Is 6.75% fixed rate considered high? We're putting 5 percent down on a home that cost 195,900.?
I understand that the rates have been rising. But it just seems like our mortgage broker is trying to make more money off of us by giving a higher rate.
- ElizabethLv 71 decade agoBest Answer
How's your credit? We got a rate considerably lower than that with 5% down but our credit came back as outstanding. Your rate will vary based on that mostly - but do get a "Good Faith Estimate" which will show you exactly what you are paying for. Also, you can always get a competing quote.
- 1 decade ago
Ask for your GFE (Good Faith Estimate). When you receive it, look for PYA, or YSP (premium yield adjustment, or yield spread premium) being paid to the broker. This would indicate that the broker is receiving money from the lender in order to charge you a higher rate. You can also ask your broker point blank if he is quoting you a "par rate". A par rate is the rate you would pay without the broker making any fees from the lender.
In my opinion, brokers should only charge the lender (thus giving you a higher rate) if you aren't able to pay them anything on the front (meaning an origination fee). It is greedy for them to charge on both the front and the back (getting paid from you AND the lender). In some instances, the broker isn't required to disclose fees paid by the lender until closing, as the laws vary by state and depending on the type of license he has so I would definetly discuss this with him. If he acts at all uncomfortable, then you know you move on! It's always a good idea to shop around.
As far as 6.75% I can't determine if that is too high or not because it depends on your credit score, debt to income ratio, and even the type of home you are buying. For instance, if the home is a condo, multi unit, or non-owner occupied the rate could be priced higher. It's best to have him breakdown how that rate was determined.
- 4 years ago
Putting 10% down is still better than putting 0% down. However, you may not get a break on the rate the way you would if you put 20% down. The only benefit you'll get in the fees will be based on those fees that are a % of the loan amount, so the lower the loan size, the lower those costs (typically the origination fee, title fee). All other fees are usually set costs, regardless of the loan size (appraisal fee, credit report fee). The biggest difference you'll see when putting 10% down instead of 20% is the presense of mortgage insurance. Unless you're doing an 80/10/10 you will have to pay PMI (private mortgage insurance) monthly because you had less than a 20% down payment. The cost of PMI is directly related to the loan size and credit score. Your lender can help you determine what this would cost monthly.
- Dale HLv 41 decade ago
It depends on a lot of things. Are you paying origination or discount points? What are your scores? If they are > 720 there are no new delivery fees but if they are < 720 adjustments apply.
FICO Score >60 to <=70% >70%
>=680 to <720 0.500 0.500
>=660 to <680 0.500 1.250
>=640 to <660 0.500 1.750
>=620 to <640 0.750 2.500
< 620 0.750 2.750
These are fees charged by the agencies. What they mean is higher rates or higher closing costs if your score are < 720.
If you are being affected by these adjustments, I would consider an FHA loan. 1). you can put less money down 2). the MIP factor will be less than conventional PMI 3). these adjusters do not apply (they only apply to FNMA or FHLMC loans). 4). FHA is not affected by declining markets.
I could do a conventional purchase at 95% with scores > 720 with closing costs of about $600 @ 6.25% in my market assuming we don't have a declining market problem.
If you feel like you should be getting a better rate, shop it and let the broker know you are shopping it. I would rather make 50% of something rather than 100% of nothing and I bet they would, too.
Good luck.Source(s): 7 years mortgage lending experience.
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- efflandtLv 71 decade ago
When I bought my home in 2002 my interest rate was 7% with 20% down through a local state bank. I refi'd for a lower fixed rate down to 20 years in early 2005 (knocking 7 yrs and $62,000 of interest off of my payments) for an extra $30/month.
But in these times of foreclosures, 6.75% probably is not bad for only 5% down, depending upon your credit score. With excellent credit score and 20% down it might be a percent lower. Avoid a prepayment penalty if possible in case you can refi a few years down the road when your have some payment history. Although, interest rates may not go much lower than they are now.
- 1 decade ago
Ditch him man. Or do a deal with him that you'll refer friends to him if he proves that he can give you a good cheap interest rate. He'll see dollar signs. He's in it for the commission yes, so play to his liking and you'll both win.
- bailie28Lv 71 decade ago
its not bad but it seems kinda high..especially right now when its supposed to be a buyers market..call around see what others would offer..you dont have to go with them...
- Anonymous1 decade ago
what is your credit score? that's what drives the rate more than anything