mortgage question anyone?

[trey]

So yeah, I'm 30 days before my close on my home so i call my loan guy and he tells me he can lock me in at 6.1%. I have been checking on a few internet sites and found that the average is about 5.6-5.8%
I am a first time buyer with excellent credit, why can't i get my loan for the average of 5.6-5.8%? or at least lower then 6.1.

sorry, i'm a bit new to this home buying process.

 

[joee12]

Have you shopped around with other brokers? Remember there are points, closing costs, etc. that you have to deal with. Make sure you talk to a relative or friend that has experience with mortgages before you buy, Joe

 

[GROUCHO MARX]

Sometimes the % you are financing can affect the rate.

 

[pitzel]

Also depends upon the term of the loan.

The current 30-year (due in 2029) US Gov bonds have a yield to maturity of approximately 5% per annum. So, 100 basis points over that doesn't seem at all unreasonable.

Without more information, it would obviously be difficult to evaluate just how good of a deal you are getting on the mortgage. The shorter the term to maturity of the mortgage, the lower the rate generally will be.

 

[eljefino]

My first mortgage I didn't shop around all that well. But I refinanced a year later, my property had increased in value and I was able to drop that stupid PMI. Also since I had been making mortgage payments (duh) my credit was better (though it was great to start with.)

But it doesn't look as rosy as far as future interest rates are concerned. I bet there's a few hundred dollar fee to lock that rate, too, eh? You can always gamble it will be the same rate when you close.

OTOH 6.1% is still pretty good for a 30 year fixed.

 

[Amkeer]

It depends on the points you are willing to pay. Your loan may have zero points whereas the others are a half to one point. You need to read the papers carefully.

 

[Pablo]

Amkeer speaks facts (as usual).

Sometimes it pays to so called "pay down the advertised rate" with points - it can make comparisons difficult.

We can't really advise you on which road to take. If the house is a 1-2 yr spec. play then paying down the rate doesn't make a ton of sense. If you plan on being in for 5+ years.....you probably want the lowest rate, within reason without paying TOO much for those magicly lower rates.

I will say this, the process will abuse you if you don't stand hard and strong. First time loan processes can really be drug out....I've noticed after 6 houses, multiple refi's, etc...not only is my confidence and strength better...some how the process goes a LOT faster.

 

[TallPaul]

I got burned on points back in 1990 because rates dropped and I refinanced a year later. I view points sort of like load mutual funds. In both cases you are putting cash in their pockets right up front. Easy to get burned, but as noted above if you are staying in the place long term it might pay off. But rates are pretty low now so the need to buy down less important. On the other hand, how much lower can rates go? Likely not much so if you do buy points you probably would not be looking at a refi to lower rates soon if ever.

Check your private mail.

 

[Matt_S]

When I last refinanced my house, I was able to get two banks to compete with one another. Bank A had a 5.25% loan that rose to 5.5%. Bank B still had a 5.35% loan, which I was able to leverage to get Bank A (which I preferred) to lower their rate back to the 5.25%. I'd say you should shop around, then call your current lender with some information on the better rates you've found and see what they'll do for you. I'll bet dollars to donuts that they'll make concessions for you.

 

[msparks]

Have you checked on a 15 year? You can usually get that at a lower rate, plus you will pay 1/2 the amount of interst you normally would.

 

[sewerman]

quote:

---

Originally posted by msparks:
Have you checked on a 15 year? You can usually get that at a lower rate, plus you will pay 1/2 the amount of interst you normally would.

---

I agree whole heartedly,tighten the belt a little and look at a 15 year term,I refinanced and got a 15 year motgage at 4.375%...Only 13 years and 10 months to go...

 

[SR77]

I just posted a question about Ditech.com before I saw this thread asking if anyone has used them before. I am in the same boat as you and found that Ditech has some great rates with good fees. They quoteed mea at 5.625 for a 30 year fixed with 0 points. That is alot better then any other lenders I have shopped for so far.

 

[msparks]

quote:

---

Originally posted by novadude:
I am reading this post with great interest, as my wife and I are preparing to make our first home purchase in the spring/summer.

Does anyone have any great links to books / websites where I can better educate myself to the ins and outs of home buying?

---

http://www.daveramsey.com/etc/realestatecenter/index.cfm?FuseAction=dspContent&intContentID=104

 

[msparks]

Also remember than an Agent makes a commission on your purchase of a home, they will try to talk you into the biggest house you can afford, since they will make a larger commission.

I remember buying my first house and stated that I wanted a 3 bed 2 bath with a garage for less than $55K. Said it couldn't be done. So he got fired and I found the house I/WE wanted for $54K.

If I were you I would find the $$ amount you can afford in a 15 year mortgage. Also try to have %20 to put down so you don't have to pay PMI. Lastly be sure you credit is 100%, go now and get a credit check on you and your spouse so that you have time to correct any errors.

Your credit score will have an effect on your percentage rate.

Lastly be sure you have little to no debt, maybe a car payment and that is it. No credit cards, store cards, finance company loans and such.

 

[Matt_S]

Msparks brought up a very good point. The mortgage companies will typically approve you for a loan amount where the payments will be 1/3 of your monthly gross income on a conventional 30 year loan. This typically works out to about 1/2 of your monthly net income. I can tell you from experience that this is a real tight squeeze. Going into my first house, I was single and had no debt, so I was fine and developed an excellent credit rating, but I wouldn't recommend that anyone else stretch themselves so thin. Go to bankrate.com and figure out a loan amount where, after the down payment is figured in, the monthly payments will be acceptable to you, based on your current income.

 

[Brett Miller]

The rate may be less, however always compare apples to apples using the Early TIL and Good Faith Estimate. The APR is the best comparison of the true cost of the mortgage. Try www.bestpricemortgage.com is a good company to deal with. You can also get up to date rates on the website.

 

[novadude]

I am reading this post with great interest, as my wife and I are preparing to make our first home purchase in the spring/summer.

Does anyone have any great links to books / websites where I can better educate myself to the ins and outs of home buying?

 

[Pablo]

Nova - This is gonna sound a bit over the top:

Back in the day when/before I bought my first house in Calif., I ended up taking a full blown training regimen to become a RE agent. I know I'm crappy at sales and I had no intention of becoming an agent but this information remains valuable to this day. Look around your area and see if there is any (free/minimal fee/book fee) such training.....