Credit GOOD vs. Mortgage Rates for Self Employed

MM1234 · ‎06-02-2007

Sorry this is not a full credit question but maybe someone can help or link me to some websites.

I have worked to get my scores too a very good - excellent score. I called BofA and started to ask questions about a Mortgage loan. Since Im more of a "keep $ in savings" person I requested a NO DOWN payment loan. They said NO Problem with my scores and amount I wanted.

But then I mentioned I also need a NO DOC loan *TOO* cause im self employed and my tax returns show I dont make a lot after all write offs.....and they said NO Problem again.....but now my rates will be crazy high.

Maybe I need to go to other lenders/brokers to maybe get a good deal but I was just testing the waters to see how a Bank like BofA will work with me.

Any advise on where to look? I.E. Broker, Lending Tree, etc. I was jazzed to find out my scores are good enough for a great loan at a great rate if I had a normal income/situation but Now I have to wait and see whats my best options.

Any help is appreciated.

girlie · ‎06-02-2007

i'm a realtor in california and i would suggest going with a local mortgage broker because they can get you the best rates. the traditional lenders (BofA, wells fargo, Citibank) often do not have the best pricing. sure they are great if you have a fully documented loan, but for the self employed, even with great fico scores, you will probably take a hit. i understand that you want to keep money in the bank, but i suggest making a down payment if you have it, say 5-10%. if you are in an area of the country where property doesn't appreciate rapidly then it is a good idea to have at least some equity otherwise you may get into trouble in the future.

Anonymous · ‎06-03-2007

@girlie wrote:
i'm a realtor in california and i would suggest going with a local mortgage broker because they can get you the best rates. the traditional lenders (BofA, wells fargo, Citibank) often do not have the best pricing. sure they are great if you have a fully documented loan, but for the self employed, even with great fico scores, you will probably take a hit. i understand that you want to keep money in the bank, but i suggest making a down payment if you have it, say 5-10%. if you are in an area of the country where property doesn't appreciate rapidly then it is a good idea to have at least some equity otherwise you may get into trouble in the future.

Very well put.
Also try to find something that is selling bellow appraised value so this can soften the down payment and/or give you some built in equity.

MM1234 · ‎06-03-2007

I can do 5-10%. This makes sense too cause I'd like to have a little EQ in the house asap. Even BofA told me my rates would drop with 10% down but only like 0.75% . So I will ask around and find a broker.

Thanks !!

girlie · ‎06-03-2007

i think a 3/4 point reduction is pretty good and worth it if you have enough cash. just keep in mind that you want to have enough cash put aside for reserves and also closing costs. there are ways that you can finance closing costs if you dont want to fork over the money. you can send me a PM and I can walk you through it.

you might also want to check out foreclosures in your area.

MM1234 · ‎06-03-2007

Thanks girlie... - here is why I was surprised and why I considered them high rates. I guess I should have listed some Rate Figures too to see if you think they are correct in charging a HIGH APR.

MY FRIEND: My friend bought a house last year with Bank of America with NO $ down and the seller paid the closing costs. He got an APR of 5.5 or 5,6%...I cant remember but it was when rates were good and it was less than 6%. And he had a 750 Credit Score.

NOW COMES ME: my scores are now a high enuf for a Excellent rate and I have ZERO debt. According to BankRate,com and even FICO current rates posted I would estimate I'd be at an APR of around 5.99 - 6%. Lets say 6.5 to give some flex.

I think with NO $ down I would have been able to get 6.5%. But tossing in the NO DOC they told me I'd need a 80/20 loan. The 80 Loan would be at 8.75% and the 20 Loan would be a 15 yr loan but at 9.759%. See - this what I meant by being SUPER HIGH. I was thinking more like 7 to 7.5% TOTAL on a CONV. 30 yr would be fair for a NO DOC loan.

With 10% DOWN, they said my 80 Loan would drop to 8% and the 20 Loan would drop to 8.1%. This is STILL high to me.

Knowing these figures, do you think Im still gonna be in that HIGH APR cause of the No DOC ?? I agree that Brokers may have more flexibility and the Bigger Banks are more cut and dry in their ways.

Im open to any advice.

Thanks again!!

girlie · ‎06-03-2007

those rates seem extremely high to me. am i missing something? what part of the country are you in? how much would you be borrowing?

MM1234 · ‎06-03-2007

HA!! Thats what I said. I'll send you some info.

MercyMe · ‎06-03-2007

I got a 6% fixed on a no doc from Indymac, through a broker, though. But then, there's still more than $200,000 in equity left in the house.... which might mean something, like, they don't lose.

Anonymous · ‎06-04-2007

Do you have to go No DOC. Being self-employed does not mean you have to go "No DOC". True, you will have to state your income, but can you verify assets. Any documentation you can provide should help you get a better rate. I also agree with previous posters, if you can afford to bring money into the transaction as a DP, do so. The more skin you have in the game, the more secure a lender feels that you will repay the loan.

Also, you can't truly compare your friends mortgage from a year ago to today's market. The subprime meltdown has cast a cloud over 100% financing even for the best clients let alone borrowers attempting to go NO Doc. Also, the past week and half has not been kind to interest rates.