|
Posted by Ed on February 13, 2006, 4:09 pm
Please log in for more thread options
Needing Expert Opinion...
I currently own a house, with 1st mortgage at fixed rate, a 2nd
Mortgage (HELOC)
and few credit cards and car loans.
How does the debt to income ratio and credit score impact/affects the
rates you're going to get from prospective LENDERS ?
My house have earn a little bit of equity after 5yrs.
I'm having difficulty finding a good rate now a days with my fico at
mid 600s.
I'm trying to refinance to lower down my payments but still with the
rates I'm
getting this is far from reality.
Is a FEDERAL mandated table or guidelines to gauge/determine what
borrowers
will get from LENDERS ? -Or- Is this something "not regulated" by
Federal Law.
|
|
Posted by Jeff Strickland on February 15, 2006, 11:41 pm
Please log in for more thread options
> Needing Expert Opinion...
>
> I currently own a house, with 1st mortgage at fixed rate, a 2nd
> Mortgage (HELOC)
> and few credit cards and car loans.
>
> How does the debt to income ratio and credit score impact/affects the
> rates you're going to get from prospective LENDERS ?
>
The Debt to Income (DTI) ratio has more to do with qualifying you for the
loan, it is not used to arrive at the rate you will get. Sorta. If your DTI
is too high to qualify, the loan officer may take you to another lender that
allows higher DTIs, and they may charge higher rates to cover the added
risk.
> My house have earn a little bit of equity after 5yrs.
> I'm having difficulty finding a good rate now a days with my fico at
> mid 600s.
>
> I'm trying to refinance to lower down my payments but still with the
> rates I'm
> getting this is far from reality.
>
> Is a FEDERAL mandated table or guidelines to gauge/determine what
> borrowers
> will get from LENDERS ? -Or- Is this something "not regulated" by
> Federal Law.
>
It is regulated, in a roundabout way. Fannie Mae (FNMA) is a government
agency that deals in the secondary market for mortgages. Here's how it
works. You go the the bank and get a loan. They put the package together
based on your qualifications. Once they close the loan, they have to service
it -- collect the payments each month. they might not be equipped to provide
this servicing, and/or they may not have the capital to fund the loan for 30
years and still service other borrowers. So, they sell the loan on the
secondary market. The buyers of these securities (mortgages are securities)
want to be assured that the loans they are buying will be repaid, so FNMA
establishes rules that lenders have to follow if they intend to sell the
loan on the secondary market. These rules are the lending guidelines that
make you think that your DTI is causing a high rate, but the reality is your
FICO is the main contributor to the rate shock you are experiencing.
If the bank has the money to allow your loan to remain on the books for 30
years, then they can work outside of FNMA guidelines. The banks that can do
this typically charge a higher rate because they tend to attract higher risk
borrowers.
|
|
Posted by Mstr Jack on February 22, 2006, 9:53 pm
Please log in for more thread options Ed,
To answer your last question first, there are Rules and regulations about
the maximum interest that can be charged without violating usury statutes,
but these are so they don't apply (think about how high some credit cards or
"in-store" financing options can be without violating those laws).
As far as what your interest rate will be with a FICO in the mid 600's, it
will depend on who your lender is, and where in the 600's your score falls.
For most banks or credit unions, if you're under 650 (and a lot of people
are) they will still do your loan, but the rate will not be their best. If
you're under 620, you will probably be turned down.
However, if you contact a Licensed Mortgage Broker, like Star Mortgage,
Inc., we have access to hundreds of wholesale lenders and a huge variety of
programs, plus we can even let you "buy down" the rate that you pay on some
of them. Basically, when you buy down the rate, you pay an additional fee to
your broker (1 point, or 1% for example) and the wholesale lender (who
doesn't have any dealing with clients until after closing) charges the
broker at closing, in order for you to have a lower rate on your mortgage.
Although it does vary somewhat, the buy down is usually at a about a 4/1
ratio. A 1% payment yields you a 1/4% drop in rate (say 6.75 to 6.5). So
break even on doing this is usually about 4-5 years. Without knowing your
credit scores from a tri-merge report, your 2 debt ratios, and the actual
loan to value of your house today, it's impossible to figure out exactly
what your best option is.
For instance, if your equity is high enough after 5 years, it may be
possible to refinance at 80%, pay all closing costs out of the loan, and pay
off a few other credit cards as well (which would lower your debt ratio, and
possibly get you a better rate). Right now, due to an unusual situation in
the bond market, fixed rate mortgages are actually running at or below
ARM's, and there are some great deals available through our wholesale
lenders.
Star Mortgage is a Florida Mortgage Broker, located in Tampa, and we
specilize in the state of Florida, although we do have programs available in
most states. I assume you are in the Tampa Bay area, since you're on this
newsgroup, and if you'd like to discuss some of your options, feel free to
give us a call at 813.882.8878, or visit our website at
www.starmortgagebroker.com. The consultation is free. No pressure and no
obligation, and if it turns out you'd like us to help you with your new
mortgage, we'll be available whenever you're ready.
Jack Pooley
Star Mortgage, Inc.
813.882.8878
http://www.starmortgagebroker.com
> Needing Expert Opinion...
>
> I currently own a house, with 1st mortgage at fixed rate, a 2nd
> Mortgage (HELOC)
> and few credit cards and car loans.
>
> How does the debt to income ratio and credit score impact/affects the
> rates you're going to get from prospective LENDERS ?
>
> My house have earn a little bit of equity after 5yrs.
> I'm having difficulty finding a good rate now a days with my fico at
> mid 600s.
>
> I'm trying to refinance to lower down my payments but still with the
> rates I'm
> getting this is far from reality.
>
> Is a FEDERAL mandated table or guidelines to gauge/determine what
> borrowers
> will get from LENDERS ? -Or- Is this something "not regulated" by
> Federal Law.
>
|
| Similar Threads | Posted | | Re: 100% mortgage financing for 500 FICO Score | January 21, 2007, 5:57 pm |
| 100% Mortgage Financing for 500 FICO Score | January 20, 2007, 6:38 pm |
| Are you looking for those low mortgage rates? | August 7, 2005, 4:16 pm |
| Better Credit, Better Rates | September 3, 2006, 8:32 pm |
| mtg tool? 1% under prevailing rates? | February 27, 2006, 6:33 pm |
| Is there a website that track Home Loan Interest Rates? | February 7, 2005, 8:30 am |
| Newbie Q about fixed interest rates and 20 yr amortization loan | March 22, 2007, 6:30 pm |
| Largest Mortgage Brokers List in USA,Calculators,Rates,Second Mortage,quotes,bad credit mortgages,Interest Only | August 30, 2005, 12:25 am |
| FIND the BEST MORTGAGE RATES,mortgage calculators,Second mortgage | September 10, 2005, 8:01 pm |
|
XML Sitemap