On Friday rates dropped to 4.5% for FHA loans and 4.625 for Conventional with 0 points from many lenders as long as you had good credit. However working with lenders is painful. I found lenders from interest.com (owned by bankrate) and I started calling the ones with lowest fees. I actually started on Thursday when rates were an 8th of a point higher.
The first lender I called – Atlantic Mortgage and Funding had lender fees of only $195. I always compare everybody to quotes from aimloan.com, who provide their quotes online on one of the best designed websites for home loans. I would have gone with aimloan but their rates for high LTV loans were higher and they only do conventional.
My 4.625% has only a $195 lender fees and AIM’s has a lender fee of $1995.So
I am beating them by $1800. If you would like to try to lock in today please
give me a call and we will start the application process.
Come Friday when I actually started to apply, the fees had gone up to $663.
$675 is the listed lender fee. This includes Credit Report, Tax Service, and
Underwriting. They actually total $663.000.
Kimberly A. Jones
Toll Free: 866-443-9777
Basically this sounded like a lender taking advantage of the situation and trying to charge more because more people are applying. Anyway I called them to apply anyway because they were the cheapest on interest.com even after the fee hike but as I started applying I got some cock and bull story – “Interest rates are about to change now and we can’t originate any loans for the next 10-15 minutes. Can I call you back after that?” So I say fine and there is no call. When I call back, I get the story that interest rates have gone up 0.75%. Bullshit. Anyway, I check back on interest.com and I see that their fees have gone up to $995. Also on their GFE which they wouldn’t honor within the hour had title costs that totaled $1764, which is ridiculous. Maybe my mentioning that I want to use my own title company caused them to drop me as a customer? Maybe they get kickbacks?
The second lender I called, United Mutual Funding, was much better and more upfront about everything and I applied with them. Their total costs came out to be a little less than Atlantic and they pulled my credit report and I was all set. Or so I thought. I get an email some time later that they cannot do FHA loans in Virginia, only conventional. Crap. By the time I see that email, it is beyond 4:30 and I really want to get this done on Friday.
I am not going to be able to secure a FHA loan for you, unfortunately. I just learned that our FHA approval does not extend to Virginia properties. We are only able to originate FHA loans in FL. I will have your credit card reimbursed for the cost of the credit report.
I am terribly sorry about this. I can still offer you the conventional loan but I don’t think that is something you wanted. Please let me know.
So a quick visit to interest.com to find the next lender I can try and I find Everbank. I call them up because their website doesn’t list FHA rates, I ask what they are and it turns out that they are also at 4.5% (after I asked if they can do 4.5 with excellent credit, the original quote was 4.625), which I was able to lock. Also their fees turned out to be the lowest amongst all the above. They provide a rate lock for 30 days but the agent admitted that they cannot close within 30 days due to high volume but the first lock extension is free and they will close with that time.
Now I’m keeping my fingers crossed that our appraisal keeps our LTV below 97.5%. We’ve paid off 11% of our initial mortgage balance in the last 5 years but our county assessment has dropped 26% from it’s peak in 2006.
If you are also considering an FHA loan with high LTV, keep in mind that FHA charges an upfront Mortgage Insurance Premium of 2.25% (which is generally rolled into the loan, so your new balance will be higher than the previous one). Also whether you go FHA or conventional, you will have to pay monthly mortgage insurance. Since FHA charges the upfront MIP, the monthly payments are lower. They total about 0.5% of the original mortgage amount each month. With the conventional, the monthly payment for PMI (Private Mortgage Insurance) is higher, I’d say about 0.75% but there is no upfront fee.
Another thing to keep in mind is that with FHA, the Insurance stays for a minimum of five years. It can be dropped after five years when you reach 78% LTV. With Conventional, PMI can be dropped at any time as long as you reach 80% LTV. You have to get an appraisal and petition the mortgage company. Either way with a high LTV loan it takes a lot more than 5 years to reach that level unless you pay significant amounts of principal.