5.25% on my FHA loan. I am getting down payment assistance and some credits from the seller.

[Anonymous]

Hello,

New here and thanks in advance for taking the time to read my post and share any useful info.

I am in the process of getting a house in Phoenix and I was made aware today that my % will be 5.25%.  Well, could be it's not final yet.  Just signed disclosure paperwork.  I contacted my LO and I was told that because I have DP assistance, my interest is a little higher.  Does that sound right?  I saw another post on this site from someone from FL and he pretty much had the same question and the only difference is that he was not given any other credits.  I got $9,400 in DP assistance and $5,400 in other credits.  I purchased the house for $270,000.  I am being told that regardless it is still high and I should shop around.  Currently, I am at a 628 CS but am in the process of clearing some finances to get a 645 so I can get cheaper closing costs.

Thanks.

[Anonymous]

I think you should still shop around as the rate is high.  Did you shop around first before going with this company or you just got one quote and decided to stick with it?

[kilroy8]

I haven't seen rates that high since the '90's. That is outrageous and I wouldn't do it. Hold out for something < 4%.

[kc0039]

DPA loans usually have a higher interest rate and it all depends on the lending entity on how much they want to charge.

[VALoanMaster]

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@Anonymous wrote:

Hello,

New here and thanks in advance for taking the time to read my post and share any useful info.

I am in the process of getting a house in Phoenix and I was made aware today that my % will be 5.25%.  Well, could be it's not final yet.  Just signed disclosure paperwork.  I contacted my LO and I was told that because I have DP assistance, my interest is a little higher.  Does that sound right?  I saw another post on this site from someone from FL and he pretty much had the same question and the only difference is that he was not given any other credits.  I got $9,400 in DP assistance and $5,400 in other credits.  I purchased the house for $270,000.  I am being told that regardless it is still high and I should shop around.  Currently, I am at a 628 CS but am in the process of clearing some finances to get a 645 so I can get cheaper closing costs.

Thanks.

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Hi Gurp,

You have to be careful when it comes to people telling you the rate you have is too high because no one knows your file or scenario.

Which DPA program are you using? Some of them are funded through bond programs so the rates are set by the county or state not necessarily the lender.

Is the additional $5400 credit a lender credit to help cover your closing costs? If so, you will naturally have a higher rate.

The combination of the lower credit score, the DPA & the lender credit all contribute to a higher rate so you are probably not going to find a rate under 4% like someone else here suggested.

[Anonymous]

The comment above is completely accurate. If they are offering you a lender credit that is usually due to taking an interest rate that credits points to the closing. It is still usually a good idea to get another quote to make sure your deal is the best for you. PM me with any questions you might have.

[Anonymous]

You are getting a 5.25% interest rate on your FHA because of your credit score. I only know this because mine was also 5.25% and I am pretty much in the same situation as you. If you get your score up above 640, you should be able to get the next FHA tier rate which is 4.60%.  Then again, I am getting a gift from my employer not using a DPA program. 

[Spider07]

I recently closed on a house that cost around 325k using the FHA 3.5% down loan.  My lender offered me 3000.00 in lender credits to help offset some of the closing cost out side of my down payment.  They offered a rate of 4.75% , our middle score was 647 at the time of the last credit pull.  I asked what it would be with no lender credit and got a rate of 4.125.  The difference in the rate would equal to about 42K over the life of the loan (30 years).  So I decieded to bite the bullet and not do any lender credits.  My builder gave us 8, 820 towards closing cost, so that was helpful of course.  This was back in Sept 2017, so I don't think that the rate quoted is horrible considering the assistance you are getting.  But if you can get the house without the lender assistance, I would do that.