We are 1st time homebuyers. My credit score is 760 and my husband's is 672. We are being offered 100% financing (not 80/20) for a 575k home. The interest rate will be fixed for 30 years at 7.25%. We will not be required to pay pmi. The closing costs will be about 29k. Is this a good deal or can we do better with another lender? We have till april 2 to get a mortgage per our contract with the seller.
2007-03-12 12:22:46 · 5 answers · asked by LLD 2 in Business & Finance ➔ Credit
A mortgage loan with 100% financing can mean higher interest rate. At times, a good substitute is to go for an 80/20 loan, where there are 2 mortgages of which the first mortgage has lower rate and the second mortgage carries higher interest rate. The advantage of this type of loan is that it does away with PMI insurance that can cost $100 or more for each month, based on the amount of loan.
Besides ask for quotes for 100% financing and quotes for 95% financing, where you make a down payment of 5%. Find out if the savings on the interest rate are substantial to make the down payment.
2007-03-13 02:12:47 · answer #1 · answered by hendy h 2 · 1⤊ 0⤋
The rate is pretty high-- you should be in teh 6% range even with 0 down....although the no PMI could REALLY pay off as so many lenders require that that you might more than break even on something like this. I paid $138 a month for PMI on a 150K house. Dont know what kind of PMI a much higher loan would have.
29K is a bit high on the closing costs too--- thats a full 5% in closing costs-- within the normal range but a tad high. See if you can negotiate away some of those.
2007-03-12 19:28:37 · answer #2 · answered by Anonymous · 1⤊ 0⤋
Your credit scores are fine for a prime loan but you need to have a down payment to get one. The current rate on a 30 year fixed mortgage is about 6.125 to 6.375%. So, you are paying about a point higher most likely because you are putting nothing down. Your closing costs seem extraordinarily high to me as you are probably paying at least 4 points (4% times $575,000).
If you have the money you should put about 20% down and find another lender. If not you should shop around for a better deal than this. Keep in mind that because of all the subprime loan defaults that this market has tightened considerably in the past six weeks.
In short, go shop around post haste. But, don't apply for anything until you find something attractive as it may push your credit score down if you apply to several lenders.
2007-03-12 19:35:14 · answer #3 · answered by Flyboy 6 · 1⤊ 0⤋
That interest rate is high. I suggest you look closer at the closing costs. It sounds like you ARE paying PMI, in a lump sum, at closing.
2007-03-12 21:22:27 · answer #4 · answered by STEVEN F 7 · 0⤊ 0⤋
The closing costs are outrageous on that loan.
Shop harder.
2007-03-12 20:07:37 · answer #5 · answered by mcd_48230 3 · 1⤊ 1⤋