whats a good interest rate on first time homebuyer?

Question

have been currently approved with builder. Still going through process to finalize. I have been given a 80/20 on my 137k loan for my first home. they have given me 80@6.5% and 20@8.5% on a fixed 30yr loan. I have a laptop im paying off (about $1800 left to pay) and a bmw i'm paying off (about 55x808.72/mo). I can handle payments, but wondering if I'm getting screwed with my home loan. I checked on myfico.com and my credit score is 714 and I fall in the texas home loan at 5.966%. Is my laptop and bmw the reason i got a higher interest rate? and if so how can i improve the home loan situation so as not to pay $1110/month on new home but less than that. Any ideas/suggestions/recommnedations would be greatly appreciated. I'm currently 24 years old. Thnx in advance!

Here's an update: I graduated college with a BS in EET@20 and started working before I graduated school. I have been with my company for 3.5yrs and have a secure gob. Average anual salary 62k.

Answer 1

First of all, you are claiming that you only have two current loans that are active.

Even though you have a decent credit score, you have no credit history. What really helps is a longer (5+ years) history of regular payments without any 'hiccups' of missed or late payments on about 5 or 6 small credit accounts.

The other thing is your age. How established are you at your job, how many years have you been at the same company? The assumption will be that if you went to college and graduated in 4 years, you would have been 22 when you graduated, leaving you two years maximum in your position/field of expertise. That is pretty much what I can gather based on the information you gave.

I do not think you are being grated over the coals, you are just paying the price for that loan under your circumstances.
6.5% is not bad for the first, and second mortgages are usually higher because the principle is low, and yields the lender little profit. Be careful of variable interest rates, they can sneak up on you in short order. In comparision for California, I could only wish to see a studio condo out here for that, let alone a house. I have never had a mortgage under $3300 per month in recent years. Keep shopping around, remember that the market is soft right now, and that is in your favor. Good luck house hunting!


UPDATED 19MAR2007 : I have a propensity to agree with kate on a couple of the issues brought up in their advice to you as well.

1.) Home builders are willing to drop rates to appeal to their market so they may turn it over as soon as possible, thus reducing any 'flooring' or lending points to the bank that financed them to build it, if they do not. Ususally it is deal worked out with their bank, not the builder themselves who are providing financing.

2.) Put the 20% down on the house yourself if you can. It will be in your favor ultimately to do so. This way you will not be paying someone else for your money. I mean after all it will be in the value of the home anyway, and the equity will be yours not someone elses.

Answer 2

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RE Whats a good interest rate on first time homebuyer?

have been currently approved with builder. Still going through process to finalize. I have been given a 80/20 on my 137k loan for my first home. they have given me 80@6.5% and 20@8.5% on a fixed 30yr loan. I have a laptop im paying off (about $1800 left to pay) and a bmw i'm paying off (about 55x808.72/mo). I can handle payments, but wondering if I'm getting screwed with my home loan. I checked on myfico.com and my credit score is 714 and I fall in the texas home loan at 5.966%. Is my laptop and bmw the reason i got a higher interest rate? and if so how can i improve the home loan situation so as not to pay $1110/month on new home but less than that. Any ideas/suggestions/recommnedations would be greatly appreciated. I'm currently 24 years old. Thnx in advance!

Answer 3

For a credit score in the range of 585-599, you may have to make a down payment of nearly 5% to be approved for a home mortgage loan. Even in this case, your approval will come from a subprime mortgage lender. You have to approach a lender who deals exclusively in loans for people with not so perfect credit or in situations that cause difficulties in getting a mortgage.

If your credit score lies between 600 – 620, you might be easily approved for 100% financing. Even in this case, you have to approach a subprime lender.

Answer 4

Your % rate is higher because you have lots of debt AND you are financing the 20 % down, NOT because you are first time home buyer.
I am surprised that you got the low rate you did , the seller must be desperate.
If you want a better rate :
1) Put down 20% for real , you do NOT borrow it and
2) Do not apply for a mortgage when you have big car payments , wait until its paid off or get rid of it.