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Am I getting a reasonable deal on this mortgage?

I'm a first time home buyer with a 704 median credit score.  I"m buying a $346k house, 5% down, my DTI is around 44%.  The place I'm going through is offering me a 3% rate on a 5/1 ARM, with a 3.6% APR, and charging about $2100 in closing costs.  The lender told me if my credit score was above 720 or 740, I could get a 2.875 or 2.75% rate. However, when I look at mortgage rates for Wells Fargo, Bank of America, etc,, they are offering 5/1 arms with 2.25% rates, 3% APR.  I understand the 2.25% rates are for people with great credit, but their rates and APRs still seem alot lower than the place I'm going through.  My lender says that I should only look at APR when comparing, and that the places with very low rates usually have higher closing costs that are reflected in the APR. Am I getting a reasonable deal with what my lender is offering?
  • August 30 2012 - US
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Answers (2)

Erin is right... The only way to compare is to actually get a quote from BofA and WF. There may be a couple of  reasons for the difference in rate.
- The rate you might be seeing for BofA and WF may be reserved for 80% LTV clients. When I look at the add-on for at your LTV the difference between the two fico scores is .500% discount. That's a .125% difference in rate.
- Some lenders may not be as aggressive on ARM pricing
or
- Like Erin said...1% orig on top.

Shop a Mortgage Bank that can meet your timeline.

ID

  • August 31 2012
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Wells Fargo of B of A maybe offering those rates based on a 720 FICO score with 1 point origination.   The difference between the Wells and B of A is the time it takes to close your loan.   Check to see how long it will take.  If they can close in time to meet the close of Escrow date and you want to pay the point it is a good deal.   Other lenders can close quicker and with lowers fees.

Good Luck!

Erin,
  • August 30 2012
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