Whats a good mortgage interest rate today? (Arlington: sale, 2013)

[mjpee]

I was approved for 3.75% interest but my APR is 4.79%??? No points. Purchase at $347,500 - 30 year fixed FHA, my credit =750, 3.5% downpmt. Sellers have agreed to pay closing costs. Condo in Arlington, VA.

[boyd888]

Your APR is so high because FHA is, quite frankly, not a very good loan. I know it isn't your exact question, but with your credit score you should not be doing FHA. The biggest issue is that PMI is FOREVER on 3.5% FHA loans and the origination fee is 1.75%. That's horrible. This is because you aren't just paying for your loan, you are paying to cover all the crappy FHA loans that are gonna default at some point.

Now it is a good way for people with low credit (or little history) to buy a house they otherwise might never get a loan for. I am totally anti-FHA, just for people that qualify for better products.

Take a look at some local lenders (there are a bunch with offices in Tyson's) and you will probably find some offering 5% down with much lower PMI. With your credit score they'll be clamoring to give you money. For example, a 30 year traditional loan at Penfed @ 3.75% has an APR of 3.883%. I'm also a huge fan of their 5/5 ARM (only reset every five years) if you think you'll be moving in <12 years. 3.1% rate, no origination fee (vs. FHA 1.75%). That's $6K you just shaved off the balance of your loan before you even make a payment!

PMI will drop at 80% LTV with any other company. If your condo appreciates you can even refinance and save $3K in PMI a year. Not gonna happen with FHA. Penfed (or similar) could save you $10-20K, take a look. Also the sellers aren't paying your closing costs, you are paying them by rolling them into the loan, but I digress. It's not a terrible idea to roll them if you would prefer to save (or don't have) a lot of cash.

[FCNova]

Is the PMI included in the APR calculation? PMI on FHA loans is killer.

[mjpee]

Thank you boyd888. I will look into traditional loan. This is all new to me and the whole process is making me physically ill. The stress and worries!

[ACWhite]

I think Penfed charges 1% origination fee on all mortgages.

[Ashley Tauzier]

Most mortgage companies do charge some sort of origination fee. Does your Realtor not have lenders that they work with and trust to help advise you? I do not mean a lender they get a kick back from, I mean a legit lender that works to advise their clients what loan program is best for their situation.

[Carlingtonian]

Originally Posted by boyd888

Your APR is so high because FHA is, quite frankly, not a very good loan. I know it isn't your exact question, but with your credit score you should not be doing FHA. The biggest issue is that PMI is FOREVER on 3.5% FHA loans and the origination fee is 1.75%. That's horrible. This is because you aren't just paying for your loan, you are paying to cover all the crappy FHA loans that are gonna default at some point.

Now it is a good way for people with low credit (or little history) to buy a house they otherwise might never get a loan for. I am totally anti-FHA, just for people that qualify for better products.

Take a look at some local lenders (there are a bunch with offices in Tyson's) and you will probably find some offering 5% down with much lower PMI. With your credit score they'll be clamoring to give you money. For example, a 30 year traditional loan at Penfed @ 3.75% has an APR of 3.883%. I'm also a huge fan of their 5/5 ARM (only reset every five years) if you think you'll be moving in <12 years. 3.1% rate, no origination fee (vs. FHA 1.75%). That's $6K you just shaved off the balance of your loan before you even make a payment!

PMI will drop at 80% LTV with any other company. If your condo appreciates you can even refinance and save $3K in PMI a year. Not gonna happen with FHA. Penfed (or similar) could save you $10-20K, take a look. Also the sellers aren't paying your closing costs, you are paying them by rolling them into the loan, but I digress. It's not a terrible idea to roll them if you would prefer to save (or don't have) a lot of cash.

Some of what you say is true, but FHA is still a good option for many of us. My wife and both have excellent credit and make over 100K/year. We used an FHA loan. Why? Because we didn't and don't have $120-150K in liquid cash lying around to use as a down payment on a house that costs $600K+, which is what you have to pay for a even a small, old house within a 30-minute drive to DC and isn't falling apart. We have student loans and other expenses, and we save for retirement--so it's not that easy to sock away that amount of money unless you can live in some cheap apartment while doing so. Especially when most or all of the profit from the sale of the old home goes toward the realtor's commission.

Yes, PMI sucked. I agree it's ridiculous that we responsible people have to pay for the sins of the slackers who default. But in our case, we refinanced to get rid of it and to get a lower rate, because rates had dropped.

The real super-deal is the VA loan. The lifetime perks that go with doing even a stateside office job in one of the armed services are so good, I'm starting to think every young person should do a hitch right before or after college.

[ACWhite]

Originally Posted by ACWhite

I think Penfed charges 1% origination fee on all mortgages.

Correction - they charge this fee for all mortgages except their 5/5 ARM (currently, anyway).

[FCNova]

Originally Posted by Carlingtonian

We used an FHA loan. Why? Because we didn't and don't have $120-150K in liquid cash lying around to use as a down payment on a house that costs $600K+

You don't need that much cash for a conventional though. You can easily get 5% down if your credit is good, which is only like 30k on a 650k home. There will still be PMI, but it won't be as bad as FHA. And it will go away, unlike FHA. And the upfront fees will be much lower than FHA. If you do an FHA loan now you're basically guaranteeing yourself a future refi to make PMI go away, but with rates so low you don't want to do that. I think you may have bought back when FHA loans weren't as bad a deal though. The rules changed a couple years ago regarding them.

[Carlingtonian]

Originally Posted by FCNova

You don't need that much cash for a conventional though. You can easily get 5% down if your credit is good, which is only like 30k on a 650k home. There will still be PMI, but it won't be as bad as FHA. And it will go away, unlike FHA. And the upfront fees will be much lower than FHA. If you do an FHA loan now you're basically guaranteeing yourself a future refi to make PMI go away, but with rates so low you don't want to do that. I think you may have bought back when FHA loans weren't as bad a deal though. The rules changed a couple years ago regarding them.

Interesting. I'd never heard of a conventional that lets you put 5% down. True, we bought a few years ago and did the refi I think in 2013.