Am I getting the best deal I can with this loan?

[tammi]

House Price: 172,000

100% Financing (no second)

Mortgage Ins .59%

Interest Rate: 6.875%

Credit Score: 620 Mid

Closing Costs: 10,124.21 (3 months Hazard Ins and 3 months taxes)

Been on Job: 6 years

30 Fixed Conventional Loan

Prime loan

Lender requirements:

1. Must escrow (I would prefer not to escrow)

Does anyone know if I would be able to get a better loan? Or one where I would not be required to escrow?

[firstsource]

RE: Escrow.

There normally is an option of your paying .25 (430.00) as a fee to not have your funds put in an escrow account. I would strongly encourgage you to set up the escrow account - at least for the taxes portion as they are a rather heafty amount per year to come up with "all of a sudden".

It may have something to do with the Mortgage Insurance as that is a very low factor. Normally it would be .96 to give you an example.

Charles

[ybrew]

I didn't want to escrow, but being VA, I have to. I can only imagine the kind of trouble I'd get into if I didn't escrow.

[tammi]

Thanks for the information. So basically you are telling me that this is a pretty good loan.

[jq26]

I close this week. Just to give you an idea where you stand...here is a comparison from my estimate:

House Price: ~$200,000

96% Financing (no second)

Mortgage Ins .59% (I think it is the same as yours)

Interest Rate: 6.375% (bought the rate down from 6.50%)

Credit Score: see below. Roughly 710 middle FICO

Closing Costs: Roughly $11,500 (4% RE transfer tax in my city! & 12 months of taxes and insurance escrowed)

Been on Job: 5 years

30 year Fixed

Prime loan with National City Mortgage

IMO, I think you have a decent loan.

[momof5]

JQ,

Wow that is an awfully high interest rate for a 710! If you check out bankrate.com you can find current interest rates for a 30 fixed in your area.

I just checked JAX, FL today and for that kind of score you can get 5.67%!

[jq26]

JQ,

Wow that is an awfully high interest rate for a 710! If you check out bankrate.com you can find current interest rates for a 30 fixed in your area.

I just checked JAX, FL today and for that kind of score you can get 5.67%!

Three aggravating factors: BK7 late in '04, multi-family unit property, and high LTV (96%).

To be honest, you might be right....but I'm constantly referring clients to my broker so I'd be surprised if he'd risk a lot of future business to make a few quick bucks screwing me on the rate now. Is bankrate accurate? Is that without points? I don't know why I even care because I'll just drive myself nuts and it is too late anyway!

[momof5]

Ok, understand the issues...

Yes, as far as I can tell, bankrate is accurate and they do list points (if any). It is a good way to double check what you are being offered.

[firstsource]

That is why I learned to never quote rates on the board. On the surface things may look good, but many times there are small issues that make a big difference.

I will tell you that you have to be careful on rates quoted on BankRate.com. There is no way that 5.67 would have been possible yesterday with out points. Also, many times these rates are not for 80% LTV loans, but sometimes as low as 70% LTV loans, with 6 months PITI etc. Not your average situation.

I think that jq26 is being wise to deal with someone he knows. That is a good insurance against last minute changes to GFE quotes etc.

Charles

[mattandallismom]

Three aggravating factors: BK7 late in '04, multi-family unit property, and high LTV (96%).

To be honest, you might be right....but I'm constantly referring clients to my broker so I'd be surprised if he'd risk a lot of future business to make a few quick bucks screwing me on the rate now. Is bankrate accurate? Is that without points? I don't know why I even care because I'll just drive myself nuts and it is too late anyway!

I think that is a decent fixed rate at this present time (with property and LTV) especially when you're using a non-subprime lender who won't pull the SUPRISE at closing. I was just approved at a 6.38% and my score is a little lower than yours. Don't fret too much about it.

[jq26]

Well, everything went off without a hitch. Except for the fact that the lender (National City) decided to FedEx a check to the title company instead of wiring funds. The check never showed up (the lender blamed a rainstorm...) but we went through with everything anyway as a dry settlement.

[mattandallismom]

Congrads that's awesome!

[PolarBearnCO]

Now if they can FHA, wouldn't they get a guaranteed 6%?

[amortgageman]

Now if they can FHA, wouldn't they get a guaranteed 6%?

Not necessarily. While the mortgage market (lenders and brokers) is competetive, it is not a given that a borrower will receive a 6% rate. There are restrictions on FHA loans that the lender/broker may only charge a 1% origination fee. With a mortgage broker, the broker also has to cover the underwriting fee charged by the lender. Under FHA guidelines, an underwriting fee may not be charged to the borrower, hece, a broker must absorb that cost, which would eat away at the 1% origination fee.

For this reason and others there is a "yield spread," on rate sheets accessible to brokers. I have seen rate sheets for some companies expand out to 6 or 7 points available on the back side of the loan. These points can also be used for a broker to pay all closing costs for the borrower, but the effect would be charging a higher interst rate to do so. While charging yield spread may be a standard practice, the net effect of doing so will mean a higher interest rate to the borrower, who may feel like shopping elsewhere for their loan. It is a very fine line.

P.S. Almost always, a broker will have lower interest rates available to them, than what a bank will be offering to the public. The reason for this is from yield spread (profit margin) to the bank. Nobody works for free........well, except us who lend our knowledge to the CIC.