Is this a good mortgage deal? Update

G

GatorDave

500+ Posts
So I just put a contract in on a house, and am now going through the lending side of things. I'm doing 15% down and using a second loan to avoid PMI. The rate on the primary loan is 6.125% and the second is at 8.05%. I have excellent credit (almost 800), no long-term debt, have a steady well-paying job, and am pretty much the safest borrower they could ask for. So I ask, do these rates seem high? I know they fluctuate daily, but they haven't been over 5.8% on average in a while. According to bankrate.com, the national average on a 30-year fixed this morning is 5.68%, and it's been hovering right around 5.6 to 5.7 for the last few business days. Just for comparison, if I had put 20% down, the rate would be a flat 6%. The house is in Frisco (TX), Denton County, if that makes much difference.

UPDATE:
So on the advice of Hornfans, I shopped around and got quotes for much better rates. I then went back to my original guy, and in a polite and civil manner, I explained the situation. He was extremely nice about it, said he understood that I had to do what was best for me, and asked me to give him the rest of the day to try and match the best quote. He calls me back within a few hours and matches the absolute lowest quote I had been given (5.625% on 20% down, very niiiice).

It's a win-win in that I got the very best deal I could, and I also get to stick with a guy I trust and have met face-to-face, instead of some anonymous person selling me a mortgage over the internet.

So thanks Hornfans for telling me to man up.
 
that seems AWFULLY high especially putting 15% down with those scores you have. The only thing I can think of that might be causing the rate jump is due to how many foreclosures there have been in the area (just an assumption on the Frisco 'life style', could be way off base). And even then, thats just a guess as to why its so different.

My uncle just refi'd his house in firewheel/garland area, 15 yr mortgage at 4.8% interest with closing costs rolled into the note. I would give a different lender a call and see what tehy can do for you... if you need one, I have a few guys that are pretty solid.
 
That sounds high to me. If Bank Rate says the AVERAGE is 5.8%, why would you go ANY higher than that? I would expect to be BELOW the average. Maybe that's just me.

Why pay a 1% origination fee? That sounds high too.
I assume we're talking about a 30-year fixed rate?
Are you putting anything down? Maybe that's the problem.
What's the breakdown on the $5,300 in closing costs?

As I posted on just about every other mortgage related thread, you MUST shop around. A loan broker gets paid more when he sells you on a higher rate. Your mortgage broker's interests are diametrically opposed to your's. The only thing that's going to keep him honest if the threat of losing the deal all together.

Bernard
 
With those closing costs, it is a horrible mortgage.

Get an mortgage from ING Direct. 5.25% for 5/1 ARM (and 5.625 for a 7/1 ARM) for a non-jumbo loan. 20% down required. $695 to $895 closing costs (they no longer guarantee this on their web site, but you can ask -- they used to guarantee this previously). no points. no ******** fees. no escrow for taxes or HOA. they trust you with the huge mortgage, they trust you with the taxes/fees.

since, you are putting down 15%, and the reduction in closing costs, you might be able to make it very close to 20%. so think about it.
 
sounds high. also, with 15% down you are only borrowing 85% and you say there is a second lien. is that an 80 and a 5? if so, that's a very strange way to do things. what's the size of the loans? can you not find that extra 5% to put down and avoid the 2nd all together?

are you waiving escrows? that would bump the rate by .25%.

with your scores, you can do better.

use mortgage101.com to find average rates for different loan types in different parts of the country.

keep in mind that with your scores, the approval process should be 5 minutes long and you should probably only have to document that you are currently employed, and proof of your cash to close. so its an easy loan to do, and many loan officers will do it on the cheap if you make them since its almost no effort.

Your current guy is making 1 point on the front which is being paid by the seller. That should be enough for him unless you are buying a $100,000 home or less. He needs to get that rate down closer to par.
 
Yes, it's been a long debate for me going back and forth between 20% and 15% down. I have the 20%, I just think it might stretch me a little more than I'm comfortable with.

And yes, I'm waiving the escrows, but he's not charging me for that. If I understand it correctly, waiving escrow just adds .25 to the initial points, not to the rate. There's also no pre-payment penalties. Does this make it any better?
 
You really have two transactions here.

Primary Loan is 80% - nothing else to debate about that - you should get the best rate possible with your credit score and income. PERIOD. Make sure you are not overpaying for origination.

Second loan of 5% is completely a separate transaction from the first loan and should not come into any decisions about what your primary rate is. Of course you have to disclose it but ask them if it would make a difference in your primary rate if all 20% was out of pocket or if it was 10-10 or 15-5 and I'll bet it doesn't change. [Edit: I re-read your post and it does change
wtf.gif
] The only thing the value of your secondary loan should affect is the terms of your secondary loan; it should have no bearing on the primary loan except your debt ratio and whether you qualify.
Of course you are going to pay a higher rate on the secondary loan - 2% is probably reasonable - What is the term? You can get a lower rate with a shorter term.

How long are you going to live there?

General Advice-
Avoid the ARMs - I doubt rates will go down enough in 5 or 7 years to make you want to refinance and locking in rates now gives you the flexibility to stay there as long as you want in the rates we have now. If they do go down enough to make refinancing a smart move you can still do it.
 
The term on the second loan is 15-year fixed. I plan to be in the house a minimum of 5 years, probably longer. I rushed into this loan thing because we got into a competing contract situation on the house and I wanted to make sure everything was lined up, so I went with the first rec I got from my fiance's mom. Now that I've had time to catch my breath, I realize I'm not getting the best deal.

The problem is this: I've already met with the mortgage guy and signed a stack of papers probably 20 pages deep, but I believe it was just application stuff. At what point am I legally committed to stick with this guy? Is it too late to back out? Can he charge me fines/fees for backing out now? The closing date isn't until April 28th. I haven't cut him any checks for fees or anything else at this point.
 
don't do it. that's way too high.

shop around at as many lenders as possible. they will all pull your credit score but you get a 2 week window where they can pull it as many times as they want and it won't affect your score.

avoid ARMs at all cost. with rates this low scoring a fixed-rate for 15 or 30 years will be seen as a steal 5-10 years from now.


i honestly think you can get a loan for about 5.5 w/ no points if you shop hard enough.
 
sorry, wasn't trying to be an ******* and probably should have left out the foreclosure comment. i'm not doubting that you can cover the monthlies, just saying that i hope you didn't sign some sort of exclusive agreement with this broker when you ok'ed 20 pages that you are unsure about.
 
What are your loan sizes? That has a lot to do with the rate as well as the combined loan to value. Also, how long your rate is locked in. Yes, your credit score should get you the best rates. The rate you have been quoted is NOT a bad rate but it doesn't hurt to get some other quotes, especially if you haven't paid anyone any money which you might forfeit. I started in the mortgage business in January of 1973 and I still love it although it is not a lot of fun in this credit environment. If I can help you with a competitive quote or just answer some questions, please feel free to email or call. My email address is [email protected] and my toll free number is 800-210-8040. Brooks Hiller.
 
You should not be paying any more than 5.75 if you are going to pay a 1% origination fee.

You are getting screwed. The good news is you are not obligated to do this loan- he can't do anything if you bail.

I'd get out yesterday. If all your stuff is as you said you are paying way too much in closing costs and too high in the rate.

I would not waive escrows were I you, but that's just a personal preference.

Everybody tells me that they are disciplined enough to put the money aside. Then I see something like 35% of them refinancing b/c they can't pay their taxes. You aren't going to make but a hundred bucks or something putting that money into a money market account- if you are actually one of the few disciplined enough to put it away- so why bother waiving escrows, paying the quarter point (here's a hint- even if it isn't charged on the hud you are still paying it- just indirectly by ending up with a higher interest rate then you ohterwise should.)

Feel free to pm me if you have any questions- I'm a title attorney that does this every day, and I'd absolutely help you out- no charge.
 
I think that is high. I got a customer a blended rate of around 6.25% for a jumbo loan last week. The first was at 6.125% and the second was at 6.65% without points and closing costs of around $1,000. The loan to value was around 50%. FYI, this was through the mortgage side of my company and I am on the commercial side.
 
Dang man, you're pretty adamant about this mortgage thing. You must have gotten burned in the past. I appreciate you looking out though.

I'm someone that's usually extremely skeptical of anybody that's trying to sell me something, be it a car, mortgage, or a t-shirt. I'm not gullible and don't fall for the basic nice-guy routine. I'm not saying I would trust the guy with my first born, but I do know that he gave me rates that were posted by his bank that day, I saw them. He wasn't out on a mission to screw people over. I didn't have to threaten to leave or anything. When I told him I didn't think they were being competitive, he got right to work on it, no questions asked.
 
The thing is, the bank isn't posting its best rates. That's OK -- I don't see this as so much of a screw job as just a business negotiation -- but it's true that the mortgage broker's best interests are not aligned with your own.
 
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