Best Mortgages and Programs (PMI, loan officer, interest rate, credit score)

[obee]

Hello everyone, I started this in the Nebraska section and with no responses figured this question may be more suited towards business people, so here it goes.

I am currently looking to buy a house in the Lincoln area and was wondering first what you thought about my current program and any others and opinions that you may have.

I have a friend that is a loan officer with Bank of America and he said he would put me on a program they call Community Commitment. He said that this is technically a first time home buyers programs, but I could get on it as long as I currenlty do not have a house. Although he said interest rates have gone up the last week or so, he said that is still the best 100% financing I can get.

My interest rate last week would have been 6.5, but today it is 6.75 with 100% financing and no mortgage insurance. He said that with this program my credit score does not matter, only my credit history. He said that if I had to I could close with as little as 500$ down.

I just wanted to get some opinions on how good or bad this sounds?

Thanks!

[Pimpy]

That sounds like a good rate for 100% financing, but don't get your hopes up until the closing papers are signed and the keys are in your hand.

It isn't uncommon for loan officers to pimp an attractive rate and program like this to a marginal buyer to whet his appetite, then once the buyer is good and excited and ready to move into the house, the loan officer comes back a couple days before closing and says, "We couldn't get you this rate after all, but we've got an 'alternative program' for you. It's an 80/20 with 7.75% on the first and 11% on the second." Or something like that.

Speaking of 80/20 programs, is that what you're in, and 6.75 is the rate on the first mortgage? Because I've never heard of a 100% mortgage with no PMI that isn't an 80/20, except subprime, and your rate sounds pretty low to be subprime.

[vpcats]

Is that one of those programs where you have to buy in a certain area and/or must own the house for X number of years or you will get penalized?

[obee]

You can purchase in any area with this program and no limit on the number of years you must live in the house either. But, there is a limit on the amount of income you can make, unless it is in a low to moderate income census tract, then income is not a factor. In Lincoln Nebraska the limit is 52k and in Virginia it is 111k. Pretty crazy to think that you can make 111k and still be a low to moderate income borrower. I have researched it a lot and have lots more information for anyone who wants it.

[Karla with a K]

Have you compared closing costs?
You also need to compare what you are paying for the house vs the apprasial.
Unless you can be 100 % sure that the market has stabilized going with 100%
financing on a house that is worth the same as you are paying will actually have you going in "upside down" by rolling the closing cost into the financing you will owe more than the house is worth.
If something should happen and you have to sell and the value hasn't gone up
you will find yourself in a situation where you would have to bring thousands to the closing table.
These are all things you need to factor in

karla

[D_J]

Originally Posted by Pimpy

That sounds like a good rate for 100% financing, but don't get your hopes up until the closing papers are signed and the keys are in your hand.

It isn't uncommon for loan officers to pimp an attractive rate and program like this to a marginal buyer to whet his appetite, then once the buyer is good and excited and ready to move into the house, the loan officer comes back a couple days before closing and says, "We couldn't get you this rate after all, but we've got an 'alternative program' for you. It's an 80/20 with 7.75% on the first and 11% on the second." Or something like that.

Speaking of 80/20 programs, is that what you're in, and 6.75 is the rate on the first mortgage? Because I've never heard of a 100% mortgage with no PMI that isn't an 80/20, except subprime, and your rate sounds pretty low to be subprime.

I agree..... although you can get 100% financing, all one loan, with no PMI but the rates are considerably higher typically 1 - 1 1/2%. As long as everything at the closing table is exactly as you were told then that is definitely a good loan. Just don't be afraid to stand up and not sign if it isn't.