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Mortgage Experience Fall 2022 - 6.125% FHA, lender paid my points!

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Bk2006
Established Member

Mortgage Experience Fall 2022 - 6.125% FHA, lender paid my points!

Just wanted to share my recent mortgage experience. My advice to anyone looking to buy a home is that there are still good deals out there despite the higher interest rates! Applied and preapproved on 9/20/2022 with a local loan originator for a major national lender and closed on the new house last week (11/01/2022).

 

I am a first time homebuyer and had limited cash to close so went with an FHA loan for the 3.5% down. $100k per year W-2 income, no other debt except for about $10K in credit card balances on one low rate credit union BT card. My middle mortgage FICO score was 687, weighed down by some 60/90 day lates in 2020 from when I lost my previous job during COVID and a couple of 60/90 day late payments on a student loan from 2016 (since paid in full).

 

I was looking for a home in the $400k range and put in an offer on my dream house in the beginning of October, which was listed at $420k. The home had been on the market almost a month, which would have been unheard of just a few months ago! I live in a midsized southern city that had a lot of remote workers relocate here from higher priced areas, so almost everything in this price range went under contract in a day or two for 10%+ over asking price when rates were low. My realtor put in an initial offer for $399k and the sellers countered with $408k, which I was VERY happy with. The house probably would have sold for $450-500k in 2021 or early 2022 considering it's in the best school district and a walkable part of town.

 

Before I put the offer in, my MLO called me multiple times to redo the loan estimates as interest rates were rising quickly. I was quoted a monthly payment of about $3250 at 6.25%, but then the points required to lock in that rate kept going up, from $3k to $7k to $10k extra due at closing. The day before I put in the accepted offer for my house, my MLO's manager got on the phone and said something to the effect of "you know what, business is really slow and we really want to make this deal...we'll cover the points since I know you have only $25,000 cash to close." I was impressed by their offer as I might have been a few thousand dollars short of the amount needed to cover closing costs and my 3.5% down payment if I had to pay the full price for points.

 

The underwriting process and closing were as smooth as could be - I am over the moon at how easy the whole process was! Yes, I'm stuck with a high interest rate for now but if rates ever go down, I can always refinance, and if they don't go down any time soon, I expect my income to increase significantly over the next couple of years so I can pay down the principal. Honestly, I prefer a higher interest rate and more stability in the housing market to the chaos and bidding wars that I would have faced if I had bought a house in 2021.

 

Hope this helps some of you out there who are "on the fence" about buying a house in a high interest rate environment. Lenders are willing to negotiate with you, perhaps more than before, because mortgage volume is down so much.

12/2022 TU 704 - EX 697 - EQ 705
Current Cards: PSECU $20,000 - NFCU Cash Rewards MC $21,900 - Chase Southwest $15,000 - Discover It $10,000 - Citi AAdvantage Platinum $9,500 - Apple Card $6,000 - PenFed Promise $5,000 - Truist Enjoy Cash $4,500 - Comenity Bread Cashback Amex $3,500 - BoA Customized Cash Rewards $2,800 - UVA Credit Union Visa Classic $1,600
Message 1 of 8
7 REPLIES 7
Seamslong
Valued Member

Re: Mortgage Experience Fall 2022 - 6.125% FHA, lender paid my points!

Thanks for sharing your experience I’m hoping to buy in 2023. I need to work on my debt to income tho, so we shall see Glad you were able to get the home you wanted




Remaining Card limit goals:
Capitol One 3,600/2,500/2,300 goal 10k each line or close after buy a home|Discover $9.5k goal 15k | Citibank $6.5k goal 10k | Southwest $8,200 goal 20k |PayPal goal $6.0k goal 10k|Wayfair $2.1k goal $5.0k

Possibly cancelling:
Amex Blue 2k | No credit line increase since inception 2017
Closed accounts
Legacy CC/Capitol One secured 08/2021
Amex 11/2022

Entered the garden on 9/01/2021
Message 2 of 8
Bk2006
Established Member

Re: Mortgage Experience Fall 2022 - 6.125% FHA, lender paid my points!

 


@Seamslong wrote:
Thanks for sharing your experience I’m hoping to buy in 2023. I need to work on my debt to income tho, so we shall see Glad you were able to get the home you wanted

Thanks, glad this helped! The higher interest rates really do put a hit on how much house one can qualify for nowadays, especially if you have other monthly debt payments that affect DTI. But I am happy I didn't overpay for the house and that it was on the market long enough for me not to have to make a snap decision or waive inspections!

12/2022 TU 704 - EX 697 - EQ 705
Current Cards: PSECU $20,000 - NFCU Cash Rewards MC $21,900 - Chase Southwest $15,000 - Discover It $10,000 - Citi AAdvantage Platinum $9,500 - Apple Card $6,000 - PenFed Promise $5,000 - Truist Enjoy Cash $4,500 - Comenity Bread Cashback Amex $3,500 - BoA Customized Cash Rewards $2,800 - UVA Credit Union Visa Classic $1,600
Message 3 of 8
Learning_Tee0225
Regular Contributor

Re: Mortgage Experience Fall 2022 - 6.125% FHA, lender paid my points!

This is good to know. Ill be taking the plunge in 2023 - thanks for the insight

Credit recovery journey -Jan 2022
1/2022: TU: 557 EX: 521 EQ: 567
6/2022: TU: 630 EX: 633 EQ:640
Current Cards
Open Sky Secured: $300
Discover IT: $2000
Merrick Bank: 2K
Mission Lane: $800
Forever 21: $600
Apple Card $1500, NFCU Go Rewards $6700, Amazon $600, Kohls $750
Message 4 of 8
ACN323
Regular Contributor

Re: Mortgage Experience Fall 2022 - 6.125% FHA, lender paid my points!

Congrats @Bk2006 on the new home! Gives me a slight glimmer of hope that it's possible for us in the next year. Our DP's are similar, so good to see what numbers you are working with 🙂

Started at 490 in Dec.18’'
EX8 740 EQ 756 TU 753
Discover IT $4.7k
Apple Card $2.5k
Amex BCE $10k
Amex Delta Gold $15k
Citi LL Bean $5.4k
Synch Adorama $2k
Chase Sapphire Preferred $8.4k
Message 5 of 8
Bk2006
Established Member

Re: Mortgage Experience Fall 2022 - 6.125% FHA, lender paid my points!


@ACN323 wrote:

Congrats @Bk2006 on the new home! Gives me a slight glimmer of hope that it's possible for us in the next year. Our DP's are similar, so good to see what numbers you are working with 🙂


Thank you! It's a great feeling to be in my dream home. Hope rates don't continue to go up too much so you can get your dream home. Are you looking in the same price range? ($400kish)

12/2022 TU 704 - EX 697 - EQ 705
Current Cards: PSECU $20,000 - NFCU Cash Rewards MC $21,900 - Chase Southwest $15,000 - Discover It $10,000 - Citi AAdvantage Platinum $9,500 - Apple Card $6,000 - PenFed Promise $5,000 - Truist Enjoy Cash $4,500 - Comenity Bread Cashback Amex $3,500 - BoA Customized Cash Rewards $2,800 - UVA Credit Union Visa Classic $1,600
Message 6 of 8
ACN323
Regular Contributor

Re: Mortgage Experience Fall 2022 - 6.125% FHA, lender paid my points!

@Bk2006  That's great to hear! Just in time for the holidays too! 

 

Yes, we are looking in the 400k range, (although we live in a major city in the North East currently, definitely looking way outside of the city to get that price lol) but our income is around 100k. We currently rent a multi-family with my in laws, but that's taken a toll on us  the last two years and I'm expecting our 3rd in Feb. so really hoping we find something in 2023 and don't just cave and rent somewhere else in the city. 

But similar to you, hoping we can get in before rates hike even more, and then refinance in the future. Fingers crossed lol. 

Started at 490 in Dec.18’'
EX8 740 EQ 756 TU 753
Discover IT $4.7k
Apple Card $2.5k
Amex BCE $10k
Amex Delta Gold $15k
Citi LL Bean $5.4k
Synch Adorama $2k
Chase Sapphire Preferred $8.4k
Message 7 of 8
NoMoreE46
Community Leader
Senior Contributor

Re: Mortgage Experience Fall 2022 - 6.125% FHA, lender paid my points!

Thanks for sharing & Congrats @Bk2006.

 

 

Message 8 of 8
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