Pre approved for 3.2% rate... is that a good rate?

[In-A-Limbo]

Hi all,

I was preapproved for 30 years FHA mortgage loan with the current rate of 3.2%. Is this a fair rate for someone who just went through bankruptcy 2.5 years ago with a credit scores of 681, 649, and a 601 (came from the lender herself). Should I keep shopping for a better rate?

[Anonymous]

That's an incredible rate! Congrats!

[Anonymous]

+1!  Very good rate.  Better than what my wife and I got, and our credit ratings are both over 720.

You might want to inquire about closing costs and get a good faith estimate just to be sure.  It's also worth noting that the rate generally isn't locked in until you submit the formal application for a specific property.  Congratluations though!  You are well on your way.

[In-A-Limbo]

Yes I was told that the rate is not locked. But she also said that she's not anticipate the rate to go any higher than a 3.5 in the next few months. Lender will cover the closing cost 100%. My husband think that we should still shop around but I think this is a pretty good deal.

[Anonymous]

They're giving you that rate and they are covering your closing costs?  I've never heard of that before.  Sounds like an amazing deal.  Good for you - Good luck!  It is a great time to buy.  It would not hurt to continue shopping around, and be sure to ask lots of questions. 

[JM-AM]

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@In-A-Limbo wrote:

Hi all,

I was preapproved for 30 years FHA mortgage loan with the current rate of 3.2%. Is this a fair rate for someone who just went through bankruptcy 2.5 years ago with a credit scores of 681, 649, and a 601 (came from the lender herself). Should I keep shopping for a better rate?

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The rate is excellent, but you need to look at all other figures.

Just because the rate is good does not mean in the long term it was the better deal.

[JM-AM]

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@In-A-Limbo wrote:

Yes I was told that the rate is not locked. But she also said that she's not anticipate the rate to go any higher than a 3.5 in the next few months. Lender will cover the closing cost 100%. My husband think that we should still shop around but I think this is a pretty good deal.

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Your husband is correct. I hate to say this but it sounds more like a bait and switch.

I can tell you I can give you a rate for 3% but not lock it, and just say I dont anticipate the rates being higher then 3.5% in a few months. You are okay with that, and when you come back I have my notes 3.5% and make myself a decent amount of money on the YSP (Yield Spread Premium).

Personally not only would I go shop with other LO's or brokers but personally I would stay clear of the person you spoke with. Just my three cents......

[In-A-Limbo]

Thanks all. We will try to get a pre approve from another lender as well.

[Walt_K]

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@JM-AM wrote:

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@In-A-Limbo wrote:

Yes I was told that the rate is not locked. But she also said that she's not anticipate the rate to go any higher than a 3.5 in the next few months. Lender will cover the closing cost 100%. My husband think that we should still shop around but I think this is a pretty good deal.

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Your husband is correct. I hate to say this but it sounds more like a bait and switch.

I can tell you I can give you a rate for 3% but not lock it, and just say I dont anticipate the rates being higher then 3.5% in a few months. You are okay with that, and when you come back I have my notes 3.5% and make myself a decent amount of money on the YSP (Yield Spread Premium).

Personally not only would I go shop with other LO's or brokers but personally I would stay clear of the person you spoke with. Just my three cents......

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That's a little alarmist.  I don't think there's anything that's been shared so far to suggest that the LO/broker is doing anything underhanded.  Of course, the OP should shop around and compare all the fees to truly understand what the loan is costing.  And when ready to put in the actual application, call the various lenders to get an update on the best rates they are offering.  But why in the world should OP cut ties with this person right now?

[MovingForward_2012]

My loan officer gave me a pre approved rate of 3.25% but he said that is the worst case scenario as he did not want to give me a lower rate and then have the locked rate be higher and the mortgage payment go up. He said my rate would likely be between 3.125% and 3.25%. I would get a estimate of mortgage payment increase should your rate go up to 3.5%. But 3.2% is a very good rate but not locked until you get into the underwriting phase. Keep us posted.