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Profile picture for abatt1

Is 2.5 points for a 353,000.00 loan and a interest rate at 4.5 to high?

My loan is for 353K.  I was quoted 4.5% interest rate w/ 2.5 points. No orig fee. Credit scores 750 - 720. House appr. for 440,000.00.  Is this to high ? What is the going rate for this type of loan? It is about 81% ltv. 
  • May 17 2009 - US
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Answers (11)

Profile picture for oldskoolballr
Who would structure this loan at $353k when you lower the loan amound by $1000 and you are no longer above 80%? 
  • May 18 2009
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With those scores, you should only need to pay 1/2 point to get down to 4.5% unless this is a multi-family home or it is an investment property.  Post your request ID so that we can see why you are getting such high offers.
  • May 18 2009
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5.5% with no points is too high, too.  5% with 0 points and origination is better than paying 2.5 points as a few posters mentioned, but its best to sit down with an LO and discuss the options.

How many quotes did you get from Zillow?  If the quotes aren't working for you, you may need to make some calls to local companies.

I would also consider getting that LTV down to 80% and going conventional.  You can bring money to close to get your LTV to 80%.  Is there a reason you can't go conventional?
  • May 18 2009
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Profile picture for abatt1
Zillow is offering in the 5% and higher. The lender is also offering 5.5% no points and no orig. 
  • May 18 2009
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Brad, why would they do it if they could go to 20 other lenders and get that same great rate and pay a point less? 

abatt, fill out a Zillow request.  Rates could move until your loan is locked, so be prepared to locked if you get what you are looking for.  Make sure you get everything in writing, too. 
  • May 18 2009
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As a mortgage broker for over twelve years this interest rate is great!  The points being 2.5 may be a tad on the high side but I suspect this loan officer is buying down the rate if no "lock in" was made.  He or she has the wiggle room they need with the 2.5 pts on the loan. If rates should drop further they may use this to be competitive.  I like it - just do it!
  • May 18 2009
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2.5% or $8,825.00 in your case, yes that is too high unless that includes all of your closing cost which I doubt..That is an additional $141.11 every month for the next five years or more conservatively $122.60 for 7 years. That increases your apr significantly.Look at it this way, lets say you didn't buy down the rate... If you took a higer rate of 5% with no points your P&I payment would be $1895. at 4.5% your P&I payment woud be $1788. That is only $107 a month difference. It is costing you  more than you are saving.  4.875% with 1 pt or 5% with no points is fairly standard now.

I was just laughing at the Ditech commercial this morning that offered 4.375 with 3.125% buydown. What are these people thinking?

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  • May 18 2009
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Profile picture for abatt1
So how many points should I be paying?
  • May 18 2009
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Just thought I'd add in one more YES, so there was no confusion!
  • May 17 2009
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Profile picture for John Paunan
As further reassurance, oh yeah, those fees are high.  Almost $9k in points...that will take a looong time to recoup.
  • May 17 2009
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Yes, those points seem high with your scores.  I would put in a loan request on Zillow.com and you will get multiple quotes.  Good luck.
  • May 17 2009
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