275K loan in Florida rates quote

[PineCat]

We just applied for a mortgage in Florida - the rate quoted is 4.5% (4.631% APR) this is for a 325K home with 15% down, 704 credit score. Is this good?

I also have to decide how I want to use the proceeds from sale of my old house - bigger down payment or pay down more revolving debt in hopes for a better score and rate. Or maybe I should apply other places in hopes of a lower rate? Trying to keep monthly payment as low as possible...

[StartingOver10]

Have you found the house yet?  If not, the interest rate floats until you have a contract on a particular property.

The factors that most influence your monthly payment, dollar for dollar each month, is the cost of your homeowners insurance and property taxes. Mortgage insurance is a factor unless you aren't paying any MI. 

You can shop the rate with other lenders without actually applying by providing your information to the lender for a quote. But even then the rate continues to float until you have a contract. 

IMO the 4.5% for a conventional loan is a good rate at the moment. 

[VALoanMaster]

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@PineCat wrote:

We just applied for a mortgage in Florida - the rate quoted is 4.5% (4.631% APR) this is for a 325K home with 15% down, 704 credit score. Is this good?

I also have to decide how I want to use the proceeds from sale of my old house - bigger down payment or pay down more revolving debt in hopes for a better score and rate. Or maybe I should apply other places in hopes of a lower rate? Trying to keep monthly payment as low as possible...

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Hi PineCat,

4.5% is a little high.

You generally want to get rid of your revolving debt first but here's some info that might help you decide where to put your money.

I'm assuming that you'll go from 15% to 20% down.

At 15% down you're looking at an estimated Principle, Interest & PMI payment of $1,421.14. 
If you put another 5% down ($16,250) estimated payment drops to $1,279.04 for your Principle & Interest.

That's a savings of $142.10 per month.

Now you want to look at how long it will take you to recoup the extra 5% down so we divide the cost of $16,250 by the savings of $142.10 & we get 114.35 months. That means it will take you 9.5 years of saving $142.10 per month to recoup the "extra" 5% down.

Now you can run the same numbers for your credit card debt to see if that will save you more money.

[kc0039]

Dependent on where you are in FL, 4.5% is pretty high. If you have a fully executed contract, every LO here can tell you exactly what the rate would be today, dependent on address, county, LTV, DTI, and credit score if you are only rate shopping.

[H-B]

If you have 20% down payment go for it. You will save huge on PMI. 4.50% rate is high. 

[Anonymous]

I qualified for a 4.5% rate with 5% down, so you should probably be able to get a slightly better interest rate with 15%. Of course, when I was playing around with the numbers with my lender, the rate didn't go down unless I put the full 20% down so not sure whether it's an all or nothing deal with < 20% down, so YMMV.

Also, I assume you are applying for a loan that doesn't require PMI (my lender doesn't require PMI). If not, like the poster said before me, it's a no-brainer to pay 20% to avoid the extra PMI payment. PLUS you should get a better interest rate with 20% down regardless of your credit score, so if you have the means, there's not really any reason to NOT put the 20% down.

[VALoanMaster]

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@H-B wrote:

If you have 20% down payment go for it. You will save huge on PMI. 4.50% rate is high. 

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Not really. The PMI should only be around $62 per month because they're putting 15% down.

[PineCat]

Yes, PMI was around $62 per month on the quote I received. 20% down won't leave us with much cash. Right now we're still waiting if our offer is accepted by the seller.

[VALoanMaster]

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@PineCat wrote:

Yes, PMI was around $62 per month on the quote I received. 20% down won't leave us with much cash. Right now we're still waiting if our offer is accepted by the seller.

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How much credit card debt do you have & what are your total minimum monthly payments?

[Anonymous]

With 15% down payment you might have to consider mortgage insurance. You can choose to pay it monthly on top of your regular mortgage payment or you can build it in to your rate. Borrower's with higher credit scores should have lower MI vs borrower's with lower credit scores. Please ask your mortgage provider to explain both options to you in detail so you can compare two payments. (mod removed link, check your pm's)