We are purchacing our first home and have ran into a situation. We looked for a loan through an online source and got over 20 replies. Our credit score was in the lower 600's and after narrowing it down to just 2 lenders we got two totally different answers about a loan. The first situation is a 5 yr ARM with no pp fees if we refinace with an intrest rate of 6.8. The other is a 30yr fixed with an intrest rate of 6.1. I am worried that the lower rate could be a "bait and switch" with the other lender being very upfront with our credit issues and DTI (52%). I guess the question is: Is the lower rate possible a bait and switch tactic or should I run with it?
2006-12-06 16:17:22 · 8 answers · asked by JJB H 1 in Business & Finance ➔ Renting & Real Estate
I would ask how long the lock is good for and see if you can lock in the lower rate. What state are you in?
2006-12-06 16:24:17 · answer #1 · answered by homes_az 2 · 0⤊ 0⤋
As a loan officer, I would advise you to be very careful of both of those offers. I am assuming that you are putting a down payment since there is no second mortgage rate.
This is the issue. Conventional rate programs have rate increases by .125. This means that the two rates you are being quoted are not conventional mortgage programs.
Because of the rates, these lenders are quoting you subprime programs. Subprime programs are higher risk loans. They have much higher rates than conventional programs and are usually 2 or 3 year arms. There is hit to the rate to go to a 5 year arm and only a handful of subprime lenders will allow a DTI over 50%. The lenders that do allow the higher DTI have higher rates.
The possibility that these rates exist is highly unlikely. Have either lenders mentioned how many points you are paying? I would get another quote, because both of these offers do not fit. If you have any specific questions, please email me at ajohnston@ftmc.net. I hope that this helps.
2006-12-07 07:51:20 · answer #2 · answered by Mama of Four 4 · 0⤊ 0⤋
Herein lies the problem with on-line companies, you have no idea as to whether or not you can trust them, or not. Do not run with both companies at the same time, this is simply not fair to either party - it costs a company money to take you through the lending process and this simply increases overall lending costs for everyone, not to mention creating some bad blood.
Deal honestly and upfront and expect the same in return - but, find a lender you can trust. A good source to find a lender is by asking someone you know who they used, or ask a real estate agent, or a title company, or appraiser.
5/1 ARMs are really not any lower in pricing right now, stick with the fixed over that option. Not knowing all of your info, the 6.1% is reasonable without being a bait and switch.
2006-12-06 18:53:32 · answer #3 · answered by walkinandrockin 3 · 0⤊ 0⤋
Those rates are not a very big difference, one might be making a little less on the loan. But both are good rates I would see if you can get a 30 year fixed worked up with both lenders. The 5 year arm and the 30 year fixed are about the same price right now. You can get conforming rates with a dti of 52% and a fico of 620 so it does sound reasonable.
http://www.diversifiedlender.com
http://www.homemortgageminnesota.com/
http://www.refinance-second-mortgage.biz
http://www.minnesota-mortgage-rates.net
2006-12-07 01:07:25 · answer #4 · answered by Matt J 3 · 0⤊ 0⤋
Not necessarily, but definitely possible! Run with both! If one doesn't work out, you'll have the other as your backup!
My suggestion is, since 30 yr fixed is most expensive of all loans, ask the lender that (offered you the 6.10% ) to quote you their 5 yr ARM, it SHOULD be lower than the 30 yr. fixed!
Better yet, have each lender draw up a 2 sided-by-side loan comparison between their 30 yr fixed and 5yr arm.
Just don't feel pressured by either lender. You can run them both until you are the signing table!!!
2006-12-06 17:11:17 · answer #5 · answered by ALEGNA 3 · 0⤊ 0⤋
Well honestly I would like for my company http://www.justgetaloan.net to compete for your business. Truth be told either one of those deals could be a bait and switch the only way you know if this activity is going on is when you get to the closing table. My advise to you though is to go with the 30 year fixed. No pp fees if you refinance? havent heard of any deals like that. Also find out which lender it is thats doing the loans. Feel free to contact me at 866 530 7300 ext 7305 or by email at jfreeman@justgetaloan.net
2006-12-07 04:44:39 · answer #6 · answered by Anonymous · 0⤊ 0⤋
FHA government loans for first time homebuyers going with 100% financing can be as low as 5.35% fixed for 30 years. It's not unreasonable.
Remember if you do a government loan you can get up to 6% seller consessions - seller consession are what your seller will pay toward your closing cost expenses! Now I am a license loan officer is cleveland ohio. I have been in the business 3 years. I am licensed and work right now with consumer real estate finance co. check us out online at www.crefco.com . Give me a call and get a free prequalification at no obligation see how much you qualify for, what rate you can get and how much a payment would be. Call me as soon as you can toll free at 888-526-5001 ext 772 or direct at 440-832-7772. You can e-mail me with any questions as well at lbishop@crefco.com. My name is Lindsey! good luck! hope to hear from you! This is no impossible go for your dream!
Please call only if you are in Florida Michigan California and Ohio.
2006-12-07 07:28:20 · answer #7 · answered by Linds 3 · 0⤊ 0⤋
a lender is going to look at your debt to income ratio past 2 years work history and a couple years of credit. If your score is not great but you have cash there are companies (here anyway) that can help. A lender should be able to approve a 580 credit score but your ratios need to be there and you run the risk of paying points first talk to a loan company of any sort and get a pre approval
2016-05-23 02:49:05 · answer #8 · answered by ? 4 · 0⤊ 0⤋