topic Re: For our LO in the audience....question about points, rate, and APR?? in Mortgage Loans

For our LO in the audience....question about points, rate, and APR??

Anonymous — Tue, 16 Jun 2020 14:05:31 GMT

We just went under option on a property. The price is $435K. I have two 30 year conventional loan offers. (Can't use FHA)

The first:

5% down

3.75% / APR 4.11%

no points or conditions (thus far)

The Second:

10% down

3.5%/ APR 3.99%

no points but requires us to pay off a tradline (car) of $8500 at closing. Our DTI is 36% so I don't really understand why the pay off of the vehicle is neccessary?

I see the HUGE difference in what we are bringing to the table....but how different are the loans?

Re: For our LO in the audience....question about points, rate, and APR??

NC_Mtg_Loaner — Tue, 16 Jun 2020 16:44:13 GMT

the rate improvement is likely due to the DTI of 36% or less on the second quote of 10% down which is less riskier for the lender.

Re: For our LO in the audience....question about points, rate, and APR??

VALoanMaster — Wed, 17 Jun 2020 16:38:11 GMT

@Anonymous wrote:
We just went under option on a property. The price is $435K. I have two 30 year conventional loan offers. (Can't use FHA)

The first:
5% down
3.75% / APR 4.11%
no points or conditions (thus far)

The Second:
10% down
3.5%/ APR 3.99%
no points but requires us to pay off a tradline (car) of $8500 at closing. Our DTI is 36% so I don't really understand why the pay off of the vehicle is neccessary?

I see the HUGE difference in what we are bringing to the table....but how different are the loans?

Hi @Anonymous ,

Are the offers from 2 different lenders? If so, you really need to compare apples to apples, meaning compare a 10% down option against a 10% down option.
The APR is a little hard to compare across 2 different down payment scenarios because the private mortgage insurance (PMI) impacts the APR & the PMI will be lower with more money down.

What's interesting is the APR "spread" between the rate and the APR is actually higher on the 3.5% down option.

What is your mid score & what state are you in?

Re: For our LO in the audience....question about points, rate, and APR??

Anonymous — Wed, 17 Jun 2020 16:41:58 GMT

My mid is 635 and we are in Texas.

Re: For our LO in the audience....question about points, rate, and APR??

VALoanMaster — Wed, 17 Jun 2020 17:23:27 GMT

I'm in Texas too.

At 635, it's possible that the lender who offered 3.5% did so based on you paying off the car so they could do a rapid re-score to get the better rate.

If I were your lender, I would look for ways to improve scores through rapid re-scoring, because your PMI is going to be pretty high with a 635 mid score.

Where the offers from different lenders or the same?

Re: For our LO in the audience....question about points, rate, and APR??

Anonymous — Wed, 17 Jun 2020 18:47:43 GMT

Different.

I just locked in 3.5 and paid $560 to do it.

Re: For our LO in the audience....question about points, rate, and APR??

Anonymous — Thu, 18 Jun 2020 02:44:36 GMT

This is great.
Our 3.5 fixed rate cost us 2 points ($7191.00). We locked yesterday.