Loan around $240,000 100% financing interest rate= 10% (ouch) 2 points. TU = 636 6 yr old repo / no collections EQ = 601 6 yr old repo / no collections EX = no score was available for some reason although Credit Expert shows 622 Is this the norm or can I get bettter, mind you this is a conventional loan NOT and FHA loan. Keep that in mind. I was told this repo is what's killing me. That being said, are these terms the norm with my situation or is this considered predatory ?
Well, call it what you like but it is definitely subprime. I recall an earlier post where you said you make %70K a year. There is a lot more to buying a home than the P&I payment. You have to factor in property taxes and insurance which will rise every few years. Then there is upkeep. Plus carpayments and the general everyday bills we all have. You don't make nearly enough money to buy a $240K house with 100% financing.
keepmine, Thanks for the advice. As far as the 10%, I saw other posters with scores less than mine getting lower rates but those might have been FHA rates vs conventional. As far as not making enough income, basically my car is paid for and I just have a small student loan payment as my only debt (no CC's) so I believe the income is available. The thing that I'm scared of is if I decided to go through with the deal and try to refinance a year later, the home's value might depreciate and you know what that means. It's a brand new home-- just built last fall but I don't know how the property values go up and down and I sure wouldn't want to get stuck with this interest rate because of the house being appraised at $20K or 30K less than the current selling price. See what I'm saying? I'm working with a realtor (buyer's agent) and a loan officer but you never know if they are really looking out for my best interest. Especially as a first time home buyer.
edoggie, Would it be possible just to hold off on purchasing something until that repo falls off your reports? In 2000 my husband and I got a subprime mortgage through Citifinancial. 12% interest-ouch! We also had to take a 2nd mortgage out from the seller so that we could have a 5% down payment. Eventually, we ended up having to do a "short sale" to get out of the house before it was foreclosed. Paid $80,000 for a house that was actually worth $35,000. Needless to say, I am not a big supporter of subprime loans. If they can find a way to screw you, they will. Granted, if you get into the house you can always try to refi later. Then I would suggest getting 2 appraisals- one from whomever the broker hires and one person who's not in anyone's pocket. Our appraiser lied and valued our house at $85,000. Just be careful- getting upside down in a house with a 10% loan could kill you financially.
Have you been to a Mortgage Broker? I have to believe there is a better rate then 10% and 2 points out there for you. If you are dealing with the in house loan company that could be the reason for the overcharge. Good luck.
Hi, I'm in the same income bracket as you with no car payment as well. I have monthly student loan payment. I personally would never even consider a $240k loan!! I'm only considering a property between $100k and $150k tops. There are several mortgage and affordability calculators on the web which tell you how much you can afford. Try the tools/calculator portion of the kiplinger.com web site. That's probably why they're offering you that ridiculous interest rate. Reconsider and good luck!!
smontoya, WOW! That IS a horror story. How could that appraisal be so inflated! It seems like it's best to hire an independant appraiser. You never know who's trying to screw you. To address some of the other replies, which I do appreciate, remember everybody's situation is different. In NJ, where I rent, the apartment cost are the same as a mortgage would be -- no I'm not kidding. I have a family and for us to get a 3 BR apartment which is NOT near a drug/crime infested area would cost about $1700 - $2000 a month. What sucks is rent is not tax deductible as we all know. At least with a house you can deduct all this interest on your taxes. As far as buying a house in NJ, with 200K best you can get is something with a small front yard, it's about 20-50 years old, not that attractive on the outside, no central air, and is tiny overall. To add to the expense, expect about a $4000/yr car insurance note for one driver with a clean record on a late model car. Anyway, that's what I'm look at. I'm migrating to PA for whatever house I decide on. It's just the financing has to be honest and competitive which is why I'm asking all of you who had credit problems was this normal. Remember, FHA, does not apply to my situation so keep that in mind. The limits are SO low that I had to go conventional. Thanks again for eer comment thus far.
pnwman, Remember that this is a no money down loan (100%) for someone with low 600 scores and a repo. I guess you have to account for that. I'm not defending this lender either, I just want to make sure that this is not predatory lending for my status. If the FHA limits kept up with the current housing market, I wouldn't even have any of these problems and would have a 5-6% interest loan but that's not the case.
edoggie, Yeah- my husband and I really took a hit on that one. Our agent worked as a "dual agent" representing both us and the seller. After the fact, we found out they were buddies. They lied about the age of the roof, condition of the electrical wiring, subflooring, hardwood floors under carpets, fireplace, plumbing, the fact that the basement flooded, etc. We were SOOO stupid! Didn't get the house inspected and took everything for their word. Whereabouts in PA are you looking? One of my friend's is a realtor out there for Remax. I can ask him to keep an eye out for new listings in your price range if you'd like.
smontoya, Well luckily, this house is brand new I'm looking at so I don't think I'll have quite the same devestation you experienced. My buyer's agent says that on new homes, they are almost always appraised close to the sale price because the builder have all documentation of what they paid out to have it built etc... I'm STILL gonna have a separate appraiser from who the bank hires. That must be the worse thing that can happen. You buy a home and find out it's only worth 1/2 of what you originally paid for it. I hear this happen a lot. The real estate agent did a market analysis of the area and he stated the property values have been going up in this area so that sorta eased my concerns but not totally. They could just be saying this to get their cut of the deal at closing. I don't totally trust anyone.
I just wonder if you are buying in an area with a very large difference in housing prices that affects the mean prices. Usually FHA guidelines allow lending values at some sort of mean or average price in a county. I recall a year or so ago someone on the Motley Fool got an FHA mortgage in CT for something in the $280K range. That is a concern owning a new home in a top end area and prices dip. A great article on an example of this in the business section of the www.ajc.com and scroll down and on the right they have an article about the housing mkt in ALpharetta, GA. An upscale subburb of Atlanta.
I'm in CA and 10% with no money down and those scores is normal for my area. Check and see if there is a prepayment penalty. This is a trick a lot of subprime lenders do because they know you'll refi once the scores get higher.
bigmon, Thank you for that information. Do you know what the prepayment penalties usually range from ? Is it normally a fixed figure or is it a percentage of the sales price. Basically, what's the "norm" prepayment penalty amount from honest subprime lenders.
OK. I am probably missing something here, but have you been to a mortgage broker? They are experts in getting you the best deal possible. A consult with them will cost you nothing. If you take your CR with you there is no reason they would need to pull an iquiry. You may want to check with FLA-tan, but I think this is the first step.
