Re: FHA interest rates?? Michigan mutal programs??
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.