i read alot onlie that even with unfavorable credit and/or a low credit score home loans are still available, but at a higher intrest rate. can anyone ballpark me an approximate intrest rate on a home loan under these conditions? im curious, but i really dont want to talk to a mortage company until i have a better idea of what im looking at.
If you go FHA then you won't have to worry about the rate (per se). They are not score driven. I think their rate is about 6.25%, which is slightly above average right now (which is 6%). If you can't go FHA (meaning, the house you want exceeds FHA maximums in your county) and you have to go non-conforming, your rate could be anywhere from 7 to 11%. If you go to MortgageQuotes.com, they have a quick little credit scoring quiz you can take then look up loans and see what rates they are giving. Keep in mind that the less you put down, on a convential loan, the higher the interest rate. So the 6% rates that is being quoted (a lot of times) is for people who are putting down 10%. If you go with no PMI, your rate will also be higher because essentially you have two mortgages. To let you know, I went non-conforming (due to a 3 year old foreclosure and my home exceeded FHA maximums) and my rate on a 95% is about 9% - no PMI. Not great, but it's better than renting.
Well here goes.... My wife just got approved to buy our first home on just her credit alone. She currently only has 2 chargeoffs on her reports left. All of her collections are deleted. Her scores are 614TU, EQ678 and EX709. She got approved for $110,000 at 100% financing and 3% seller assist at a rate of 9.91%. This rate sucks but until my credit and her credit are near perfect and we can refinance we are stuck. We found a home and are closing on it on October 25th, 2002. Again it is better then the $850.00 monthly we are paying for rent and actually it is just a little more by about $100.00 a month to own, this includes taxes and insurance. So for $975.00 I would rather own my own house then to keep supporting my landlords house payments like we've been doing the last 5 years. Tac
tac, would it not be better to pay those two charge-offs and get fha? It would save you so much in the long run. FHA rate is about 6.25% right now.
The lender is making her pay the charge offs anyway! We have to have a check to cover those at closing time. The problem is we do not have alot of money to make this happen. No large down payment and only about $6000.00 which includes paying the chargeoffs to make this deal happen. The seller is agreeing to pay almost all of the closing with the exception of us coming up with the charge off money, tax money for escrow and the 2 points for the lender. I am close to getting the most costly charge off taken off of her one report. Equifax has until the 10th to come back with an answer and as of Friday it was still pending. I am hoping and praying that it gets deleted! I have looked into FHA and find that they are really strict and nit picky with alot of things. We will do this now and refinance next year. Thanks! Tac
TAC Is your mortgage co charging you 2 points at 9.9%? Plus you are paying the chargeoffs as well? I do believe that you may be being overcharged. Has the mortgage co given you a good faith estimate yet? Also how much in $'s is the seller paying towards closing costs and how much are you paying in closing costs (not including the chargeoffs)? You may have other options. fla-tan
yuppietras Without more information, it really isn't possible to answer your post accurately. Without going too much into specifics, what does your credit look like? Do you have chargeoffs and collections or do you just have lates? Also, are any collections or judgements that you might have paid or unpaid? Many questions that need to be answered before being able to give a true response. Also, besides home ownership, what are you looking to accomplish and how long do you plan to be in the home? Good luck. fla-tan
Yes, it would be 2 points at 92,000. We received a good faith estimate of about $3700.00 total for closing costs and another $2800.00 for the Chargeoffs. The seller is paying close to $3000.00 and the Transfer tax which is 2%. I also think we may be paying alot but we are desperate to get into a home and this deal is going to get us into a home. We have been turned down in the past or told we had to pay close to $15000.00 to get into a home. This is before I found this board and started repairing her credit mostly, since her's was the easiest to start with. When we finally got approved and were told this was the best offer we were thrilled and kinda jumped at the opportunity to make this dream a reality. I can't stand renting anymore! I don't have a problem paying a little extra now to get what we want. These payments are still well within our means, considering my income and credit aren't even a factor in this loan. Thanks for the help! Tac
FHA only requires 3% down, you could still afford to pay those chargeoff's and have the money for a downpayment. I was offered the same kind of deal from Quicken Loans, I didn't know I could get better. Please, please do not take this loan, you have the option of FHA at a good, decent interest rate with all chargeoff's paid.
Let me give you my figures, Quicken offered me a loan at 11.4%, I just got an fha loan through Indy Mac at 6.2% the home cost is 100k, with Quicken 5% down, with Indy Mac, 3%. Quicken Monthly payments, almost $1000, Indy Mac, $620. $380 extra month in savings, $4560 a year in savings. You may well be able to afford it, but is it worth it?
I think what he means about FHA being strict is the downpayment. I don't think FHA will allow the downpayment to be paid by the seller so he would have to come up with another 3k (3%) on top of the chargoff payoffs. I know Fla-Tan will correct me if I'm wrong but that may be what the problem is. If I am correct in my above assumption you would probably do fine by buying this house and just refinance in a year when you will have a clear report after the chargoffs are paid. You are correct, never rent if you don't have to. Better to pay a higher rate than nothing at all.
Are there any down payment assistance programs in your area? It looks to me that you can definately go FHA if you pay those charge offs. 3% of 110k is $3300. Your charge offs are $2800. The closing costs...I'm not sure, but if the seller is going to pay 3%, you may still be able to go FHA. Don't let anyone tell you "this is the best you can do". They don't know that. That's the best THEY can do for you. Don't be so desperate that you'll allow yourself to be raped by high rates then walk around and say you "deserved" it. Poor analogy but that's about what it amounts to.
Do you have a 1st time homebuyers program in your area? My daughter got one with less than 1k move in, last Oct. at 7.04%. Charlie
My wife was offered other plans from different lenders with a few of them offering lower intrest rates ranging from 7-9% but.....they would not allow the seller to assist with closing costs and they required a down payment of 5%. You have to understand that if we went with this type of loan with a lower intrest rate it would cost us.... 5% down for a home that is $92,000 = $4600.00 Chargeoffs = $2800.00 Closing costs, Transfer taxes, Real Estate Taxes in Escrow, Insurance & title taxes = about $4200.00 Est. Total = $11600.00 The plan we have now is 100% financing, 3% seller assist and the seller paying the transfer taxes. This plan has us only paying about $6500.00 for the same home. Yes we are getting raked in intrest but....This is a way to get into a house that WE OWN instead of the wasting money monthly paying someone else's mortgage. Which is more costly?? Paying rent and not owning, or paying higher intrest for a year or two and owning, then refinancing when our credit is great?? I prefer to own. Thanks for the help! Tac
Tac You are making the right move if you can recoup in a year. Are prices going up in your area? If they are you will be fine doing what you are doing and then refinance in a year. The bad credit will be paid and you will have a years worth of mortgage reporting which will help your scores. A year from now you can refinance and may even be able to get rid of the PMI if the value goes up enough or you can save more to put down. It sounds like you have researched and gotten many offers. Like the others say though, check for any first time buyer or down payment assitance programs in your area first. If there truly are none then you are correct, what you are doing is better than renting.
Yes, Prices are going up in my area and homes seem to be selling quickly. The home we are buying for $92,000 just got appraised for $97,000 so we already have $5000.00 in equity already. Thanks for the help. I have researched info for 1st time home buyers in my area and elsewhere and it doesn't look like we can use any of them with some of the requirements. Thanks Tac
I am not understanding how you would have to pay $11k out of pocket if you took a lower interest loan, an FHA backed loan only requires 3% down, if the seller is paying 3% then that should cover closing costs. I have read and re-read your posts and still don't see the rationale behind not going with FHA. Anyway, I guess I will save my "help" for someone who needs it.
iamsam He has answered that question already. FHA requires 3% down but that 3% cannot be paid by the seller of the home. The only money he has to put down is going to pay off the chargoffs. He does not have 3% to put down himself. The loan he has taken is allowing the seller of the home to pay the down payment. To go FHA would mean he has to pay 11k and he doesn't have it so he is asking for other options. A first time buyer or down payment assistance program would be the ticket if they were available.
