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Guest BadAccountant

So my loan officer through the gauntlet down and told me that if I find that his rates for a VA loan are on the high end of a range of rates then he would discuss lowering them with his "boss." I don't close for about six months, but if there is a way that I can get an idea of where his rates are to a range of other lenders that would be great.

Does anyone know how I would go about finding a comparison of rates to what he is quoting without other prospective lenders banging away at my credit file like a screen door in a hurricane? I don't know if it is as easy as walking into a Chase or Wells Fargo and saying can I have a rate sheet for VA loans. If it is, then I will do it, but I was hoping someone could guide me on this.

Thank you,

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Ask him what his rate would be today, with the 10 year bond at 4.65.

Ask him what conventional rate would be today for a comparison.

Ask him to provide you with a GFE for both scenarios. He is probably not very busy this week and would be a good time for him to put them together.

Charles

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Guest BadAccountant

I know that the VA rate he quoted me yesterday was 6.25 with no points and a non-negotiable 1 point orignation. Then the next step is one point for 6% and 2 points for 5.875%.

I just emailed him for the conventional rates. I had asked him about the possiblity of going conventional earlier, so I hope he will do the GFE for that way. I just signed and mailed all of the application and disclosures for the VA route so I have the GFE for that way. Anything you're looking for or is it for comparison of the different fees between the two types? How do those rates above seem?

Thanks again.

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I just got his response to my questions (you must be right. His response time took about as long as it would to type it!). He said that I would have to go with an 80/20 at 6.75% for the 80 and 13% for the 20 balloon. He also said there would be an additional $878 in mortgage fees and $400 more in title fees and other misc fees additional to my GFE for VA about $125.

Thanks for the help Charles.

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That 2 point on the VA for "origination fee" may not float with the VA anyways. VA loans are subject to rules about what fees they can charge you and a 2 point origination fee is nothing more than a 2% fee for doing the clerical work (ie. typing up documents and making calls to verify your financial statement) involved in preparing the loan package.

From what I've read, the VA caps origination fees at 1%.

I've also seen advertised rates of 5.875% on VA loans with no points. I think you have room to negotiate those fees.

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Sorry for the confusion. The rates I was quoting were with me paying the points. They are only charging the 1% statutory (or whatever) amount that the VA will allow. I was just trying to show that they are not giving the usual 1point = .25 in rate.

Would you mind sharing where you've seen those rates? Are they with a national bank (BofA, Chase, etc) or are they with lesser knowns?

Thanks for the input Methuss, your views are always helpful.

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With rates going up it is going to be difficult to compare apples to apples.

I would suggest that you use the 10 year bond yield as a standard and ask the lender/investor to quote you "today's" rate and then use the bond as a yard stick. The 15th the bond closed at 4.6 and today closed at 4.69. That is almost enough to raise a rate 1/8. So last week's quote maybe lower than reality

Charles

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...like a screen door in a hurricane?

LOL - I didn't know they had hurricanes in AZ

You probably already know this ('cause your broker should've told you), but VA allows the seller to pay closing costs and discount, plus an additional 4% for prepaids and other items. You must negotiate your purchase contract in a specific way with the seller to accomplish this.

If you are successful, then you can buy the home with no money down, no closing costs, no prepaids, and you can be refunded any earnest money at settlement.

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Guest BadAccountant
You probably already know this ('cause your broker should've told you), but VA allows the seller to pay closing costs and discount, plus an additional 4% for prepaids and other items. You must negotiate your purchase contract in a specific way with the seller to accomplish this.

Hum, well he did tell me that the VA only allows 4% contribution by anyone beside the buyer. Let me know if this is wrong, because it makes a big deal. I have 2% coming from the deal and my RE Agent is contributing 2% (he is a friend and I only brought him in to get that). But if more can be contributed then I can buy down more rate or get more of my earnest back. That really is my goal right now.

Are you sure about the seller paid costs, PLUS the additional 4%? :shock:

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Are you sure about the seller paid costs, PLUS the additional 4%? :shock:

The below inofrmation is copied verbatim from VA's site...

http://www.warms.vba.va.gov/admin26/pamphlet/pam26_7/ch08.doc

Seller concessions include, but are not limited to, the following: ·

payment of the buyer’s VA funding fee·

prepayment of the buyer’s property taxes and insurance·

gifts such as a television set or microwave oven·

payment of extra points to provide permanent interest rate buydowns·

provision of escrowed funds to provide temporary interest rate buydowns, and·

payoff of credit balances or judgments on behalf of the buyer.

Seller concessions do not include ·

payment of the buyer’s closing costs, or·

payment of points as appropriate to the market.·

Example: If the market dictates an interest rate of 7½% with 2 discount points, the seller’s payment of the 2 points would not be a seller concession. If the seller paid 5 points, 3 of these points would be considered a seller concession.

Any seller concession or combination of concessions which exceeds 4% of the established reasonable value of the property is considered excessive, and unacceptable for VA-guaranteed loans.

Do not include normal discount points and payment of the buyer’s closing costs in total concessions for determining whether concessions exceed the 4% limit.

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So my loan officer through the gauntlet down and told me that if I find that his rates for a VA loan are on the high end of a range of rates then he would discuss lowering them with his "boss." I don't close for about six months, but if there is a way that I can get an idea of where his rates are to a range of other lenders that would be great.

Does anyone know how I would go about finding a comparison of rates to what he is quoting without other prospective lenders banging away at my credit file like a screen door in a hurricane? I don't know if it is as easy as walking into a Chase or Wells Fargo and saying can I have a rate sheet for VA loans. If it is, then I will do it, but I was hoping someone could guide me on this.

Thank you,

When I went through my mortgage process, I got pre-approved from one lender and got an email copy of my credit report.

I then called other lenders and told them my scores, and where I got them (from the other lender's credit pull) and asked them to give me today's rate. Sometimes the other lenders would ask for a copy of my credit report (because I told them they were not authorized to pull my credit again). No one ever had an issue with not pulling my credit when I asked them.

I'm curious though - You're getting the house built now with a builder and a requirement from the builder to use the preferred lender to get the full incentive package (35K in upgrades).

The house won't be ready until June 07.

What happens in May 07 if the house is almost complete and the preferred lender is way higher than an outside lender, and you decide to use an outside lender? Does the home price go up 35K?

I'd ask the builder and find out exactly what happens in that scenario. One builder I was looking at offered 20K in incentives (with the idea of 15K upgrades, 5K closing costs) and title fee with the preferred lender. If I didn't use the preferred lender, the title fee wouldn't be paid, and I'd lose the 5K towards closing. Since it was end of year when we were looking at that builder (last December), they waived the preferred lender requirement for the entire 20K, but kept it for the title fee. (And I got that in writing.)

Didn't go with that builder after all so it was a non-issue, but still find out all the details, and get them in writing.

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Guest BadAccountant

The answer that I have gotten is yes, they will not give me the 35K in incentives if I do not use their preferred lender. My RE Agent said that he has heard of builders allowing other lenders, but in extreme circumstances and I doubt that a high rate would qualify as an extreme case.

Now, I would worry about it more if I was not going VA. I know the lender still sets the rate, but I imagined that it would be a very easy rate to shop. And the VA doesn't allow junk fees to be added to the loan recklessly.

And to answer what I know is a follow-up question...Am I prepared to back out of the deal and lose the 2K? Oh, yeah baby. If the rate that I shop for come back out of line and it is obvious that they are taking advantage of the situation then hell yeah I am out of there. Of course I will try to do the deal with an outside lender and if that doesn't work, I have already looked at some VA provisions that may allow me to get my earnest back. Like one that says if the veteran has already paid the orgination fee and the deal is not consumated then it shall be refunded to the veteran. (Pamphlet 26-7 Chapter 8 Paragraph 6(B)). Origination = 2K earnest =2K, hmm...:-)=

I did receive a hard copy of my report as well. I think that because I have an automated approval from the VA right now it will be even easier. But I will use that advice and contact other lenders. I think the point is not to go with other lenders, but have ammunition to try and have my lender's rates reduced. I can also use the knowledge to know when to get out. :ah:ah:ah:

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Don't know what your veteran status is, but "if" you are a disabled vet you may be able to get the VA funding fee waived depending on percentage of disability. Also, you may qualify for certain property tax exemptions. In NC we get 0 property tax on motor vehicle and exempt on the 1st $48,000.00 or 50% whichever is greater on primary residence. I am rated 100% , bought my home in 2000. List was 75,000 made a full price offer w/ seller paying all closing and prepaids, VA funding fee waived, used NC Housing Finance(1point rate reduction) and walked away from closing w/ $1000.00. Just a note if you're a Disabled Vet. Good Luck!!

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