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First time home buyer- Preapproved but have a question.

Regular Contributor

First time home buyer- Preapproved but have a question.

I was preapproved for a home loan on yesterday (4/2/18). I qualified for a 180,000 FHA loan with a mid fico mortgage score of 702. That is with zero debt, my income is low and we are getting down payment assitance i believe of 3.5%. The question is they gave me a interest rate of 5.625% which seems a little high for FHA and for my score. I know its not an excellent score but its not horrible.

Should i try a different lender or is that an ok rate for my score. Any input is appreciated. Thanks.
Discover IT $16k, Costco Visa $5.5k, BofA rewards $500, C1 QS VS $11k, VentureOne $11.75k Golden1 CU $2k, Barclay's Rwds $2.8k, Barclays Cash Fwd $2.8k, NFL Extra Points $1750, Walmart $6k, Old Navy $4k, Target MC $7k, Sears MC $3K, Overstock $3.9k, Pink $3,050, Kohl's $3000

Current Fico8; TU 721 EX 710 EQ 697
BK7 DC 12/14
Message 1 of 15
14 REPLIES
Established Contributor

Re: First time home buyer- Preapproved but have a question.

You are getting downpayment assistance. That's why the rate is so high

Mortgage Loan Officer in Greater Chicago Area plus 49 states
Message 2 of 15
Regular Contributor

Re: First time home buyer- Preapproved but have a question.

Really? That much of a difference it makes?
Last october i was preapproved for a interest rate of 4.5% also fha but without downpayment assistance. My mid fico was only 3 points higher. I didnt know it would make a whole 1.125% difference. What do you recommend? Wait and some more or try a different loan option like usda? I live in central california so i believe a lot of the towns qualify. Thanks for the input.
Discover IT $16k, Costco Visa $5.5k, BofA rewards $500, C1 QS VS $11k, VentureOne $11.75k Golden1 CU $2k, Barclay's Rwds $2.8k, Barclays Cash Fwd $2.8k, NFL Extra Points $1750, Walmart $6k, Old Navy $4k, Target MC $7k, Sears MC $3K, Overstock $3.9k, Pink $3,050, Kohl's $3000

Current Fico8; TU 721 EX 710 EQ 697
BK7 DC 12/14
Message 3 of 15
Established Contributor

Re: First time home buyer- Preapproved but have a question.

Can't you come up with 3% to 5% down and go that rout? USDA is stricter on DTI as well.

Mortgage Loan Officer in Greater Chicago Area plus 49 states
Message 4 of 15
Regular Contributor

Re: First time home buyer- Preapproved but have a question.

Its possible for me to get the 3.5% percent but it will mean putting everything i have down plus a gift fund offer from my wife’s family member. But i wont have anything left for closing costs. Anyway i can make this happen? Thanks
Discover IT $16k, Costco Visa $5.5k, BofA rewards $500, C1 QS VS $11k, VentureOne $11.75k Golden1 CU $2k, Barclay's Rwds $2.8k, Barclays Cash Fwd $2.8k, NFL Extra Points $1750, Walmart $6k, Old Navy $4k, Target MC $7k, Sears MC $3K, Overstock $3.9k, Pink $3,050, Kohl's $3000

Current Fico8; TU 721 EX 710 EQ 697
BK7 DC 12/14
Message 5 of 15
Contributor

Re: First time home buyer- Preapproved but have a question.

USDA's dti is 41%. My score is the same and was just locked at 4.675% for USDA. 0% down. You can ask for closing costs from the seller. We asked for up to $4000 and will need to bring about $900 to closing. We looked into FHA with down payment assistance and it was well over 5% so we didnt do that. If you have a lower income, USDA might be a good option
Message 6 of 15
Regular Contributor

Re: First time home buyer- Preapproved but have a question.

Thanks for the insight. My income is 37,000 annually so its pretty low. Hence why i was using downpayment assistance. I will look into that and see which is a better option. I will ask my lender to see if they can give me better options. Thanks
Discover IT $16k, Costco Visa $5.5k, BofA rewards $500, C1 QS VS $11k, VentureOne $11.75k Golden1 CU $2k, Barclay's Rwds $2.8k, Barclays Cash Fwd $2.8k, NFL Extra Points $1750, Walmart $6k, Old Navy $4k, Target MC $7k, Sears MC $3K, Overstock $3.9k, Pink $3,050, Kohl's $3000

Current Fico8; TU 721 EX 710 EQ 697
BK7 DC 12/14
Message 7 of 15
Established Contributor

Re: First time home buyer- Preapproved but have a question.

The high rate = a rebate to fund the assistance and/or closing costs you are being offered.
Message 8 of 15
Regular Contributor

Re: First time home buyer- Preapproved but have a question.

I spoke to the LO and she said it was because of the program i was using that the rate was high. She said if i did my own down payment and closing costs, she would give me a 4.00% rate.
Discover IT $16k, Costco Visa $5.5k, BofA rewards $500, C1 QS VS $11k, VentureOne $11.75k Golden1 CU $2k, Barclay's Rwds $2.8k, Barclays Cash Fwd $2.8k, NFL Extra Points $1750, Walmart $6k, Old Navy $4k, Target MC $7k, Sears MC $3K, Overstock $3.9k, Pink $3,050, Kohl's $3000

Current Fico8; TU 721 EX 710 EQ 697
BK7 DC 12/14
Message 9 of 15
New Member

Re: First time home buyer- Preapproved but have a question.


@Cspotterhair wrote:
USDA's dti is 41%. My score is the same and was just locked at 4.675% for USDA. 0% down. You can ask for closing costs from the seller. We asked for up to $4000 and will need to bring about $900 to closing. We looked into FHA with down payment assistance and it was well over 5% so we didnt do that. If you have a lower income, USDA might be a good option

How much where you approved for w/ your USDA loan? Me and my wife are considering this but worried about what we would be offered. I think our DTI is 13%.. we would be right at the 78,200 combined income limit. 

Message 10 of 15