Receive a high mortgage rate?

Asked by Michael, 06525 Thu Jul 2, 2009

I just had a closing. 20% down, no debt, credit scores as high as 840, I thought that I should had been eligible for the best going interest rate on a $128000, 30 yr. mortgage. May 1, my mortgage broker applied at providentfunding and locked in a rate of 4.875%. Provident turned me down, May 22, because they were picky, picky over the $6000 cash that I added to my savings, in Feb. Next, my broker went to franklinamerican. Mortgage rates skyrocked, and topped out the 2nd week of June. At that time, I asked my broker if he had locked in a rate, and he didn't, I could tell that he didn't like that question. He told me to first get approved, then look at the rate. franklin finally had all the paperwork in by June 22. My mortgage broker sent me an email telling me that I was approved. I emailed him back, requesting the interest rate. He emailed me with a rate of 5.875%, adding that I may someday refinance, if it made sense. Was 5.875% a fair rate? I think not. What happened? Thanks

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Tony Grech, Mortgage Broker Or Lender, Southfield, MI
Fri Jul 3, 2009
Hi Michael,

Rates change on a daily basis and timing is everything. Unfortunately the last 6 weeks have been very turbulent with respect to interest rates.

Although a broker has several lending options and this provides him an opportunity to shop for the best terms, the investor offering the best rate is not always the easiest to get approved through. And because it sometimes costs money to secure a rate I can understand why your broker would be hesitant to lock in until he had an approval considering your loan had been declined already. And a broker can't just lock in with several lenders at once and let them duke it out to see who can close first. That broker would be out of business because no lender would work with them. So they've got to shop your loan around one lending source at a time.

Even if a lender was offering rates that were 1% lower than everyone else (which no one is by the way), it doesn't matter if you can't get approved with them. Lenders are scrutinizing files very closely these days and any large deposit usually raises a red flag and needs to be documented. That's not being picky, that's par for the course.

5.875% doesn't seem too out of line given rates recently. Not saying you couldn't find a better deal somewhere, but that's pretty close. Like Katina said, if you really feel you aren't getting a fair deal you should check around and get a 2nd opinion. It's not going to get you 4.875% or even close but maybe it will give you some peace of mind

Best of luck
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Katina Wright, Other Pro, Atlanta, GA
Fri Jul 3, 2009
Greetings,
Sounds like you are working with some issues. With an 840 credit score why are you not going to a direct source ( a company that originates and service their own loans). When you say mortgage broker do you mean a broker or your loan officer. From the description of the fact that your profile is being brokered I answered my own question.

What is wrong with Chase, Bank of America, Wachovia, Wells Fargo? One of my past clients just executed a refi and got 4.5%. As I have not checked the rates lately (http://www.bankrate.com) I can't say whether or not 5.875% is appropriate for an 840 beacon, but you have reason to question the information you are receiving.

Did you know that EVERYTHING is negotiable???? Even in court you have the option of pleading Guilty, Not Guilty or NoLo...options.

Your biggest problem sounds like you have not opted to comparison shop...I know I know, you didn't want a whole bunch of credit inquiry hits on your credit. To that I say 1. The same type of inquiry (i.e. mortgage apps) within a certain time period counts as a single look (that used to be a true statement, I'm not sure about these days) and 2. Don't be so trusting and lazy.

The only reason you haven't gone anywhere else is because it's easy to stick with what you are doing and hope your guy 'does right by you'. SHOP AROUND...your life...your money!

Get a good faith estimate from someone else (at least one direct lender) and then you will be able to decide. You already know something doesn't smell right.

P.S.....sometimes people make money based on what they are able to sell you and you are willing to buy. You are buying a loan.

Good Luck,
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