How much do points affect a mortgage and are points an "extra" cut the lender makes over higher rates

Question

I had an appointment with a mortgage broker today and having been close to pre-qualifying 2 years ago I had an idea that I was about to be taken on the same type of "ride" I just wish that seeing what they were trying to do I think it might have helped if they kissed me first =p

I have the feeling that a FHA loan will get me the best intrest rate for all of my individual factors. No outstanding credit at the moment and only one of three credit reporting agencies even give me a score (660) So with a 6.5 intrest rate in mind. I thought Id entertain the idea of meeting with this broker( who was very aggressive on the phone )at first for the realtor called two lenders and I had them both calling me at home and giving info w/o knowing who was whom... another story =p
Not knowing the exact details of the 2 offers that were presented on the table I can just say one was 7.5 + 2 points and the other was 8.5 +1 points both very similar numbers on about 225k with 34 down Lender makes 6k?

Answer 1

Points are usually not a good thing. The theory is that they will take points in return for a lower interest rate.

A point is a percentage point. If you are looking to borrow $100,000 then one point would be $1000 up front.

Both of those 7.5 + 2 pts and 8.5 + 1 pt are VERY high rates if fixed, never minding adjustable.

I'd find another broker.

Answer 2

Most lenders require at least two scores. I think your on the right track with FHA. They aren't so much credit score driven and since you don't have much debt at the moment you can likely just write letters to explain any blemishes that exist.

With FHA you should be able to get rates close to 7% if not below. FHA only allows brokers to make 1% commissions.

There are a TON of brokers out there. Now that you know your score you can call around and give them your situation and let them beat each out to get you the best deal. Go with someone you actually feel you can trust.

Answer 3

factors do no longer result loan prices. that is extra like in opposite. you may purchase down (decrease) a loan cost purchase paying factors. a million factor is an same as a million% of the quantity borrowed. factors are tax deductible interior the 12 months they're paid. in most cases, established loan prices are determined by technique of the Bond Markets. no longer, inevitably the Federal Reserve, no matter if or not they a great deal impression those prices.

Answer 4

Find another lender, one who you want to work with..........