hungryhorace

How did Relobotomy manage those kind of rates? Are you a permanent resident / USC, Relo?

vtcarter6

I'm also curious about Relo's decent rates. Are there any lenders who are more comfortable with those of us who are fresh off the boat? Are bigger banks better to try, or smaller local ones?

Bob

Some of this might be down to the local market.

It's fairly hopping in the MA area, so banks can afford to be much more picky here than in other areas which probably affects how easy they are to get a loan from and the kind of rates they're likely to offer.

hungryhorace

What would you do in our situation, Michael? I don't see us there for longer than 10 years, probably because I'll want to come home to the UK by then, or we may wish relocate to another area / state.

Michael

Personally I would go with a 30 year fixed rate mortgage but just make sure there isn't a pre-payment penalty (from my understanding that hasn't be common since the 1980s). If the economy continues to recover, interest rates will likely raise and you'll be protected and if the economy stalls like the Euro zone, interest rates will likely fall and normally you can refinance with a no point/no fee mortgage. My ex g/f refinanced 5 times with a no point/no fee mortgage since 1990.

hungryhorace

Thanks, Michael. I've been doing more reading, and I think we're going to elect to go with the 30 year fixed for 10 years. I don't see us staying there for more than 10 years (we may move back to UK / West Coast) and we save $15k over 10 years compared to the 30 year fixed rate. The cap in year 11 would be libor + 2.35% then in the future years a cap of 2% above or under this rate would apply. At that point obviously, I think we'd re-mortgage.

Sound reasonable?

Michael

If you will be selling in 10 years, that is probably financially the best option. However if you keep it longer, 3 month libor has typically been in the 4%-6% range.

LIBOR Rates History (Historical)

The problem with any of the loans that reverts to a variable rate is that if your plans change, you could be stuck with a high interest rate. Also if interest rates get too high, sometimes you can't sell and have to rent out the home paying a high interest rate. Once interest rates rise, it's too late to refinance.

hungryhorace

Agree with everything you say, though the only caveat I would add is that I don't feel we can look to past rates for an indication of <=10 year rates. We haven't experienced anything like this financial situation in our lifetimes, no one knows what's going to happen. We could be at low's for years to come. Who knows?

FinnDiego

Sounds standard to me. 3.25% for 5/1 ARM here, closing day supposed to be today. I signed my life away and wired Escrow a boatload of money yesterday, just waiting to see if I can actually get my hands on the keys today. Ever so slightly excited!

The difference between a 5/1 ARM and 30-year fixed means thousands of dollars in interest a year for me, and I doubt I'll be staying in the house for much longer than five years anyway. If I do and the rates are higher at that point I'll pay the mortgage down further; with today's interest rates I'd rather invest the money than make a larger downpayment.

On the process itself, it seems that the magical time is two years. Last two tax returns, 24 months of rent checks, etcetc. I've been in the US for three, and was treated as a local with no interest in foreign credit reports or other international complications. Also having all the funds you'll use for the process in a simple bank account for at least two-three months before starting the mortgage process makes your life a lot easier...

hungryhorace

Yes, good point re having the money in the same account. I have only been here for 18 months, and only one (dual status) tax return filed. Yet we're seemingly being approved. Totally different process to the UK in terms of checks done I thought.

kins

Because we'd only been in the country for a few months, we were paying about 2% over the minimum rate for our mortgage. By refinancing after 2 years we saved 2% because then we started getting the rate that someone with a good credit rating would qualify for. Even if rates went up .25% in that time you'd still be better off if you're simply at this stage being penalised for not having a long credit history.

That's how it worked for us anyway...

kodokan

Not necessarily - we got a mortgage after 15 months; we were even L visa holders at the start of the application (although confidently along the GC route, which arrived about halfway through the house buying process). So we only had 15 months of US credit history on one credit card (a HSBC one we'd got from Day One through their Premier service), and no tax return (we bought in Jan 2013, and hadn't done the 2012 one at that point).

At the time, we got a 15 yr fixed rate of 3.125% - could've been 3% if I'd let them also escrow the property taxes and insurance, but I'm over-controlling. I imagine the percentage borrowed helped; we only needed about 35% of the purchase price as a mortgage, and it was therefore also a low salary multiplier.

In hindsight, I probably should've borrowed more/ got a 30 yr fixed/ leveraged it all into the stock market for the 2013 stellar growth, as the rates were bonkers low then. But I'm hopelessly risk-averse - it's making me uncomfortable enough having this debt, and we've already overpaid back 25% of it.

Relobotomy

UK citizen moved fro France, L1, great realtor who introduced great banker, very stressful application process, had to open their bank account. Apart from all that, no idea if it's a good rate or how I got it...happy to share banker's contact info via PM if anyone wants it.

FinnDiego

Yeah, that probably makes a difference too. I put down the usual 20%, plus the price of the house (hello San Diego) pushed the mortgage to jumbo territory too. I ended up with an impound account - didn't originally plan for one, but that would have delayed closing even further. I'd rather invest the money myself thankyouverymuch...

Final closing was a bit of a letdown. "Congratulations, you just bought a house, the keys are hidden under a flowerpot on the driveway".

IlAlfie

We got 4.65% for a 30 year fix. L-1 and L-2 visa, 2 year credit history and 2 tax returns. Put down 20%. San Francisco....eye watering prices and we needed to keep money back for renovations.

The paperwork was pretty exhausting (annoying) and tracing the money from the UK to the US for the deposit became infuriating as they needed to comply with money laundering laws.

the 10 year fix was a lot better but as I don't know what we'll do or where we'll be, we just didn't want to risk it as we're both in our 40s, although I'm pretty risk averse.