Got approved for a loan 100% to purchase a condo for 180k w/ 3 yr prepayment Penalty 40 years loan with 1st 3 years at a fixed rate of 8.9%... is this a good idea...
2006-12-19 06:28:47 · 11 answers · asked by Marisol F 1 in Business & Finance ➔ Renting & Real Estate
That sounds like a very high rate if your credit is what you say. My advice is to talk with at least one more loan broker. Your loan officer should take some time to find out what your goals are for the near and distant future, then make loan recommendations based off of that information. If you don't know how to find a reputable loan officer, talk to a couple of Realtors, we know the offices that are easy to work with and the ones that aren't.
If you are in Southern California, you can contact me through my website and I can put you into contact with a few great lenders.
2006-12-19 06:36:47 · answer #1 · answered by royal_fiction 2 · 0⤊ 0⤋
A fixed rate loan would be better. You have no way of knowing what your payment will go up to after the 3 year fix. You can't refinance within the first 3 years without paying penalty and it's a 40 year loan, that's a long time. Depending on your credit history you might be able to do better, but the 100% loan is probably why your interest rate in 8.9%. If you could pay more down, that rate and your terms would be better. I guess if your comfortable with what they've quoted you, go for it. But I'd check around.
2006-12-19 06:36:19 · answer #2 · answered by Kathleen M 4 · 0⤊ 0⤋
You are getting screwed. Badly.
If your credit is actually excellent (720+ FICO scores), and you have solid, verifiable income that qualifies you, this is just a terrible, horrible crappy offer.
You should be able to get a 40 year fixed rate (fixed for ALL 40 years) with mortgage insurance for about 6.25-6.50%. Mortgage insurance would be another .6% typically. Or get an 80/20 interest-only loan.
Find a new broker immediately. Talk to a couple of them, ask about Fannie Mae My Community products. Contact at least one major bank in your area, as they often have their own special first-time buyer programs that might get you an even better deal.
You are being offered a sub-prime loan. Which shouldn't be happening if your credit is excellent. Even if it's not 720+, the numbers I said above are valid typically down to a 620 score.
Run like hell from your current loan officer. He is either crooked, or completely incompetent.
2006-12-19 06:39:45 · answer #3 · answered by Anonymous · 1⤊ 0⤋
1. Get a 40 yr. fixed rate.
2. 8.9% is high, but it's because you're talking a 100% loan for 40 years.
3. If you don't have the down payment and need to get a 40 yr. loan, you shouldn't be buying this property. Find something cheaper that is within your budget and save for a down payment.
2006-12-19 06:56:06 · answer #4 · answered by Phoenix, Wise Guru 7 · 0⤊ 0⤋
Be sure to put at least 20% down payment. This will remove the mortgage insurance from the monthly payment. This "insurance" is really a disguised scam since you think that you are paying to insure your property. Actually, the insurance is normally issued by a whole owned subsidiary of the lender and insures them against your default or invalid property ownership. The current market trend also appears to be headed for lower interest rates for next 20 months but will likely increase when your adjustable rate will kick in so you will probably be paying slightly above market in the short term and then keep up with the market when rates increase. You would probably save a bundle by seeking fixed long term rates, additional points and down payment.
2006-12-19 06:47:18 · answer #5 · answered by Anonymous · 0⤊ 0⤋
I am going to say no. If you have excellent credit than you should be in the low 6's for a First Time Home Buyer. If that was your second than I could say that could be correct. Without your personal scenario: income, credit report, and other factors. I cannot really give you a definate answer. But if you have excellent credit like in the high 700's than yes you are getting screwed.
2006-12-19 06:34:20 · answer #6 · answered by Openthathouse.com 4 · 0⤊ 0⤋
8.9% is a bit too high if you have excellent credit scores... we currently offer 5.99% fixed for 30 years with 2 year pre-payment penalty. (in California)...
rates also depends on documentation type if you can provide2 months paystubs, last years tax returns, and 2 months bank statements, then I don't see any reason why you shouldn't get prime rates.
Good luck!
-- mortgage advisor
2006-12-19 06:59:40 · answer #7 · answered by rmijares 2 · 0⤊ 0⤋
Wow that interest rate seems a little high. Take the offer you've been given to several other institutions and get them battling between each other, and see who comes out on top. You can even use the leverage of threatening to move your RSP's, accounts, and investments to the lowest bidder. You have nothing to lose and everything to gain by shopping around.
Good luck to you and happy holidays.
2006-12-19 06:40:01 · answer #8 · answered by Marc A 2 · 0⤊ 0⤋
Bad idea. Listen to the cooler heads here. Someone is ripping you off big time.
Get a Buyer Agent to put you in touch with the Rural Development officer near you. They can do much better. (Used to be FHA)
2006-12-19 08:40:14 · answer #9 · answered by Anonymous · 0⤊ 0⤋
Hi ,
I would say it is not at all a good deal .You have very good cerdit and i don't think your rates should be so high .In my company for the persons like u the rates should be in between higher fives and lower sixes. For more information you can write your case details to me at kishaloy_bhowmick@yahoo.com.
regards,
kish
2006-12-19 07:01:48 · answer #10 · answered by kishaloy_bhowmick 2 · 0⤊ 0⤋