What does 100% financing mean for a mortgage rate?

[Math_Rocks]

Kind of a different question so I'll start another thread.

I know all my FICOs and based on this site, the scores would qualify us for rates like 6.1% on a 30 year fixed. I started applying for mortgage quotes today and it seems like the rates are more in the 6.5 - 7.125% range. Is this because we need 100% financing? Or am I not getting quoted their best rates?

[Tuscani]

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Math_Rocks wrote:

Kind of a different question so I'll start another thread.

I know all my FICOs and based on this site, the scores would qualify us for rates like 6.1% on a 30 year fixed. I started applying for mortgage quotes today and it seems like the rates are more in the 6.5 - 7.125% range. Is this because we need 100% financing? Or am I not getting quoted their best rates?

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According to myfico.com the est best rate for spotless credit is 5.860%. So you are close.. I can't say how much the 100% financing is affecting your rate.. hopefully the mortgage gurus will chime in.

[Anonymous]

Tuscani is correct, the rate you see is for the perfect borrower.

• Great credit
•  minimum 20% down payment
• ablility to document income and assets completely.

For each that you lack above, lenders are taking more risk and hence a higher rate.

Also, when you are looking at the chart, was the 6.1% under the APR collumn. If so, this is not the note rate for the mortgage. The note rate would actually be lower than the APR. The APR includes certain costs to obtain the financing and adds that to the note rate to give you the cost of credit for the first year.

Regarding the whether or not you are being quoted the best rate: Rate is going to be tied to the cost of the loan. Brokers will, and should, get paid money on the deal. How much is between you and the broker. The broker can get paid from the borrower, the investor/bank, or a combination of the 2. The more you pay the broker (Origination points), the lower your rate. The more the Bank pays the broker (Yield Spread Premium), the higher your rate will generally be. You need to determine what makes the most sense for you at this point.

[Math_Rocks]

Our FICO's (mid score) are 704 and 703 so going by the chart on the frontpage of myFICO:

760-850 5.869% $1,773

700-759 6.091% $1,816

680-699 6.268% $1,851

660-679 6.483% $1,893

640-659 6.913% $1,978

620-639 7.460% $2,089

We fall into the 6.091% category. So I will update the question - is 6.5 -7.0% with ~2500 in closing costs (that we may be able to have sellers pick up part or all of) reasonable for us?

[Anonymous]

Need more information. What is the loan amount? Can you document your income? What are they quoting you on your 2nd our are they quoting you that rate with one loan? What state are you purchasing in?

[MidnightVoice]

When I was lookinmg at refinancing the rates quoted on this site seemed to bear little relationship to reality, rather like the simulator 

I just talked to a reasonable company today. Their best rate is reserved for people whose middle of the 3 FICOs is above 680, their best rate for a 15 year mortgage (20% down) was 6.0% (note 15 years not 30).  Best rate for a 10 year was 5.9%.  So I am guessing that for a 30 year they would be 6.15-6.2 with 20% down.

I would suggest talking to a few people without getting credit pulls!

[Math_Rocks]

We will be looking for a home in Arkansas in the price range of 125-175K. (I want to know how much we can qualify for BEFORE we look at houses.) My salary will be in the mid 40's and my husband is just beginning his job search since the move is still more than 2 months away.

[Math_Rocks]

Oops - forgot to say YES we will document our income (which is just my signed contract at this point).

[Anonymous]

This is my specialty. I am mortgage banker in PA. 100% will definitely make an impact on the rate. Like previosly mentioned the rates that are posted almost anywhere make the assumptions of a conventional loan which is 80% and verifying income and assets. Remember also that anything over 80% is going to have mortgage insurance. There are a few ways to taclke that, but that is for more of a mortgage forum. The one thing I can assure you that most first lien rates are very comprable with 620+ credit scores. That being said if you are splitting the loan 80/20 than you can avoid the MI but rates on second mortgages are not very attractive today and would be affected by your credit score. The cost of the MI can be affected by the credit score as well. If you are over a 700 there are some pretty attractive single file mortgage insurance programs which you can pay up front one time and remeber that at least for this year MI is tax deductible.

Anyone who is interested in going over their individual scenarios please contact me, my branch is in PA but my co. has branches in almost every state.

[Anonymous]

I would suggest you contact a broker. I have a bankruptcy in my past and with a middle score in the high 600s I was able to get a rate of 6.25% fixed for 30 years. I put down 5% but could have got the same rate with no money down.

I opted for a premium program which included a higher rate of 6.75% but I do not have to pay PMI. The PMI was $105 a month and the higher interest only cost me $20 a month, so I am saving quite a bit.

I never would have known on my own. I am so glad I used a broker!