Newbie question on mortgage broker rates!
All, I'm a first time home buyer who has found a property. I'll sign
the contract forms today.
I'm not financially savvy and am looking for a mortgage. I'm planning
on putting a 10% down.
This is in central New Jersey (if that matters).
I'm totally confused by the different rates offered by lots of
companies out there.
How is is possible for them to quote a 5.5% rate on a 5/1 ARM when the
going market rate is 6.625%? I'm comparing 5/1 ARMs with 10% down and
zero points.
I'm being clear with them saying that I don't want ANY of the closing
costs bundled into the mortgage as I'm ready to pay all the closing
costs out of pocket.
What should I watch out for?
I' am a loan officer with a direct lender, but don't worry... I won't
answer your post with a solicitation!
A legit rate should fall in the neighborhood of 6.25% on a 5/1 ARM with
no points. Variances from this could be attributed to:
a) someone is misrepresenting their rate in order to lure you in, in
hopes that you won't cancel later when the numbers suddenly change
b) some rates are a higher because the lender or broker is trying to
make more money, on a "first-time buyer"
c) a mtg broker or lender has misunderstood your intentions of not
paying any points
d) you've encountered a crazy lender who wants to lose money
I would recommend that you get any quotes in writing and if you make an
application, scrutinize the Good Faith Estimate that they will send
you.
On a side note... You may want to consider an 80-10-10 structure to
avoid paying PMI (mortgage insurance). What this means is that you
should look at taking a primary mortgage of 80%, a secondary mortgage
of 10% and then your downpayment of the remaining 10%.