokers can be a bit shifty and some of them encourage you to take financially risky steps (higher interest with cashback, ARM with shorter duration etc). Truth is - no one knows when and how much the interest rates are going to rise or fall. We are only seeing projections right now. Do your own diligence and ask for things in writing. Good luck!
Yes, I’ve started looking for another loan officer through chase thanks
Fire that ass. Just refi when the fixed rates drop
Get a new loan preapproval with less of a scumbag. There really plenty of online companies with better rates anyway. My latest loan: the loan officer/bank recommended by the realtor had by far the worst terms. This was when rates were low. They were offering 4.5% but I got a 30 year fixed elsewhere for 2%. Pays to shop around.
It’s more likely than not that rates will go down in the next 7 years. But I do think it’s insane that the loan officer gave you a loan you didn’t ask for. I would fire that guy and hire someone else.
Right? Seems like they deliberately lost my trust
Why are you buying a new home? Are you selling the old one?
How did you not know? Didn’t you see any documentation?
It's unlikely they make more, but they probably want to close the loan and the payment is either later or they couldn't get the 30 year fixed approved.
I don't think they would make more commission but seems sneaky. Any loan you sign up now won't matter much except for the rates as they will go down in the next 2-3 years. It won't go down to 3% probably ever (barring another ultra large scale event) but 4.5/5% seems possible. Dont know your debt to loan ratio and all, but having a 600k mortgage does add up. It is always tricky to sell an existing home and upgrade in the US unless you go for a brand new construction. In your case, you want to sell after buying which means you technically are going to qualify for a smaller amount (they would assume you to pay old house mortgage also, unless you can show you have a rental contract).
And the bubble begins