Is this a decent rate?

Anonymous · ‎04-15-2016

Hi guys. I'm really confused over our rates so any opinions/thoughts would be appreciated!

Last year we were pre-qualified for an FHA loan of $600k with 3.5% down. My mid mortgage score was 682. Our % was 3.875%.

This year we saved more and I brought up my scores more and we are pre-qualifying with our credit union. High limit conventional - 5% down on a 600k. My mid mortgage score is 716. (Can I ask our LO to re-pull our scores? They were pulled a month ago while I kept my app in limbo...I think it might be a smidge higher now.) Looks like our rate will be 4% (not including any points).

Should I try prequalifying again for an FHA loan to see if it's cheaper since the interest rate might be better?

Or just stick with conventional? I thought with higher scores and more down that our credit union would be substantially better but payment-wise it's the same!

We could push ourselves to put 10% down but we don't want to drain our savings that much....

Any thoughts would be greatly appreciated! Thank you!

Anonymous · ‎04-16-2016

Comparing FHA and Conventional rates probably should be avoided since they are two totally different programs. To get the best conventional rates, you would need a score above 740 and a score above 760 in order to get the best rate for PMI as well. Also, best rates for conventional go to those with 20% down as well as being above 740. 5% down is seen as a higher risk than 20% down and your rate will reflect that. If you go FHA, the rate will be cheaper, but the loan may not be. You will be paying MIP for the life of the loan, whereas for conventional, you may ask the lender to cancel PMI when you have paid down the mortgage balance to 80% of the home's original appraised value. When the balance drops to 78%, the mortgage servicer is required to eliminate PMI.

StartingOver10 · ‎04-17-2016

I would check other lenders.

CU's are great for auto loans, credit cards, HELOC's or second mortgages (maybe), but not primary mortgages except for some CU's.

My experience has been to use a mortgage banker (not a big box bank) to get a mortgage. Compare the rate and the cost for each program. You must be in a high cost area to even consider an FHA for $600k. Most FHA loans are maxed out at a much lower amount. Where are you geographically? In most areas $600k is a jumbo loan.