First time home buyer -

1. looking for guidance on how to find credible mortgage lenders and how to shop/negotiate interest rates as well as the loan amount

2. Is it true that pledging your stock investments as collateral helps with getting a lower interest rate?

3. If I sell some stocks to go towards down payment, are there any strategies to minimize capital gain taxes on the stocks?

I’m in NJ and looking to buy a condo in north Jersey! TIA

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I’m not infallible but I own multiple properties and am a licensed real estate broker in California. Here is what I’d say:

1. If you are going to attempt to go direct to the lender, be aware that a lot of the time that will not result in the best rate. Quite frankly, the lender will know you are reliant on them for information and guidance, and you have fewer other options, and that does not work in your favor. If you must go direct, typically the best rates and terms will come from local community banks/credit unions, or if you already have an established private banking relationship with a larger institution. Otherwise, I recommend using a mortgage broker to source a deal for you, and they will help keep the rate low with the lender because the broker will have several options and the lender must compete for the business. Yes, a broker will cost you perhaps an extra point at closing, but often that’s well worth it for the additional surety and guidance and the loan terms you get.

2. If you are using conventional Fanny/Freddy mortgage financing (that gets sold on a secondary market and later packaged in MBS), which you almost certainly should be for an owner occupied condo, the real estate itself serves as the collateral. Having additional assets can help you qualify (not as much as having steady reliable income) but they will not be interested in cross-collateralizing your financial securities. If this was an investment loan, or if you were using a private lender or bank loan that will stay on the books for the lender, potentially they would consider the extra collateral. But it won’t help you qualify based on DTI, and why would you not go for the government-created conventional mortgage structure that is made to benefit the consumer/borrower with low rates and long amortization schedule.

3. Plenty of capital gains tax savings strategies exist, whether any apply in your situation I don’t know. To be honest, you could try to find complex tricks, but other than selling securities at a loss to offset gains, I’d say you will probably not benefit by spending too much time and effort chasing those savings.

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The thorough explanation has been really helpful, I appreciate it :)

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Just start the process with 3-5 and do a down select. You are a consultant, run it like a RFP process.

The major criteria would be the rate/APR followed by relationship/customer service and then closing costs.

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Jersey city checking in. Just use a comparison website to shop for cheapest rate (I used bankrate). You can usually negotiate a few hundred off closing cost. Lock in rate with one lender and keep shopping for best rate as you go through the purchase.

helpful

Thanks for clarifying

If you’re working with an agent, they may have mortgage brokers they can recommend. But definitely shop around different lenders for rates.

If you don’t want to seek your stocks, you could look into borrowing against your portfolio (M1 offers rates starting at 2%. I don’t know anyone who has done this in real life but Mr. Money Mustache has a blog post about it).

helpful

This is quite common.
Many “cash offers” on homes in Bay Area these days, are made by people buying using margin against their financial assets. Then later they can refinance the home to pay back the margin.

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