First Home Buyer/Mortgage

vmiller8 · Joined: 12 Feb 2008 Posts: 1 1.38 Dollars($)

I recently completed the initial application with a mortgage company of a home builder. Because my credit score is 656 or "fair" I was told I would likely qualify for an interest rate of 6.5. Then, after reviewing my info more in depth, I was told I would only qualify for rate of 7.375 due to not having a very extensive credit history. Any suggestions? Is this ever negotiable?

sara · Posted: Tue Feb 12, 2008 9:13 pm Post subject: RE: negotiate rates

Hi Vmiller,

The interest rate is negotiable to some extent depending upon your financial situation and the lender you are working with. The initial rate that the lender quoted was just a rough estimate. But perhaps when he reviewed your entire situation he felt it would be possible to sign a deal with a 7.375% rate. What I suggest is, apply for quotes with some more lenders and then compare the offers. You'll come to know which one is best for you.

Feel free to discuss the offers here. There are several lenders participating in this community. I'm sure they'd like to give you advice that works for you.

Take Care

gmakerley · Posted: Wed Feb 13, 2008 1:36 pm Post subject:

at the present time, with conforming loans (the most common), you are often penalized for a credit score that falls below 700. however, fha loans (which your builder may not be authorized to offer) bear no penalty for credit score. a 656 score such as yours would generate the same rate and fees as a 750 score or an 800 score. you ought to investigate the possibility of financing with an fha loan, as you would be able to reduce your monthly payment along with the interest rate, at lesser cost.

jeffselan · Posted: Sat Feb 16, 2008 1:53 pm Post subject: I would add.

GM was spot on. Only wanted to add, FHA is right around 5.825%. No points. Your lender might be overpricing your loan to make a little money on the front.

As GM and Sara stated, it might be wise to shop around.

charlesarmbruster · Posted: Wed Feb 20, 2008 1:00 pm Post subject:

A quality builder will use a battery of quality lenders with quality loan officers to work with the buyer/borrower. Normally, they work with low margins in order to be competitive.

Unless they are giving you a whole bunch of incentives and a bargain purchase price, you may be better off finding your own lender -- at a local bank or through a broker.

While interest rates are going up again, the increase on your quote may be taking in to account the amount of money you are putting down on the property, and not simply reflecting the current lending environment or your credit picture.

Communication with your loan officer is the best way to get to the bottom of your concerns -- I think everyone reading this thread would love to know what they have to say....please respond!

lisascherzer · Joined: 04 Jan 2008 Posts: 599 69.58 Dollars($)

Shop around, I am sure you can do better. Builders usually have limited resources and in most cases do not provide the most competitive terms.

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