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Approved for $400,000 at 4.2% interest with 20% down...is this good?

The last post in this topic was posted 1361 days ago. 

 

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Hello,

 

I started a new thread at the suggestion of someone else.

 

My husband and I just got pre-approved for $$400,000 at 4.2% interest with 20% down. My husbands scores had the lower mid score at 754 so it's based on that.

 

We both have "clean" credit (or so we thought, explanation below) after years of working on Creditboards.
We have no collections, no judgements, no hard pulls, etc.

 

My husband has like three ccs with less than $100 on each with high available credit on each. He has one 30, 60, and 90 day late from TD back in 2012 that they were supposed to remove, even wrote him a letter saying they would, but they never did, and guess what....he lost the letter! So there is his only ding.

 

Should he do the 0, 0, $2 balance to get a bump in his score?

The company we applied with can do a "refresh" if we improve our credit without another hard pull.

 

I, on the other hand, have $30,000 in student loans (never late), and two credit cards with 50% utilization. My mortgage scores were 767 EX, 759 TU, 758 EQ.

 

 

Are we getting a good deal?

 

 

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There are too many unknowns to say if it is a good deal or not -

 

We need to know what the costs are as well as the rate - the scores are good the down payment sufficient so you should get a decent price for a purchase -

 

Have you locked in the rate - how far along are you

 

I wouldnt worry about your scores or his - improving them at this point will do nothing for the rate - you are already at the top of the spectrum for scores (above 740)

 

B

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Hi, Brian

 

What costs do you mean other than the price of the house?

 

We are locked in but our guy can do a "refresh" in his system if we have improvements in our scores for any reason (won't be another hard pull).

 

The process, we just did a pre-approval (hard pull), and haven't fully started working with a realtor. We just started going to open houses and watching Trulia for the past year. We are ABOUT to hire a realtor and start looking.

 

Also, we have a pre-approval for $400,000 at 20% based on our max budget. Plus we only have 20% of 400,000 if we borrow from our 401ks from our company and pay back over 5 years. We have $70,000 in cash but the rest would be from our 401k.

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When you do a mortgage the rate is only part of the equation - there are also closing costs - those costs along with the rate determine if it is a good deal -

 

To truly answer your questions we need all of the info -

 

For example - if the rate comes with a 3k credit it is a lot different than if the bank is charging you 3k to get the rate -

 

When I asked if you were locked in I was asking about the rate - once in contract you will lock the rate - at that point you are locked in - meaning you have agreed to a rate/price with the bank

 

when comparing it is important that you look at both the rate and the costs (bank costs - there are other costs like title but those are not in the banks control)

and you need to do it on the same day as rates can and do change daily -

 

I hope this helps a little - it is all new so it may take asking a lot of questions for it all to start making sense

 

B

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Thanks, Brian!

 

My mortgage guy gets zero fees. There were fees, but they are waived because my husband and I are in healthcare.

 

He states to expect 3-4% in closing costs (ie. attorney, tax and title (in NJ). But stated that it will all be itemized when we go to close.

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Here is a sample of rate and cost options for a $400,000 loan from the same mortgage company.

 

To Brian's point, you may also be presented with options where you pay no closing costs and get an upfront credit. In that case, from the table below your interest rate would go up from here, and in return you'd get money back upfront.

 

They key to picking the best option is to calculate the sum of the upfront and the ongoing interest costs during the time you plan to have the mortgage.

 

IMG_0309_zpsx45ycbkn.jpeg

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Thanks, I do remember talk about lumping the closing costs into the loan.

 

Is your handy chart above current? I thought no one was getting below 4% as of today?

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Thanks, I do remember talk about lumping the closing costs into the loan.

 

Is your handy chart above current? I thought no one was getting below 4% as of today?

 

Yes, it's fresh. I generated it two minutes before I posted it.

 

Can you explain to me how the "in health care" fee waiver works? That's a new one to me.

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Thanks, I do remember talk about lumping the closing costs into the loan.

 

Is your handy chart above current? I thought no one was getting below 4% as of today?

 

Yes, it's fresh. I generated it two minutes before I posted it.

 

Can you explain to me how the "in health care" fee waiver works? That's a new one to me.

 

 

 

So you are saying that we could potentially get as low as 3.75% right now?! So then how is 4.2% good?

 

Sorry, I just thought that 4.2% was the low right now.

 

As far as the healthcare thing, I'm not sure but based on his company, they give discounts for people in certain industries. They waive the application and commitment fee.

 

The mortgage bank uses the Fanny Mae and Freddy Mac. Could this be why we got 4.2% and not a lower number?

 

Sorry to ask so many questions. :)

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Thanks, I do remember talk about lumping the closing costs into the loan.

 

Is your handy chart above current? I thought no one was getting below 4% as of today?

 

Yes, it's fresh. I generated it two minutes before I posted it.

 

Can you explain to me how the "in health care" fee waiver works? That's a new one to me.

 

 

 

So you are saying that we could potentially get as low as 3.75% right now?! So then how is 4.2% good?

 

Sorry, I just thought that 4.2% was the low right now.

 

As far as the healthcare thing, I'm not sure but based on his company, they give discounts for people in certain industries. They waive the application and commitment fee.

 

The mortgage bank uses the Fanny Mae and Freddy Mac. Could this be why we got 4.2% and not a lower number?

 

Sorry to ask so many questions. :)

 

 

As I said above, you need to weigh both the upfront and the ongoing costs of various options to know which will cost you the least in total.

 

Ask your mortgage company for a detailed, complete list of all costs and fees that go with the quoted (4.25%) rate and post the itemized list here. It's hard to comment further without more info.

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Ok I will try to explain the chart posted so you can better understand how things work - in the example pulled above at 4.25% there would be no cost to you - at 3.75% the costs would be over 10k (part of that is paying points to buy the rate down) - you need to decide when it is time to lock your rate if it is better for you to pay now and have a lower payment or pay less now and have a higher monthly payment -

When you are working with a bank you should receive something similar that shows your options - that is what I was referring to regarding rates and costs - they are associated -

The higher the rate the less you pay - the lower the rate the more you pay -

 

The numbers above illustrate this but are a little confusing because they dont show the points as a credit -

 

You really should get a ballpark in a similar format to decide what works best - a lower rate sounds great but if it costs 10k to obtain and you only shave say $50 or so off the monthly what makes more sense - that is where you will need to sit down and crunch the numbers - at some point it no longer makes sense to buy the rate down -

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The last post in this topic was posted 1361 days ago. 

 

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