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Interest rates/loan questions


Lisa71
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I called a realtor and of course he had a morgage broker call me and she said she expects my loan to be at a 6.5 or 6.75 interest rate, mainly because I just got a new job and just finished school and even though I am in the same field (basically) I am screwed and that is with getting my scores up to 680.

does this sound right?

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What were you majoring/studying and what is your new job? Are you paid salary? Commissions? Debt ratio is important, it uses a formula that requires the minimum payments on your consumer debt and your wage.

Down payment? House price?

I see your credit scores have been increasing this year, what derogs, if any, are left on? If none, why don't you think you have 700 scores? EQ looks to be there.

In addition to the rate it's important to know what the associated closing costs are since an interest rate could have a lot or a little, it all depends, have you received a good faith estimate or did you discuss the costs?

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Rates.

It could be that you are getting a great rate. It is possible that you are paying a bit too high of a rate.

I have seen people with great scores not be able to get a loan at the lowest rates for many people, and seen people with not top scores get the lowest rates. WHY?

To get into conforming lending programs/prime rates, there are several things needed in addition to the scores.

Assets are very important. (you need at least 2 months PITI (Principal/Interest/Taxes/Insurance) in the bank for 2 months.

% of the sales price you are borrowing, anything over 95% there is a penalty in rate, etc.

Depth of credit (how many trade lines and how long have they been active.

Credit profile. It is possible to have a recent 30 day late and have a 720+ score.

I learned the very hard way that until all the facts are known, rates are very difficult to give.

Charles

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I see, thank you for answering that question.

The lady told me to take a 100% loan and pay the closing fees. Before i do anything i think I will spend some time on this section of the boards. Hopefully I can do some things that bring my rate down.

I just don't want to shop for morgages because it will bring down my score.

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What were you majoring/studying and what is your new job? Are you paid salary? Commissions? Debt ratio is important, it uses a formula that requires the minimum payments on your consumer debt and your wage.

My new job is teaching and yes I am paid salary. I do get stipends for stuff, would that count as commissions? The only debts I have add up to less than $200 (not including rental stuff) until I have the morgage, but with a home morgage about 30% maybe less.

Down payment? House price?
The woman told me no downpayment, I can pay probably 5% though.
I see your credit scores have been increasing this year, what derogs, if any, are left on? If none, why don't you think you have 700 scores? EQ looks to be there.

EX: I have 2 derog left on, a water bill and a car that burned down that needs to be taken off.

TU: I have 3 derog left on, two that came off the other 2 and I have a letter saying it is coming off all 3 cra's but TU is taking their time and the car that burned down that needs to be taken off-which is also dated incorrectly 12/2004 instead of 8/2001

In addition to the rate it's important to know what the associated closing costs are since an interest rate could have a lot or a little, it all depends, have you received a good faith estimate or did you discuss the costs?
Not yet, just began the process but she said she would give me one and she told me a approx %, I haven't found a house yet as I just started the process yesterday.
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RE: paying closing costs.

One thing you might consider is sort of rolling in the closing costs into the loan. It only works in certain cases, but it might for you.

If 3% or so would cover the closing costs, and if you can get a 3% discount of off the listed price, make that part of the offer that the seller/s should pay closing costs up to 3%. Since you seem prepared to pay them at this point, take that $ and use it as a down payment. It is pretty much a wash as far as real life goes, but it makes your loan more appealing to the lenders than a straight 100% loan.

Charles

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I called a realtor and of course he had a morgage broker call me and she said she expects my loan to be at a 6.5 or 6.75 interest rate....

This must be an adjustable rate with 100% financing. Possibly it is just the 80 of the 80/20 combo rate. Or better yet, what is called the blended rate. Get all the facts from the broker.

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As of today, 6.5% on a 100% loan is doable through FNMA, however she will have to pay Mortgage Insurance :( One way to avoid this is to do and 80/20, using a FNMA first and a fixed rate second. Putting 5% down will lower the rate andf the mortgage insurance. You culd also opt for Lender Paid Mortgage Insurance. You get a rate of aroud 6.5% but you pay no MI. It is built into the loan and is therfore, in most cases, tax deductible as interest.

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You guys know what your talking about although I am slightly lost.

FNMA-is that fanny mae? Because if so, that is who the broker said she would be using.

Also, if i do the 80/20 do I do it with 2 diff companies?

For Lender paid insurance do I have to use a different lender.

I think what I am getting out of this is that I should look into more than this broker.

Thanks for all your help. :)

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I think that you are being given too much information. FNMA is one of the quasi-government agencies that is supposed to be the go between, it is an easy way for lenders to sell the "paper"/loans" to the Wall Street investors. So it is not a lender, but a program.

If you do an 80/20, it is two different loans, normally placed with the same lender initially. Ultimately loans get sold or the servicing of the loans gets sold, so at one point you may be paying 2 different lenders. It does normally start off, on the day of closing, as one complete package.

If you go this route, there is no "PMI" or mortgage insurance. Mortgage Insurance is only required on loans when the LTV (Percentage of the sales price that you are borrowing) goes over 80% of the value. Most of the time your final loan payments will be less if you have two loans, one for the 80% and the other for the balance, instead of one single loan for 100%.

Charles

If you would like more:

The goal of every borrower is to have a "conforming" loan. This means that you have good credit, enough liquid assets for 2 months of PITI (Principal/Interest/Taxes/Insurance) in reserve. You have 2 years of job history. If you do "conform" to this set of conditions required by "A" paper lender, then you are going to get the best rates. Reason is that the loan can be sold in the open market as conforming to Fannie Mae or Freddie Mac (Another quasi-government agency). Your loan is more apt to be paid on time.

These loans are sold as if they were 1) 80% financing or 2) with an insurance policy that takes care of the extra risk to a lender that it becomes the same risk.

If you are still confused, please ask again. Not only for your sake, but for the others that will read your questions and need answers.

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Okay, it is gradually becoming clearer.

One of the reasons I can't get the "A" loan is because I haven't been at my job long enough but I am in the same field, so she said that can be worked around.

But since I didn't make much money this year or last by that matter, I will have trouble she said. Although now I am on salary, but I guess that doesn't matter to the lender. IS there a way around that too?

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