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Background: 660 score...30 year FHA Fixed...
Loan amount..$177434
Started out with a 5.25%.
Rate renegotiated to 5.0% couple weeks ago and locked.
Total Estimated Settlement Charges..$9276.94
Also it says I am paying a charge of $443.59 for this rate
We are working with a local broker who is very courteous and always available to answer any questions at any time. But, my concern is are we getting the best deal?
First of all, why are we having to buy points, is this normal right now for this type of rate?
Also, should I renegotiate a 4.75% rate right now? (with no points)
What goes into renegotiating the rate, what is the process? Will it slow us down on closing (our underwriting starts next week).
Also, is the broker suppose to help us get the rate or is he looking out for his own interests because he didn't seem to happy about even taking it down to the 5.0%?? Any help is greatly appreciated! Thanks!
If this a normal FHA loan, or are you going for an FHA 203k rehab loan? If it's the normal FHA loan (203b) then this is a real high rate & closing costs - should be in the neighborhood of 4.25-4.5% with no points. At 5% instead of you paying points, they should be crediting you $3k+ towards your other closing costs.
Hi Shane! Thanks for the info...yes, it is a normal 203b FHA...Break down of closing costs..Adjusted Origination Charges...$1438.59
Charges for other Settlement Services...$7838.35 (This includes taxes and insurance).
For this size loan what is the average closing costs I should expect? Thanks again!
The "other settlement services" are 3rd parties that the mortgage lender/broker has minimal control over (especially if this is a purchase), so the "adj. original charge" is what to keep in mind. It's a bit on the high side but if it's a broker then it's about normal. For those charges the rate should be in the 4.25-4.5% arena. Lowering the rate doesn't start the underwriting process all over again, it's just a small change that will be factored into the underwriting when it gets done, and a lower rate only increases the likelihood of approval since it lowers your debt to income ratio.
Just a little bit off topic here but still related to the OP.
Shane,
Would the % down payment affect the rate? Say if the OP is only putting 3.5% down, then the rate is a bit higher than if the OP were putting 20% down.
I was in the process of getting a Fannie Mae HomePath loan and my loan officer said the rate was approx. 0.5% higher if I put 3% down than if I put, say, 5% down.
With FHA 3.5% down qualifies for the same rate as 50% down.
Fannie Mae is different, there are quite a few more variables (credit score, loan-to-value, and loan term) that go into determining the interest rate. All other things being equal, 5% or more down on Fannie Mae loan programs qualifies for the same rate. When just putting 3-4.99% down it qualifies for quite a bit higher rate (about 1/2%).
Background: 660 score...30 year FHA Fixed...
Loan amount..$177434
Started out with a 5.25%.
Rate renegotiated to 5.0% couple weeks ago and locked.
Total Estimated Settlement Charges..$9276.94
Also it says I am paying a charge of $443.59 for this rate
We are working with a local broker who is very courteous and always available to answer any questions at any time. But, my concern is are we getting the best deal?
First of all, why are we having to buy points, is this normal right now for this type of rate?
Also, should I renegotiate a 4.75% rate right now? (with no points)
What goes into renegotiating the rate, what is the process? Will it slow us down on closing (our underwriting starts next week).
Also, is the broker suppose to help us get the rate or is he looking out for his own interests because he didn't seem to happy about even taking it down to the 5.0%?? Any help is greatly appreciated! Thanks!
Among the very savvy there is a saying......"Borrow long but pay short"
In other words that means borrow for a long enough time to keep the payments doable but pay off as quick as you can to get a real deal lower rate at the end of the day because you've avoided thousands of dollars in interest.
A "prepayment penalty clause" is a real enemy and should never ever be agreed to.
Am I asking too much for a 4.5% with no points right now? How do I approach my broker with this..how do I respond if he says there is no way to get this rate? The whole process is extremely intimidating, so would appreciate any help getting my ducks in a row. Also, another quick question...i don't understand why he has us paying points right now anyway, why do some pay and not others? Also, doesn't every loan institution have basically the same rates that they can issue...I don't really understand why there is such a big difference in rates when there is an identical situation (credit score, etc..) given when talking to different banks, brokers etc...
Sorry about the rambling of questions....a little peak inside what goes on in my head
Its not really that hard at all. The loan officer, if he is any good, is trying to get you the best rate he/she can. But the loan officer is also responsible on the other end to make sure the loan will get paid. AND there is nothing to say that you can't go to someone else to get your mortgage. You do NEED to shop around, at one point I had talked to 12 different mortgage companies to get the best mortgage for me. Also, if people are willing to loan you money and you have a job YOU are in the driver's seat asking for 4.5% is not asking too much. If the loan officer says it is, tell him that you were quoted that rate from another mortgage company. Also being locked doesn't mean it wouldn't go down anyway. I was locked last year at 5.5% when I went to closing my loan officer managed to drop that down even further to 5.125% and asked me if that was ok.
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