PenFed mortgage Pre-Approval, question on rate

[Doomgaze]

Got preapproved with PenFed for $350,000, with a MMS of 760, though they pulled all the reports. At the time, PenFeds website was advertising 30y fixed as "rates as low as 2.65%".  So, I was quoted a rate of 2.875%.  I spoke with my loan officer and told her if I could get my score up, could they pull a new report to get me a better rate. She said I already was in the best credit tier, and that a higher score wouldn't help. If that's true, why did I get 2.875% instead of 2.65%? Is this just cause it's Pre-Approval? Anyone with a PenFed mortgage able to help here?

[NC_Mtg_Loaner]

Are you able to 'read the fine print' on their ad?

How many discount points are  you being charged for 2.875%?

How many discount points would you be charged to get 2.65%?

What's your loan amount and how does it impact your payment with the rates above?

Lastly, do you realize that rates have never been this low before and may never ever be this low again if they ever go up in the future?

[Doomgaze]

From their website https://www.penfed.org/mortgage-center/mortgages/30-year-fixed-conforming-mortgage:

"The following payment example assumes a purchase loan with 0.000 points"

"At a 2.625% interest rate, the APR for this loan type is 2.650% and the monthly payment schedule would be"

My loan agent said my 2.875 was with me getting a $700 credit. I can't imagine that my rate would drop to 2.65% if I dropped the $700 credit, that seems like too big of a gap for $700.

Loan was for 350, 20% down, so 280 would be financed. The difference between 2.875 and 2.65 APR's would be $12,000+ over the life of the loan.

And yes, I understate rates are low, but that doesn't mean I shouldn't shop for the lowest rate possible.

I'm really just trying to understand why they're offering 2.65% with 0 points, but I got 2.875% with a $700 credit with the "best credit score" (their words).

[NC_Mtg_Loaner]

Well, they are providing you that $700 lender credit which is about .25% of your loan amount. 

Of course some lenders' rates change daily as the US 10 YR Treasury bond yield moves up and or down, do they have a better offer today since that rate has improved?

[Doomgaze]

No, they're still offering 2.65 on their website, and my rate is still at 2.875 with $700 credit

[VALoanMaster]

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@Doomgaze wrote:

Got preapproved with PenFed for $350,000, with a MMS of 760, though they pulled all the reports. At the time, PenFeds website was advertising 30y fixed as "rates as low as 2.65%".  So, I was quoted a rate of 2.875%.  I spoke with my loan officer and told her if I could get my score up, could they pull a new report to get me a better rate. She said I already was in the best credit tier, and that a higher score wouldn't help. If that's true, why did I get 2.875% instead of 2.65%? Is this just cause it's Pre-Approval? Anyone with a PenFed mortgage able to help here?

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is that for a conventional loan?

[VALoanMaster]

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@Doomgaze wrote:

No, they're still offering 2.65 on their website, and my rate is still at 2.875 with $700 credit

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According to the website:

The following payment example assumes a purchase loan with 0.000 points, a loan amount of $300,000 and an estimated property value of 375,000. Property located in Fairfax County, VA. The property is an existing single family home and will be used as a primary residence. The rate lock period is 45 days and the assumed credit score is 720.

So we have to answer a few questions to try & make sense of this.

1) Are you buying in Fairfax County, VA?

2) Are you buying a single family residence?

3) How long is your rate lock?

[NC_Mtg_Loaner]

From their link that you provided:  

Payment Example

The information provided assumes the purpose of the loan is to purchase a property, with a loan amount of $300,000 and an estimated property value of $375,000. Property located in Fairfax County, VA. The property is an existing single family home and will be used as a primary residence. The rate lock period is 45 days and the assumed credit score is 720.

At a 2.625% interest rate, the APR for this loan type is 2.650%. The monthly payment schedule would be:

• 359 payments of $1,204.95 at an interest rate of 2.625%
• 1 payment of $1,205.76 at an interest rate of 2.625%

If an escrow account is required or requested, the actual monthly payment will also include amounts for real estate taxes and homeowner's insurance premiums.

*Is your loan similar to this^

if so, have them give you the lower rate--otherwise, take the lender credit to reduce closing costs

[MyFault]

As already been stated, your rate offered is 2.875% with $700 credit. If you were to go for the 2.625, you would lose the $700 credit that would go towards your closing costs.
I've been out of the mortgage business for about 8 years now, but $700 seems about right for the rates offered.

I'm curious, as i'll be looking into a similar mortgage next year and planned to go with PenFed, what are they telling you the closing costs will be?

I started a thread asking about experience with PenFed mortgages a few days ago with no response. I'm also curious if they've told you how many days it will take to close, and if they've been responsive and easy to work with?

[NC_Mtg_Loaner]

Did lender credit improve any more today?

It should have.   The US 10 YR Treasury Bond yield gave up that eighth of a point it gained late last week.  Of course it may not be over yet either but you may not want to get greedy.