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Hello Mortgage community. My family is in the process of purchasing a home. The offer has been accepted by the seller and we are in the process of getting an official approval from the finance company. In a discussion with the agent, I inquired about a lesser interest rate and was told that it would have to be bought down. The current rate being offered is 5.125%. I was told that the is a good rate based on my husband's credit score of 658(they use the middle score). According to the agent a 660 might make a difference. We believe that his score has improved since it was initially ran - over a month ago. But the agent is not in the practice of re-running...
My question : Is the interest rate of this type of purchase negotiable. I mean can we request a 4.75%? My husband has a balance of about $2,000 in revolving credit, so his debt ratio is good. Is there anything approach we can use to get the lender to extend a better offer?
How is having a balance of $2k in revolving credit "good"? I'm genuinely puzzled by that statement.
Hi Mauve! While I'm no expert on credit, I've been told that the less debt you have the better. In my household having a debt amount of $2k,(which is being strategically paid down mnthly) is a good thing. It could be much, much worst. For example,we could owe 10k in credit cards, plus have a car payment of $600 per mnth and student loans, etc. So for a balance owed of $2k which will be paid off before the end of the year is something were excited about. Does this make any sense?
I think what mauve is trying to say is $2000 out of what kind of total credit availability?
To purchase down points, you would have to have money in hand in order to pay them off at closing. Your lender can tell you how much a point will be in your transaction. Usually a point = 0.25%
Hi AMO. Yes the agent did say it would be like $1500 to do so. She didnt think it was worth it. I was just wondering if there was a way to negotiate a lesser rate without spending extra money.
Do we know each other? Just wondering. BTW, whose credit scores are you displaying ?
No, there isn't. Most mortgage brokers receive a rate sheet daily with today's rates, what a point will get you, etc. If you want a better rate than that, you have to pay for it. The other side of this is you can accept a higher rate, and have the broker lower closing costs. It isn't like buying a new car, they aren't going to just lower their interest rate for nothing.
Buying down interest rates depends on how long you plan on staying in the property and how much cash you have available. If buying a point costs you $1,500 and say it takes 4 years for your to recoup that $1,500 through a lower payment amount, then it is advantageous if you can if you plan on staying longer than 4 years, and is not worth it if you are staying for a shorter period.
Thank you Cdtotten, I was under the impression that I could shop lenders for cheaper rates. You'ved helped me to better understand.
Goodlala, you CAN shop lenders for better rates... just don't expect a single lender to play with their rates. Lender A is not likely to drop their rate because you dont like it, but Lender B might be an 1/8 of a point lower.
Definately shop rates.
Thanks CD! Do you know anything about Trustco Bank and its mortgage process/criteria? I hear they're pretty good...
Also, if you have $1500 in hand, and your credit score is near a point where a couple points could get you a better rate, rather than buying points you could pay $1500 of your $2K balance and potentially get a better rate due to an improvement in your score. What is your utilization, i.e., $2K out of what amount of total credit available?