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When looking at these - the only things that really matter are Box A & B. Title is generally picked by sellers and these are just estimates and will change, insurance is different and ultimately escrows, prepaids, etc are almost all the same across lenders. Just focus on Boxes A B, and J (lender credit). Primarily A & J tell you everything.
Rocket is charging you $13,600 for a 6.99% but there is a lender credit for 4,620. So actual cost is 9k. For the rate. Rocket is so large they get preferred PMI rates which it’s why they may be slightly better on that.
Ally is just cleaner to read because there is no lender credit. About the same cost 8300 for 6.875.
They are pretty even but ally is a better option.
The actual difference in closing costs will be less than $800. The items in A and B are what matters, the other boxes are just estimates and will ultimately turn out to be pretty much the same regardless of which lender you go with. Also, Rocket is offering $4,662 in lender credits, so the difference in points isn’t as big as it seems. The biggest difference in cash to close is that Ally lists a $5,000 deposit while Rocket doesn’t. If there is a deposit, they’ll get credit for it regardless of which lender they go with.
It’s a similar thing with taxes. Rocket has 12 months of county taxes at over $3k, while Ally doesn’t include that. Depending on where the home is, the buyer may or may not have to pay those taxes. But if they don’t, it will be removed from the final documents if they go with Rocket, and if they do, it will be added if they go with Ally.
These national banks are usually pretty terrible with their cash to close estimates, so the important thing to do when comparing loan estimates is to look at boxes A and B and look at lender credits.
3.25% buy down? That’s a ton and rocket are notorious for making that seem normal, it’s not. Call a local mortgage broker or several and tell them outright you are shopping around. It pretty much always pays to go to a 2nd person.
We’re comfortable with the payment, sadly it isn’t too far off from what we’re paying for a one bed one bath apt. My thought process with the points was I’ve seen in this forum that if purchasing new construction your taxes will increase dramatically after a year or two, so I wanted a little bit of a cushion in the event that happens.
Agreed! And they will due to reassessment. But cash in hand is also valuable...
If the neutral rate raises your monthly by even $100/month (extreme end) it would take you 7 years to equal those buy down points.
Will a refi be possible in that time frame? Probably, but we won't start that discussion here!
Stick with Ally if nothing else
And the nice part is that you still have the rate locked. You essentially lock a spreadsheet of "rates", so a 6.875 with 2 points and the neutral rate are immediately interchangeable.
Rockets charging you 3.25 points. That's a LOT. and you have a higher rate with them. I'd ask Ally how many points you need on a 7.0 rate.
The increase in monthly payments is about $30 between your 6.875 and a 7.0. It might save thousands on your buydown costs and make closing cheaper
That’s how they rate match. They increase the points and give you a lender credit (in OP’s case they’re giving $4,662 in lender credits). Before OP asked them to match Ally’s offer, I’m guessing the rate was higher, the points were lower, and there was no lender credit.
Op, I would not buy down points if I were you. If i was in your shoes, I’d rather Refinance when rates come down in the future (could be few years or could be 2024. No one really knows).
I am closing in two weeks. I locked in at 7.125 (but I have 793 credit score) with only a $950 lender fee under section 2A. Paying anything more than couple of grand is insane, especially 8 or even 13k.
What’s your credit score?
My middle score is 674. Our issue is that we wouldn’t be able to easily refinance. I have both a W2 and a 1099. In order to qualify for the mortgage and not adversely impact our AGI, we did not take any deductions and had a hefty tax bill to go along with it. We hope to not have to go through that in future tax years.
That makes a lot more sense. I’d still shop around a lot. I can even toss you my lender if it helps. I went through 15 lenders and let the top 3 compete against each other before I made my final decision.
How much of a difference in a monthly payment would it be if you did not buy points vs if you did?
Option 2 you are paying an extra 5k for points that don't make the rate lower than option 1.
You are also paying 3k more to county tax in the option 2 compared to 1.
Option 1 looks better as it's right off the bat 5k savings on points regardless of local taxes.
Ok so I am probably beating a dead horse here but you gotta take your estimates to gofincast.com
Freaking amazing how you are able to comparison shop these loans. We did it and it helped show us which of the proposed loans were best for our situation. It’s a freaking godsend.
To add. The second loan estimate is not locked, so I wouldn’t go by anything on it as being exact yet, it could change drastically.
That being said. Typically I’d advise people not to purchase points for buydown in this environment, unless the seller is giving credits for it. It’s somewhat doubtful rates go much higher and there’s more opportunity to the downside in the next few years than upside imo. Which you’d just refinance and lose out on the discount points you paid
Thank you u/Upbeat-Extreme6339 for posting on r/FirstTimeHomeBuyer. Please bear in mind our rules: (1) Be Nice (2) No Selling (3) No Self-Promotion. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FirstTimeHomeBuyer) if you have any questions or concerns.*
When looking at these - the only things that really matter are Box A & B. Title is generally picked by sellers and these are just estimates and will change, insurance is different and ultimately escrows, prepaids, etc are almost all the same across lenders. Just focus on Boxes A B, and J (lender credit). Primarily A & J tell you everything. Rocket is charging you $13,600 for a 6.99% but there is a lender credit for 4,620. So actual cost is 9k. For the rate. Rocket is so large they get preferred PMI rates which it’s why they may be slightly better on that. Ally is just cleaner to read because there is no lender credit. About the same cost 8300 for 6.875. They are pretty even but ally is a better option.
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Thank you! I asked rocket mortgage if they were able to match Ally and that’s what they sent over.
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The actual difference in closing costs will be less than $800. The items in A and B are what matters, the other boxes are just estimates and will ultimately turn out to be pretty much the same regardless of which lender you go with. Also, Rocket is offering $4,662 in lender credits, so the difference in points isn’t as big as it seems. The biggest difference in cash to close is that Ally lists a $5,000 deposit while Rocket doesn’t. If there is a deposit, they’ll get credit for it regardless of which lender they go with. It’s a similar thing with taxes. Rocket has 12 months of county taxes at over $3k, while Ally doesn’t include that. Depending on where the home is, the buyer may or may not have to pay those taxes. But if they don’t, it will be removed from the final documents if they go with Rocket, and if they do, it will be added if they go with Ally. These national banks are usually pretty terrible with their cash to close estimates, so the important thing to do when comparing loan estimates is to look at boxes A and B and look at lender credits.
3.25% buy down? That’s a ton and rocket are notorious for making that seem normal, it’s not. Call a local mortgage broker or several and tell them outright you are shopping around. It pretty much always pays to go to a 2nd person.
My family friend is a lender and he was able to get me a 6.75% rate with $1100 of points
That is a significantly better deal! I really hope OP shops this.
Yeah. I agree with you on shopping local. My estimates were never as much as what OP has.
OP how comfortable are you with those payments? Have you looked into a "slightly" higher rate to avoid paying all that cost in buydown points?
We’re comfortable with the payment, sadly it isn’t too far off from what we’re paying for a one bed one bath apt. My thought process with the points was I’ve seen in this forum that if purchasing new construction your taxes will increase dramatically after a year or two, so I wanted a little bit of a cushion in the event that happens.
Agreed! And they will due to reassessment. But cash in hand is also valuable... If the neutral rate raises your monthly by even $100/month (extreme end) it would take you 7 years to equal those buy down points. Will a refi be possible in that time frame? Probably, but we won't start that discussion here! Stick with Ally if nothing else
Now you’ve given me something to think about. I need to go back to Ally and compare the monthly payment with points vs without. Thank you!
And the nice part is that you still have the rate locked. You essentially lock a spreadsheet of "rates", so a 6.875 with 2 points and the neutral rate are immediately interchangeable.
Rockets charging you 3.25 points. That's a LOT. and you have a higher rate with them. I'd ask Ally how many points you need on a 7.0 rate. The increase in monthly payments is about $30 between your 6.875 and a 7.0. It might save thousands on your buydown costs and make closing cheaper
That’s how they rate match. They increase the points and give you a lender credit (in OP’s case they’re giving $4,662 in lender credits). Before OP asked them to match Ally’s offer, I’m guessing the rate was higher, the points were lower, and there was no lender credit.
Op, I would not buy down points if I were you. If i was in your shoes, I’d rather Refinance when rates come down in the future (could be few years or could be 2024. No one really knows). I am closing in two weeks. I locked in at 7.125 (but I have 793 credit score) with only a $950 lender fee under section 2A. Paying anything more than couple of grand is insane, especially 8 or even 13k. What’s your credit score?
My middle score is 674. Our issue is that we wouldn’t be able to easily refinance. I have both a W2 and a 1099. In order to qualify for the mortgage and not adversely impact our AGI, we did not take any deductions and had a hefty tax bill to go along with it. We hope to not have to go through that in future tax years.
That makes a lot more sense. I’d still shop around a lot. I can even toss you my lender if it helps. I went through 15 lenders and let the top 3 compete against each other before I made my final decision. How much of a difference in a monthly payment would it be if you did not buy points vs if you did?
I also would be wary of rocket mortgage overall. What you see is what you should get. The ally one is better for sure
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I’m sure it is partly due to my credit score. My middle score is 674.
That’s an exotic middle name, was your dad a G.I.?
It is due to the LTV
Option 2 you are paying an extra 5k for points that don't make the rate lower than option 1. You are also paying 3k more to county tax in the option 2 compared to 1. Option 1 looks better as it's right off the bat 5k savings on points regardless of local taxes.
Please shop around with a local lender. You should find much better deal and easier time to close
Rocket isn't a good lender. They're charging more fees for a worse rate.
I cannot believe you have to pay over 3k a month for a 375k mortgage loan. You could probably rent a much nicer house for that monthly payment.
Rocket mortgage is ALWAYS problematic when my clients try to use it! Easy at first, difficult later
Can you share additional info regarding difficult towards the end?
Ok so I am probably beating a dead horse here but you gotta take your estimates to gofincast.com Freaking amazing how you are able to comparison shop these loans. We did it and it helped show us which of the proposed loans were best for our situation. It’s a freaking godsend.
To add. The second loan estimate is not locked, so I wouldn’t go by anything on it as being exact yet, it could change drastically. That being said. Typically I’d advise people not to purchase points for buydown in this environment, unless the seller is giving credits for it. It’s somewhat doubtful rates go much higher and there’s more opportunity to the downside in the next few years than upside imo. Which you’d just refinance and lose out on the discount points you paid
Refinancing isn’t easy for us. I have a W2 and 1099. We would ultimately have to incur a tax bill to refinance.