Financing in 08205>Question Details

George, Home Buyer in New Jersey

My question is how is he able to get that low when bankrate.com is showing the rates at 5.18%?

Asked by George, New Jersey Wed Mar 11, 2009

We have an FHA loan on our first home that we bought in February 2008 (just a little too early, missed the $7500 tax credit/loan; would have REALLY helped out!).

Our rate is at 6% and our broker has contacted us and let us know that we can do a streamline refi and lock us in at 5%.

My question is how is he able to get that low when bankrate.com is showing the rates at 5.18%?

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Although there are several reasons for why your broker might have been able to get that low rate (eg his relationships with specific lenders, new lending programs, etc), the actual reason why is probably less of your concern. Just know that some lenders are willing to refinance at lower rates than they'd be willing to lend for new financing (which could be another reason why).

Besides, whether you're able to lock in 5.0% or 5.18% . . . both rates are considerably lower than 6%.
2 votes Thank Flag Link Wed Mar 11, 2009
Hi George,

I don't have an exact answer for you but rates have been around 5%. One way that the bank may be lowering the rate is by charging points to buy down the rate. A point is 1% of your loan amount. By paying extra points now you can lower your rate to even less than 5%. I had a client purchase a home last month with a 4.675% rate. Ask your broker why the rate is 5% but it could mean that you paying points.

Best wishes,

Matt
Web Reference: http://havilandgroup.net
1 vote Thank Flag Link Wed Mar 11, 2009
Best thing to do when you live in South Jersey is go to http://www.sjrates.com and compare mortgage rates in minutes at real banks and credit unions found only in south jersey.
Web Reference: http://www.sjrates.com
0 votes Thank Flag Link Wed Sep 9, 2009
Best thing to do is shop around first.
Web Reference: http://www.fhaloanagent.com
0 votes Thank Flag Link Fri Mar 13, 2009
Note - if you must put down a point - then there's a break even for doing so - which is somewhere around 7 years I think - so consider if paying points makes sense for you.
0 votes Thank Flag Link Fri Mar 13, 2009
Thank you, Matthew and DP2, I really appreciate your quick responses and info. I was worried that there might be something shady going on but I do understand the points situation, so feel better.

I really appreciate it!
0 votes Thank Flag Link Wed Mar 11, 2009
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