07-24-2012 07:37 AM
I got my approval this morning from Michigan Mutual, it looks like I may be in ther 620-639 program unless I can get two points in the next week or so. My LO is being vague about rate, keeps talking about 4%??? THis seems high for a 15yr FHA loan, he wont get into details yet keeps saying he will know more when we lock it in??
My question is this, am I going to pay a higher rate for the sub par program? He also mention putting down an additional $500 get under 4%?
07-24-2012 08:00 AM - last edited on 07-24-2012 07:55 PM by MarineVietVet
Without knowing the full details of your transaction, it would be hard to say. Right now on a 15 yr with a score under 640 about 3.75% with a credit toward closing costs. Are you purchasing or refinancing? If you are refinancing - is it a streamline or ful doc with appraisal? What is the loan amount?
07-24-2012 08:23 AM
Thanks for the quick reply. I am doing an existing home purchase. $129000 is the loan amount. LO says I am getting a $500 credit and he thinks I am at around 4%. I dont want the credit, I think I would rather pay the extra $500 and my target is 3.75.
07-24-2012 09:25 AM
07-24-2012 10:18 AM
I was pre-approved last week with Quicken for the maximum loan limit of 297,500. My lender told me she would be able to give me a $7000 lender credit. Is a lender credit something that can be used for closing costs? The house we were looking at is $315,000, and she told me we would have to come up with about $30,000 at closing. That would leave me to think that:
-Since loan limit is 297,500, we would need to come up with $17500 to bridge the gap between the limit (297,500) and the price (315,000)
-if she said I need to come up with $30,000 at closing, that would lead me to believe that closing costs are $12,500
-If closing costs are $12,500, could I apply the $7000 "lender credit" towards that, leaving me with $5,500 in closing costs?
If that is correct, I would need to come up with $5,500 for costs, plus $17,500 for the bridge between price and limit? Leaving me with a total out of pocket of $23K.
Does that sound right?
07-24-2012 11:05 AM
Hammer, LO just quoted my 3.75%, I am in Michigan's 620-639 program. I am not sure what you mean by comp %. estimated closing costs are $2902, I paid appraisal and inspection out of pocket. THis is for a $130,000 loan. I am putting down $4570 and getting a $723 credit??/
07-24-2012 11:28 AM
Your broker is paid on a Yield Spread Premium or YSP. This is basicly accomplished by marking up the interest rate on your loan over the base rate that the lender allows (wholesale rate) for instance lets say the wholesale rate is 3.325 and your rate is 3.75%. The difference that you pay in interest is used to compensate the broker, pay closing costs, or provide the "credit" you are getting back in this senario.
With Michigan Mutual brokers can elect to get paid between 2-4% of your loan amount as compensation for their services. (4% of $130000 would be $5200 comp to your LO's company) In order to get these comp % you as the buyer pay a higher interest rate on your mortgage.
You will see this amount in the Good Faith Estamate under "orgination charges" Mine looked like this
Orgination Charges $4946.27 (Payable to my broker)
MMI Underwriting Fee $775
Your Charge / Credit for the interst rate selected ($5911.00)
Your adjusted Orgination Charge / Credit ($189.73)
You can select a lower interest rate if you want to bring more money to the table. If I wanted a 3.5% rate, i would have had to bring $3500 ish more
to closing on my loan.
Look here on page 11 for more info:
I just did a quick search on Wells Fargo's website and a 30 year FIXED rate FHA loan with no points is running 3.325% in the state of Ohio with no points or credit, but I would assume that is for excellent credit.
3.75% doesn't sound like that bad of a deal. I would work 'em and see if you can get t down to 3.5%
Quicken loans shows a 15 year fixed FHA loan at 2.875% and they go down to a 580 score from what I understand
I paid my Apprasial and inspection out of pocket as well, but I got a check for the appraisal back at closing.
IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions based on Experian or Equifax data (additional FICO® Score versions based on TransUnion data are not currently available on myFICO.com). Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more
FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.