SCENARIO: Your friends John and Jane Doe who moved recently to Florida from Iowa have taken your advice from Assignment #2. They have set up new bank accounts with your recommended financial institution. The Doe’s have been renting a home from you temporarily in Hillsborough County but are ready to buy their own place. They are now seeking your advice with mortgage financing since the process can be a bit different between states. The anticipated purchase price is $600,000 and they will put 20% down from their savings account. They would like a 15 year fixed rate mortgage. All closing costs, as required for the purchase of a new home, will be paid out of pocket at closing.
PART 1 of 2: Provide TWO mortgage estimates from two different bank or mortgage companies for this scenario. Assume the Doe’s have Excellent credit scores (740+). The estimate should show the details of the loan (purchase price, loan amount, interest rate, payment) and an itemized breakdown of closing costs (origination fees, 3rd party fees, prepaid items, escrow funds). Present this in a PDF copy from the financial institution’s mortgage calculator (or copy the info into a Word or Excel doc if you are unable to save as a PDF).
Use the financial institution’s website to gather this information, but note that not all company’s will provide online an estimated itemized breakdown of fees. Some may require you to use both a mortgage calculator and closing cost calculator. However, many companies such as Chase and Bank of America and others do provide the list of estimated fees in a nice, easy to read, format.
PART 2 of 2: In a paragraph provide your recommended institution for the mortgage and why. Also compare/contrast a little between the quotes. Are the estimated fees similar or what specifically is different? Are there origination fees or ‘points’ paid to buy down the interest rate? Comment on the differences that jump out at you.