Need mortgage help!

[Anonymous]

I am having a home build by a large builder (Centex Homes) and was going to finance through CTX mortgage and have no closing costs.  When they first reviewed my credit, they offered me a 100% 30 yr fixed loan ($160K) at 7% with PMI of $250 and $2796 in points (to be paid at closing).  I freaked out a bit because I was also pre-approved with Coldwell Banker Mortgage for the same thing (30 yr fixed)at 7.25% with no points and $189 PMI.  I only had a mid-score of 610 so CTX said that if I could get my score above a 620 they could get me a regular approval with no points and PMI would be $123.  It wasn't a "promise", but she said that she didn't think we would have any problems.  So, more than two months later, we are now 6 weeks away from closing and she re-ran my credit.  My mid-score is now a 647 and she is now quoting me 7.375%, no points, and $189 PMI.  I truly thought I would qualify for something a little better.  The deal I had with Coldwell Banker was better with a mid-score of 610, but I would have to pay closing costs.

I would like to shop around again, but I am not sure how the inquiries will effect my credit.  I cannot afford to loose any points, but I wonder since CTX pulled it again that the two week thing would come into play again.  Or maybe I should just take their deal to save on closing costs.  I truly do not know what to do, but I am really disappointed because I thought things would be looking a little better.

Please let me know what you think and if you have any pointers.

Thanks! 

P.S.  I just realized that you might want more info...have no BK's, no unpaid collections (1 paid medical collection), 1 paid tax lien, and no lates for the past 4 1/2 years.  I have a mortgage that was PIF almost two years ago and I had about 3 years of good history with no lates on it before it was sold and paid off.

Message Edited by bsf56 on 10-16-2007 07:44 PM

Message Edited by bsf56 on 10-16-2007 07:46 PM

[ShanetheMortgageMan]

Was your loan run through Fannie Mae or Freddie Mac's automated underwriting?  If you do not know then call up and ask, also ask what level recommendation you received, and come back here to post/let us know.

Fannie Mae's best to worst recommendations are: Approve/Eligible, Expanded Approval Level-I (EA-I), EA-II, and EA-III.  100% financing is only available through Approve/Eligible & EA-I these days, EA-II requires 3% down and EA-III requires 5% down, so it's unlikely you would've recieved an EA-II or EA-III.

Freddie Mac is more straight forward, either "Accept" or "500 Class" (A-minus Levels 1 through 5) with are lower levels of approval.

With each lower level of recommendation, the interest rate gets a bit higher.

[Anonymous]

I went through her emails and it must be Fannie Mae Level I.  Here is what she said in the last email, "I pulled a new credit report and reran the loan thru our computerized underwriting system.  I did get a better loan approval.  It is now a level one, which means you will not have to pay any points, the rate would be 7.375 for a 30 year fixed rate."

Do you think I should call another lender?  I believe that CTX is giving me a much worse deal to compensate for not having closing costs.  I'm just afraid of more inquiries...but since she's pulled my credit again, would another hit from a mortgage company hurt me?  I checked with Coldwell Banker and Countrywide before...should I have them give me some updated quotes?

Also, do you think that I should look into an FHA loan?  I could put 3% down.  I'm not sure that I understand how their PMI works, but it would be MUCH lower right?

Thanks for your help!  Let me know if there's anything other info you need.

Message Edited by bsf56 on 10-17-2007 06:23 AM

Message Edited by bsf56 on 10-17-2007 06:23 AM

[Anonymous]

Shop around!!!! Go see what B of A or Chase hase to offer. Your loan with CTX will still be there. Did you lock the rate? Keep in mind that the broker at CTX can get you a better deal if they want too. Since you're not paying points.... She is going to make all the money in the back end of the loan. So shop!!!!! Then go with the best deal if you cant find one... Well you already have it with CTX!

[Anonymous]

I called my LO at CTX wanting more info.  It was submitted Fannie Mae and was approved Level 1.  CTX was only bumping the interest rate by .125 to compensate for paying the closing costs so if I paid my own, the rate would have been 7.25%. 

I asked her about FHA and she got me approved for 97% financing at 7% interest and the PMI factors out to about $60 a month.  The payment ended up being about $200 less a month.  Since there are no closing costs and they cannot contribute toward the down payment, CTX will be paying all of the pre-paids, including next years HOA.  

I haven't formally reapplied with any other lenders, but from what I understand, it is what it is, right?  I may get a little better rate with another lender, but I would have to come up with another $1500 - $2000 for prepaids in addition to the 3% down payment for FHA.  And if for some reason they would be able to get me a non-FHA loan with a better rate, I would have to come up with closing costs AND pre-paids (at least with FHA, the 3% is going towards the principle...and PMI). 

Do you think I am safe staying where I am at and taking this deal?  CTX's recent inquiry didn't drop my FICO's and I am afraid that if I shop around again they may still take a hit.  I trust my LO, but I also know that she is in the business to make money and I really want the best deal possible.  

Thanks for any input you have!

P.S.  My fico's were 649 (eq), 659 (ex), and 689 (tu)...so it was all based off of a 659. 

[Anonymous]

FHA's PMI is deductible this year (should be extended though) if you meet the  guideline.  In fact, Congress is thinking of making all PMI deductible (guidelines though)... so watch for this and write appropriate congressmen - no more secon mortages to avoid PMI.

FYI - for an FHA loan it is called MIP (Mortgage Insurance Premium)... so if you see that don't flip out.

PMI=Private Mortgage Insurance and is there to protect the lender in case of default.  Lender requires it to give you the money.

Message Edited by Lady_Scarlet on 10-19-2007 09:44 PM

[ShanetheMortgageMan]

A 7.125% rate is appropriate for an EA-I approval, so you aren't getting screwed there... however 7% for FHA is a bit high, should be in the mid 6's.  Mortgage insurance is deductible this year only so far (on FHA & conventional), only on loans originated this year as well, there hasn't been a formal extension of this but people seem to thing it will be continued into 2008 as well.  FHA isn't score sensitive, it's credit history sensitive, so if you qualified for FHA once then you should be able to qualify for FHA elsewhere as well.

[Anonymous]

I am looking at their GFE and am confused.  Do FHA loans have closing costs? 

[ShanetheMortgageMan]

---

bsf56 wrote:

I am looking at their GFE and am confused.  Do FHA loans have closing costs? 

---

Yes they do, including a 1.5% FHA MIP (mortgage insurance premium)... post your GFE here and we can comment on it.

[Anonymous]

How do I do that???