We are closing on a house this Thursday. The loan we are getting is fixed rate (7.15%) for 30 years. This is a no money down loan, with the total of the loan being 72,100 (this is a 3 br, 1 ba house with 2.638 acres of land, some cleared, some wooded). The house itself appraised at 82,500 with one company, and 80,000 with the other. Our payments will be $715.40 per month.
My concern is all the talk the last few days about subprime lending problems. To my knowledge, we ARE NOT getting a subprime loan, but how do I know for sure? I am scared to death that something will happen in 2-3 years, and we will lose this place. While I know we have plenty of money, and could afford about $600 more per month in payments, we felt that we didn't need something that high.
Do I have reason to be concerned, and if so, could you explain?
2007-03-26 05:38:51 · 4 answers · asked by Critter Lady 4 in Business & Finance ➔ Renting & Real Estate
For anyone wandering, we are located around the Gadsden, AL area, with the new home being about 4 miles outside of town (nice and peaceful).
2007-03-26 05:40:29 · update #1
The rate we are getting is due to a paid off bill that hasn't been removed from my hubby's credit record. We are currently fighting tooth and nail to get it done, but no luck so far. We would wait, but we have to be out of the rental we are presently in by the first of April, due to construction in the area. The house is being torn down.
We are planning on refinancing it after a year, so that we can get a much better rate (we are going to leave the equity in the house when we do it.....we don't need it anytime soon).
2007-03-26 05:53:03 · update #2
The hubub in the news about sub-prime lending is due to the high foreclosure rate on adjustable rate loans to marginal borrowers. Even if your loan is sub-prime you have nothing to worry about as long as you make your payments on time.
Your rate could indicate sub-prime territory but since it's a zero down loan it's probably not sub-prime. 100% loans command higher rates since the lender is taking on more of the risk.
2007-03-26 05:49:41 · answer #1 · answered by Bostonian In MO 7 · 0⤊ 1⤋
No, you have no concerns. A sub-prime loan is where lenders lend money to people with dubious credit. The issue currently being hyped in the news is that many of those loans are now going into default. If you are getting 7% +/- thats about average so your not getting a sub prime loan. If you were your rate would about 9% or more. As long as you pay your mortage on time each month, even if your lender folded, their loans would be bought by another lender, and you'd just end up sending your payment to someone different.
2007-03-26 05:51:13 · answer #2 · answered by Sane 6 · 0⤊ 0⤋
First of all, if your credit scores are sufficient, there is NO reason that you should be paying that exhorbitant amount of interest. The going rate right now is right around 6%. Unless this is a "combined" rate that takes the 80/20 rates and combines them....I know that you don't have much time right now, but if I were you, I would contact another lender to see if you couldn't do much better on the interest rates...the research just might be worth it. Feel free to email me if you would like some suggestions on other lenders. terra@terrabruns.com
2007-03-26 05:49:51 · answer #3 · answered by Terra B 2 · 0⤊ 2⤋
location
2007-03-26 05:46:02 · answer #4 · answered by siva k 2 · 0⤊ 4⤋