Need advise on a mortgage quote, is 4% good?

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I got a quote from at 4% fixed for 15 years is this a good deal or not?

can anyone help me? I am buying first home and my mortgage broker quoted me a good faith estimate and everything is alot higher then he said. Loan is 100% financing no money down, credit score 695. Price $ 122,500.00. In Texas.I need payment around 780 not much higher but his closing costs are around $ 6200.00. This is really high for me. His origination fee is $ 1837.50. I am self employed but have tax returns and bank statements prifit loss statement. I just need to know if there is a better deal this is the first guy I went to and don’t have experience? please help
oh and by payment i mean just payment taxes will be $ 233.00 per month and insurance is $ 45.83 per month so that would be added to 780

  1. Reply
    February 3, 2011 at 4:13 am

    Well yes, but you have to consider points and fees. They can make the rate sound good but charge high points or origination fees or other things. Look at the total package. Yes that is a good rate.

  2. Reply
    February 3, 2011 at 4:46 am

    That is a super rate but do look in fine print for other charges and see if they are keeping a percentage of your pmt…make sure that in 10 years u could sell it for what it is worth and that u wont get screwed…my sister almost took low int mortg loan but she found out later that in 10 years she would not have been able to sell it for what it was worth because that loan company would be getting a percentage and she would have been screwed.

  3. Reply
    February 3, 2011 at 4:56 am

    Also check for pre-payment penalties and the ability to discontinue PMI payments once 20% equity is reached

  4. Reply
    February 3, 2011 at 5:27 am

    4% would be a great rate. Though it is way below PAR rate and there will be a reason why. That can be done with large fees in eitehr origination, points, or you are looking at an interest only, or option ARM loan (which are not always the best loans). Even if that is the case I can’t think of a loan program that would offer a 4% term FIXED for 15 years. Your lender is required by law to give you a GFE (Good Faith Estimate) and a Truth In Lending statement that will disclose all the fees to you. Have some other lenders or brokers compare that for you. Shopping for or comparing loans is very difficult unless you are comparing apples to apples, meaning the same loan. Otherwise you can end up with a whole different loan product whic hwill be priced very differently. The last thing I can say is there is a loan out there for everyone, though not every loan is for everyone. Many brokers will place you in a loan that is not right for you because they will make more money on it, or they will not have to work to get yuo in it etc… There is much moe to a loan than rate. Best of luck to you!

  5. Reply
    February 3, 2011 at 6:12 am

    This sounds like an “interest only” loan because that rate is too good to be for a traditional mortgage. Interest only loans are good under certain circumstances, like if you are only planning on staying in the home for a few years, or if you are in an up-and-coming neighborhood where property values are expected to rise a lot very quickly. You build no equity in the home and at the end of the loan, you don’t OWN the house— the bank still does!

    I would be very, very cautious and find out everything possible about this loan. It seems way too good to be true. And when a loan seems too good to be true, it usually is not true!

  6. Reply
    BOB F
    February 3, 2011 at 6:29 am

    The closing cost fee of $ 6200 seems high. Ask for a detailed breakdown of EACH cost.

    BOB F

  7. Reply
    Home Loan Guru
    February 3, 2011 at 7:06 am

    Those closing costs do seem a bit high. Ask for detailed breakdown. It sounds like you are also paying the $ 1,837.50 orgination fee on top of those. Is that included in the $ 6,000? If not, you seem to be paying a lot.

    My guess is that you have bought points to bring down your mortgage rate? You didn’t mention your rate, so I assume it’s good?

    A general rule of thumb is closing costs generally range from $ 2,500 to $ 5,000 or about six percent of your loan. So $ 6200 does fall in the six percent range, but just make sure all the costs add up and make sense. If your broker won’t provide a detailed explanation, something is strange.

    Here is a list of common closing costs. You can read more detail in the article I’ve linked below from Quicken Loans (where I work). I’ve included average amounts for each cost, but these can vary depending on where you live.

    Appraisal ($ 225 – $ 450)

    Credit Report ($ 15 – $ 30)

    Closing Fee ($ 150 – $ 400)

    Title Company Title Search or Exam Fee (varies)

    Survey Fee ($ 150 – $ 400)

    Flood Determination/Life of Loan Coverage ($ 19.50)

    Courier Fee ($ 30)

    Title Insurance (Lender’s Policy) (Varies – generally between $ 175 – $ 875)

    Title Insurance (Owner’s Policy) (Varies – generally between $ 175 – $ 875)

    Homeowners’ Insurance (Varies – $ 300 and up)

    Buyer’s Attorney Fee (Not required in all states – $ 400 and up)

    Lender’s Attorney Fee (Not required in all states – $ 150 – $ 500)

    Escrow Deposit for Property Taxes & Mortgage Insurance (Varies widely)

    Transfer Taxes (Varies widely by state & municipality)

    Recording Fees (Varies widely depending on municipality)

    Processing Fee ($ 575 – $ 1000)

    Underwriting Fee ($ 195 – $ 795)

    Loan Discount Points (Generally zero to two percent of loan amount)

    Pre–Paid Interest (Varies depending on loan amount, interest rate and time of month you close on your loan.)

    That pretty much covers it. Good luck with your mortgage and if you feel like you aren’t getting a fair deal, ask around for referrals to other mortgage professionals that your friends, family and other people your trust have used.

    Hope this helps!

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