My 30 year fixed GFE 100% financing is @ 6.875% with One Point..... $185K is borrowed. $7,600 to close. the proposed payment breaks down : $1,215 princ/interest monthly with $90 PMI. Also, why does my truth in lending say the APR is 7.762% ??? Does this sound like smoke and mirrors, or the best deal available. Credit scores are well into the 730's employment A+++..no issues there!
I know I am asking alot but any help would be greatly appreciated since I am 27 yrs old with 2 youngsters to look after!
2007-09-19 08:59:00 · 4 answers · asked by george r 1 in Business & Finance ➔ Credit
Sounds like you're not putting any money down for the down payment. That's why you're rate is a tad bit high. The APR looks normal too. That number is bumped up because it takes into account origination fees, points and closing costs.....
Yes it is confusing. All loans look like smoke and mirrors really if you ask me. I've had 3 loans before in the past. Yours looks straight forward.
Personally, if I were you, I would wait until I had 10% to 20% saved up for a down payment......
Oh yeah $7600 is a tad bit high (just over 4%) but you did say you had a point thrown in. That would account for that.
2007-09-19 09:05:21 · answer #1 · answered by Anonymous · 1⤊ 0⤋
Okay, the Truth in Lending is a bit misleading. You have to understand what it's telling you.
The APR is mislabeled. APR is "annual percentage rate", but really it's the EFFECTIVE interest rate on what you borrowed. Here's the concept:
If you borrow $100,000 for one year, and have a choice between 10% and 12% interest, it's not as simple as going with the lower rate. On the 12%, you pay back $112,000 in a year, APR = 12%. However, if the 10% loan requires you to pay 3% up front, you are really only borrowing $97,000, and paying back $110,000 in a year, for an EFFECTIVE interest rate of about 13.5%.
That's what the APR tells you, the effect of the points and other charges considered "prepaid interest", because you're really not getting that money in the first place.
Bear in mind that all your signature on a TIL means is that you've seen it, and had a chance to ask about it, but you are NOT agreeing to pay the interest rate in it. The interest rate you will pay and deduct from your taxes is the one in the Note. The TIL is merely a disclosure of the effect of that Point you paid, and the other closing costs you are being charged.
2007-09-19 16:17:03 · answer #2 · answered by open4one 7 · 0⤊ 0⤋
How soon can you save up 20% of your purchase price for a down payment PLUS closing costs? That would save you that PMI pmt of $90.00 per month.
I understand the fever to own your own home, but if you cannot put down 20%, then you are not ready to make a home purchase.
Truth in lending makes adjustment for points paid as well as stated interest.
Check Bankrate.com to compare interest rates. I agree that you want a FIXED rate loan.
2007-09-19 16:09:49 · answer #3 · answered by Jeff H 5 · 0⤊ 0⤋
I can break it down and give you a better rate. Call me 813-907-0605
2007-09-19 16:06:24 · answer #4 · answered by Liz P 1 · 0⤊ 0⤋