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I'm looking to purchase a townhouse for around 190k in a suburb of Atlanta, GA.
Annual pre-tax salary: $55k Credit Score: 730 (never had a late pmt, no bankruptcy, etc.) Downpayment: I have 20% down and enough to cover closing costs (although I'm going to ask and see if seller will pay the cc) Monthly Expenses: Never had a car loan, Never had any student loans, I do have a few credit cards - I've never been late on any of them, and I average about $200/month on cc payments. Those are my only "must pay" bills.
I was quoted with a rate of 5.5% (APR 5.6%) with 1.875 pay down from Chase. (I'm a Chase customer and was interested in their 1% cash back program).
Is the 5.5% rate (5.6% APR) reasonable for me? Sites are quoting around 5.1 and I just don't see how 5.5% is fair. Also he quoted about $45k needed @ closing (38k of that is for the DP)... but stated that I'm not responsible for the appraisal fee, credit report fee, etc. and than that is a fee that Chase will cover. All I'll have to pay is $395 app fee. So what's the add'l $7k?? That can't be just title fees, etc., can it?!?
I'm looking to purchase a townhouse for around 190k in a suburb of Atlanta, GA.
Annual pre-tax salary: $55k Credit Score: 730 (never had a late pmt, no bankruptcy, etc.) Downpayment: I have 20% down and enough to cover closing costs (although I'm going to ask and see if seller will pay the cc) Monthly Expenses: Never had a car loan, Never had any student loans, I do have a few credit cards - I've never been late on any of them, and I average about $200/month on cc payments. Those are my only "must pay" bills.
I was quoted with a rate of 5.5% (APR 5.6%) with 1.875 pay down from Chase. (I'm a Chase customer and was interested in their 1% cash back program).
Is the 5.5% rate (5.6% APR) reasonable for me? Sites are quoting around 5.1 and I just don't see how 5.5% is fair. Also he quoted about $45k needed @ closing (38k of that is for the DP)... but stated that I'm not responsible for the appraisal fee, credit report fee, etc. and than that is a fee that Chase will cover. All I'll have to pay is $395 app fee. So what's the add'l $7k?? That can't be just title fees, etc., can it?!?
Any advice would be greatly appreciated!!!
I don't know on what basis Zulu400 is using in stating that the rate is high. The avg 30yr fixed rate is 5.33%. Sites that advertise lower rates are generally for established A-paper credit. The rate is quite fair in my opinion. The reason is, besides your revolving credit card debt, you really don't have any major purchases that is on your credit for them to evaluate your payment history. Having credit cards with payments totalling 200.00 a month is not the same as having and showing past installment credit. You have to understand that buying a house is one of the top major purchase one will make in their lifetime. Lending on a major purchase as your first installment credit is a risk to anyone lending. Just because the particular rate is showed on an advertisement doesn't mean you qualify for it. I commend you in being able to build your credit and establish a good payment history but paying a few dollars a month does not equate to being eligible for the lowest rate available on a major purchase.
I would be very happy with that rate if I were you. Don't lose sleep over it. Do you know how much difference half a percentage point is on a monthly mortgage note of around 190k? It comes to a few dollars, if not pennies. Don't lose sleep over it. Just be happy you're closing on your home.
As far as the 7k additional closing cost, you'll have to look at the Hud1 to see the breakdown. Make sure they provide you with a preliminary hud. Closing costs usually averages about 1.5-2% of the loan amount. They may have a loan orgination fee in there as part of the 7k. That is how the broker is paid. It's usually 1-2% as well. Hope this helps. Congratulations.
Don't think your problem will be the rate, just the fact that you are really stretching on the purchase price considering your income. All I can say is good luck!
I would suggest that you contact a mortgage broker who can shop you with multiple lenders to find the best rates. The rate and costs quoted do seem high, but most lenders do pass along higher rates on townhomes and condos.
So, they are not having you pay for the appraisal or credit but charging you an application fee of $395? They should be able to complete the loan application in 10 minutes so that equates to an hourly pay of $2370! Not bad. In addition, if your loan is denied or you decide not to move forward, guess what happens to the application fee? They keep it.
Never work with anybody who charges a fee up front unless it is paying for the appraisal.
.... So what's the add'l $7k?? That can't be just title fees, etc., can it?!?
Any advice would be greatly appreciated!!!
Most likely your deal with Chase is including some add on fees that are similar to the junk fees that you see on telephone bills. Banks are especially good with quoting you good terms up front then tossing these into the closing costs. Before you send in the money for this loan you need to get, in writing, an itemized list of these closing costs. If you see something like "Loan Origination Fee", then this is just pure profit added on by Chase. It will be something from 1% to 2% of the loan amount.
Mortgage brokers will do this too so watch out. You best bet is to work the phones yourself, get them to fax you written offers for a loan, and then sit down and compare them side by side to see what you are actually paying. Many times the lowest interest rate isn't the best deal because of what they do in the closing. This is just like buying a car, these fees can be negotiated off if you are a desirable customer.
BTW, you are borrowing a lot given the salary you stated. Add in the condo fees, taxes and any additional insurance, and you are going to be on the tight side. You might want to think this through again.
Part of the 7k is the 1.875 buy down points you are paying. I would ask what the rate is without the points. Then call other lenders and ask for their rate with 20% down, zero points and credit score of 730. Do not let them pull your credit. Just ask what they have to offer and make sure they tell you how much in closing costs and what they are. Make sure you ask about origination fees.
I would not move ahead with any lender until I had called at least 3 lenders first. It is called comparison shopping I am sure you do it when you buy other things.
BTW, you are borrowing a lot given the salary you stated. Add in the condo fees, taxes and any additional insurance, and you are going to be on the tight side. You might want to think this through again.
You should be more like in the 140-150k range MAX. Our taxes are $770/yr, plus homeowners insurance, etc. You'll have to pay HOA fees I'm assuming, which can be quite steep (my area can be up to $400/month ADDITIONAL on top of mortgage cost, for a condo/townhouse). I can't imagine a loan officer allowing this to pass considering all of the recent home forclosures and bank failures.
Think of possible issues you may have to come up with money for...home repairs/updates, car bills, doctor, loss of a job, etc. Even just eating out once a month!! Ever see the movie "The Money Pit"?
I thought the OP was only borrowing 80% of the 190k (ie 152k)
I still believe she is out of her range financially. If she has to pay HOA fees, it will be a huge debt. Banks never take that into consideration when they are doing the loan amt. originally. You are the one supposed to consider it.
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