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Interest rate ranges with these scores?


mikeee1
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Looking for 100% financing with maybe an 80/20 for a 200-250K loan. Have been quoted 5.99% (80%) and 12.25% (20%) locally with a reputable mortgage broker. It was a 2yr ARM. I did not have them check credit. Just told them scores where EQ-612, EX-611, TU-647 from Myfico.com. I have one 30 day late mort. payment in Dec 03 and a chapter 7 BK that will be discharged 2 years in early Nov. which they also based their rate on. I had almost perfect credit before an period of unemployment in 2001-2002 that caused the chapter 7. What I would like to explore is differnt ARM's 3/1, or 5/1. Or maybe a 97% LTV FHA loan. Anyone out there have any info on what the interest rates would be on those type of products and FHA? Trying to keep my payment under $1500 a month if possibel with PITI.

Thanks, Mike

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FHA interest rates are very similar to the interest rates on a conforming loan. Often times, when going all the way to 97% or higher LTV, they are indeed less expensive (when compared to mortgage insurance on a conventional loan).

You do have one problem though in qualifying for FHA, and that is the loan will, most likely, be rejected with post bankruptcy deragatory credit. FHA will forgive the bankruptcy, but in a letter of explanation about the bankruptcy, the lender wants to know "What have you done to prevent this from happening again?" Even if you were able to obtain an FHA loan, the loan amount exceeds most lending areas maximum, but there are "hi cost areas" that are exceptions.

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Thanks for the info. I didn't know that the late might make it not possible for FHA. But maybe saying selling my last house with a huge mort. payment is what I am doing to avoid BK again :p

I have tried getting my previos lender to remove the late but they are pretty stubborn. I am still disputing now and then to see if it will drop off but most likely not by mid Nov.

Looks like maybe the 80/20 ARM is the only way to go. At what scores do the interest rates start to go down a bit? I am shooting for 650 mid score by Nov. as I am paying off my 2 CC and a line of credit.

Mike

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Thanks for the info. I didn't know that the late might make it not possible for FHA. But maybe saying selling my last house with a huge mort. payment is what I am doing to avoid BK again

You know, that could possibly work, but a couple things would go into consideration on this. If you are selling your current house and taking on a lower payment would be a big plus. Still this would be a longshot, up to the underwriter discretion.

The one thing that would still worry me on this, would be the reestablishment of credit. If you have added any new accounts since the bankruptcy, then they will weigh that into the lending decision. If you have not added any new credit (in the form of a monthly onligation, meaning you have new charge cards, with zero balance), and you are downsizing your mortgage, and you will be lowering your payment obligation on the mortgae. It would almost have to be the perfect picture.

As your credit scores increase between now and November, so will the interest rates.

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Thanks once again for the reply. I sold my house in Dec. 03. The late was because of carpet and some other things that needed to be done before selling and I just could not come up with that last payment. I went from a 1st mort. at $2150 a mont and a 2nd mort. of $650 a month to $1200 rent a month and am trying to get payments on a house below $1500 with taxes and insurance on a house aroun $220000. FHA limit in this area is around $270K. I had all my credit cards closed because of the BK so I did open a CU line of credit at $1000 limit (400 balance) , a capital 1 CC and a household CC to reestablish credit. They are low $500 and $800 limits that will be pretty much paid off before I go loan shopping. Also have a car payment of $530 a month. Income is around 90K a year. My debt to income ratio will be pretty low. I will have around $10k cash by closing so a 3% down was what I was looking for and having a seller pay closing costs.

Mike

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