Posted on: 02nd Feb, 2010 04:56 pm
Hello, I am a first time buyer and dont know anything about loans.
I am seeking a loan for 140K house, FHA fixed 30yr, 3.5% down. I have 650 credit score.
I have a preapproval letter with a "Contract Interest Rate" of 5.25%. This rate seems higher than what I see online at lending tree and such, is this because of my low credit score? Is this a fair rate?
Also regarding "points", and other lender/broker fees; what should I look out for - and what is fair? I dont see anything about points, but I see the following fees listed:
Pay to mortgage broker: 400.00
Pay to bank lender: 700.00
Thanks! :o
I am seeking a loan for 140K house, FHA fixed 30yr, 3.5% down. I have 650 credit score.
I have a preapproval letter with a "Contract Interest Rate" of 5.25%. This rate seems higher than what I see online at lending tree and such, is this because of my low credit score? Is this a fair rate?
Also regarding "points", and other lender/broker fees; what should I look out for - and what is fair? I dont see anything about points, but I see the following fees listed:
Pay to mortgage broker: 400.00
Pay to bank lender: 700.00
Thanks! :o
Hi konaluke,
If there are too much of negative items on your credit report, there are chances that the lender may charge you a high interest rate. You should speak to your lender and ask him to clarify as to why you are being charged a high interest rate.
As far as points are concerned, if you pay those points, it will help you in reducing your interest rates to some extent. It is a fee equal to 1% of your loan amount. To know more about points, check out the given page:
http://www.mortgagefit.com/know-how/points.html
If there are too much of negative items on your credit report, there are chances that the lender may charge you a high interest rate. You should speak to your lender and ask him to clarify as to why you are being charged a high interest rate.
As far as points are concerned, if you pay those points, it will help you in reducing your interest rates to some extent. It is a fee equal to 1% of your loan amount. To know more about points, check out the given page:
http://www.mortgagefit.com/know-how/points.html
5.25 is not a high rate by any stretch of the imagination. You have adequate credit, putting a minimal down payment. I believe you received a pretty good offer. Rates posted on sites and advertisements are not always what they seem. If you're comfortable with your loan officer and his ability get your loan closed, I'd suggest to continue on.
5.25 is not a high rate by any stretch of the imagination. You have adequate credit, putting a minimal down payment. I believe you received a pretty good offer. Rates posted on sites and advertisements are not always what they seem. If you're comfortable with your loan officer and his ability get your loan closed, I'd suggest to continue on.