Why the Big Difference?

[Mgilbert8605]

Yesterday, I submitted mortgage applications to 3 lenders, for an FHA loan. The prequal offers are:

Lender 1- 3.25% interest with the option to buy points to reduce it to 2.875% and APR 3.954%
Lender 2- 2.75% interest and APR 3.803%

Lender 3- 3% and APR won't be disclosed until I'm under contract. 

Some details about me...2 years post Chapter 7, middle mortgage score 690, and DTI is 11%. 

Why such the difference in offers between the 3 lenders? I thought I qualified for top tier interest rates on FHA, based on my stats. I found these lenders based on online reviews. I wanted to go with lender 3 (because of reviews),  but the terms aren't so favorable. 

[Mgilbert8605]

Anyone?

[NC_Mtg_Loaner]

The APRs are the true measure of the cost of  your transaction.

All 3 of these appear to be under 4%.  what is it specifically that you don't like about any of them?

[Mgilbert8605]

Thanks for your reply....I just wonder why the large difference in the interest rates. Like how I can qualify for 2.75% interest with one lender, yet another I have to buy points to get down to 2.875%. Also, is it common for a lender not to disclose the APR to a consumer? I'd hate to get under contract and the APR be an outrageous percentage, that I can't back out of. I'm a first time buyer, so I've had tons of questions throughout the process. 

[TheKid2]

Based on my experience, I'm not sure why you feel you would get "top tier" rates as FHA is very expensive when you look at the total cost of the loan. As you seem to know, that's the reason you look at APR instead of the Rate. Don't focus on the Rate at all - focus on what you have to pay at closing and what your payment will be. If you review these, the APRs seem similar, but I have no idea why a lender wouldn't disclose the APR for a rate - that would get me mad and make me want to eliminate them.

If this a generic pre-approval that may explain it, but if you submitted for an actual property you put an offer on they should disclose APR, payment, and cash to close. That's what I would be looking at to compare.