I just got off the phone with my mortgage finance guy, and I'd say what he told me was both good and bad news. First the bad -- it will be a 9.5 percent fixed for three years and then we refinance (*can anyone tell me more about what kind of loan this is? not really an ARM it doesn't seem, but maybe it is?) its for $170,000 with no money down. This is making my payments about $400 more than I want them to be. I can afford it, but you know, I'd like to pay as little as I can. Now the good -- we are not bound into this. We want to build a home, so for the next five months while they build the house, I can continue to improve our credit scores. They'll do the financing for real at the end, and hopefully by then, our scores will be in better shape to get better terms. Oh, and according to the scores he ran this week, mid-scores are 561 and 580 for me and my DH. (pretty low, huh? urgh. and that's after six months of work on them!) So for all you mortgage gurus out there, I am seeking some impartial advice. Please bear in mind that this would be our first home. -- * should I ask him to shop it around more and see if he can't get a better rate? From my credit reports, I see that he pulled the reports, and then this lender pulled them ... no one else. Its important that I go through this loan officer, however, since there are about $11,000 worth of incentives tied to using the builder's company. (Please spare me all the rhetoric about the builder and the financer in bed together ... the bottom line is the builder says we use this guy, we get the bonuses. So I'm using the guy.) * what should I ask him to look for specifically? FHA loans are limited to about $155,000 in my county and the home we are considering is about $165,000 -- so I don't think that would work, or would it? What is an 80/20 loan all about? * I have been somewhat successful with our credit repair so far. gotten about 20 derogs off ... but they were all kind of old, which is probably is the reason the score hasn't improved so much. I have two HUGE disputes right now that will probably change the score significantly (settlements that were not honored and derogs are still being reported ... i'll probably have to go to court with Cap1 on this). It is realistic to think it can improve enough in the next four to five months to get a significant rate change? There are no judgements, repos, etc., justa few random late pays and a couple of chargeoffs (less than $1,000) that were handled by the afore mentioned settlements. Any advice in general? I knew we'd pay more than prime (prime is 4.5 through our builder's lender) but I didn't expect this much ... I guess I just convinced myself it would work out somehow. Should I be happy that we are approved and can start building and look at the next five months as a great opportunity to improve our situation even more? But if it doesn't improve, I'm stuck with that lousy rate. Please, someone, help me put all this in persepctive. thanking in advance. peace, delilah
So for all you mortgage gurus out there, I am seeking some impartial advice. Please bear in mind that this would be our first home. -- * should I ask him to shop it around more and see if he can't get a better rate? From my credit reports, I see that he pulled the reports, and then this lender pulled them ... no one else. Its important that I go through this loan officer, however, since there are about $11,000 worth of incentives tied to using the builder's company. (Please spare me all the rhetoric about the builder and the financer in bed together ... the bottom line is the builder says we use this guy, we get the bonuses. So I'm using the guy.) If you want us to "spare you" good advice, why are you posting a question here? If the builder says you don't have a choice on who to use for a lender, he's breaking the law. Don't be so quick to jump into a deal if it's not within your budget. Shop around for a better rate elsewhere. Remember, those $11,000 in "incentives" aren't free... you're paying for them in your higher monthly payment. Sounds like you need to get a claculator out and see what the difference is between a 6% mortgage and a 9.5% mortgage on a $170,000 loan. Hint: If you're patient and get a 6% mortgage, you'll have paid for those incentives in 3 years. Over the life of the loan, you'll have saved about $50,000. Do you want to work $50,000 worth of hours at your job to make your lender rich? Or, do you have patience? Besides, I bet that if you look close at that $11,000 in incentives, you'll find that you could do/buy them yourself for much less money later. * what should I ask him to look for specifically? FHA loans are limited to about $155,000 in my county and the home we are considering is about $165,000 -- so I don't think that would work, or would it? What is an 80/20 loan all about? A better lender. Maybe you should look for a $155,000 house when your credit improves? An 80/20 loan is simply an 80% mortgage and a 20% mortgage = 100% of the home's value. It is done to avoid paying mortgage insurance. The 20% mortgage will have a higher interest rate. * I have been somewhat successful with our credit repair so far. gotten about 20 derogs off ... but they were all kind of old, which is probably is the reason the score hasn't improved so much. I have two HUGE disputes right now that will probably change the score significantly (settlements that were not honored and derogs are still being reported ... i'll probably have to go to court with Cap1 on this). It is realistic to think it can improve enough in the next four to five months to get a significant rate change? There are no judgements, repos, etc., justa few random late pays and a couple of chargeoffs (less than $1,000) that were handled by the afore mentioned settlements. You're putting the cart before the horse. You don't need to go house shopping until your credit scores are above 620. Trying to buy a house now is a $50,000 mistake. Can you afford such a mistake? Yes, you can clean up your credit in 5-6 months if you use the credit repair tips you pick up here and elsewhere. Doing so will save you a huge amount of money. Learn to be patient. Any advice in general? I knew we'd pay more than prime (prime is 4.5 through our builder's lender) but I didn't expect this much ... I guess I just convinced myself it would work out somehow. Yes, be patient. You cannot afford to pay an extra $400/month...no one can. You're just throwing away money in order to get what you want today. If you need to, rent an apartement for another year so you can fix your credit. It will save you money in the long run. You might also be able to save up some more money for a down payment. When your credit score is above 620, go talk to a mortgage broker who isn't in bed with the builder... Should I be happy that we are approved and can start building and look at the next five months as a great opportunity to improve our situation even more? But if it doesn't improve, I'm stuck with that lousy rate. Should you be happy that the lender/builder are trying to rip you off? Hmmm.... Please, someone, help me put all this in persepctive. thanking in advance. You are welcome. peace, delilah [/B][/QUOTE]
hmmm ... maybe too much to digest in one post? fire away. If you think so, please tell me it would be a big mistake to get started building a house with these terms. am I rationalizing by thinking the credit score can only get better in five months and surely we won't actually finance at 9.5? peace, delilah
OK the rate is way too high for todays market. I have a guy with a lower score than you and I am getting him some thing in the 6's. I would shop around for a good 80/20 program. The blended rate should be in the 7's and look into FHA. Don't stop with one quote get at least three.
Re: Re: mortgage questions (long) Interest rates, unit prices and points don't matter. Didn't you get the memo?
Re: Re: Re: mortgage questions (long) We filed chapter 7 in Sept. '97, it was "converted" to a chapter 13. The "payment plan" was done, and then it was discharged in March 2001. That very fall (Oct. 2001) we re-financed with Wells Fargo from 8.375% (30 yr) down to a 6.125% (15 yr). (They were our existing mortgage company). We're now hoping to re-finance again almost 2 years later, and are "wishing" for somewhere around 4.50-4.75% (by paying a point or two). My "His" scores as of two weeks ago, are 662, 642, & 644. We haven't ran "Her" scores yet. Maybe we're dreaming about getting a rate as low as 4.5-4.75%. We'll find out in the next few weeks.
