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rate sheet for First Mortgate Corporation

Posted on 2010-09-21
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I'm planning on getting a home loan FHA for $360,000 from First Mortgage Corporation and I'm getting a 5.25 interest rate, which I think is a bit high and I wanted to know if I could possibly get this particular banks rate sheet so I could compare my rate.

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Question by:OCwaste2
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by:8080_Diver
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Have you tried asking the bank?
I wouldn't think that First Motgage Corp. would publish their rates as public information.  Among other things, I know, from having worked with a 1st mortgage lending institution, that there are other aspects to a loan product (as they like to call their rate sheet entries ;-).  For instance, your down payment, total long term debt to Gross Income, total short term debt to net income, as well as your credit rating come into play.
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by:Callandor
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I am currently refinancing and I see 3.75% for 15yr fixed, 4.25% for 20yr fixed, and 4.50% for 30yr fixed, if you have excellent credit.  Today, the rates have dropped significantly, and you can see examples at http://www.bankrate.com/.
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by:8080_Diver
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@Callandor,
The question arises, though, as to whether those rates are for First Mortgage Corp. and for the right location. ;-)
@OCwaste2,
Are you asking about only  First Mortgage Corp.'s rates or is your reference to this particular banks rate sheet a reference to any bank's rate sheet?
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by:Callandor
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This is what First Mortgage Corp is showing for national rates.  They are nowhere near the average, which would be bad marketing.
FirstMortgageCorp.png
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by:OCwaste2
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I'm asking more for 1st Mortgage Corp's rate sheet although I would assume that any banks rate sheet would do.  My questions stems more from a question as to the high interest rate I'm being charged for the loan.  I'm putting 3.5% for the down payment and I'm purchasing the home for $365,000.  The interest rate is 5.25% although it's not locked in just yet.  Since I'm going under a special program that I only need to submit my w2's, I was told this is why my interest rate is a bit higher.  I did sign a 4605T form which is supposed to allow the the financial institution access to my past tax years records.  My middle fico score is 680, which is not the greatest and I presently earn roughly $70,000 a year because I take a few losses per year due to my job which requires me to travel and has some job expenses.  I basically take a loss of about $10,000 a year.
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by:Callandor
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Your 3.5% down payment is most likely the reason for the high interest rate.  If you put down 20%, you would be in the normal category, because the bank doesn't have to worry as much about recouping the loan if you default - the house would probably sell for more than 80% of the current value.  A FICO score over 750 would get you the better rates, and the credit check should have told you what was impacting it.
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8080_Diver earned 500 total points
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To expand a bit on Callandor's response:
Part of the problem you are encountering is that one of the reasons banks got themselves in a bind during the recent financial disaster was that they lent money to people who a) had marginal credit scores (at best), b) were putting next to nothing (if anything) down, and were purchasing more house than they could reasonably afford.
Your 3.5% (which may sound like a large percentage to you) is actually only $12,775 in actual dollars.  In order for that to be a 20% down payment, you would need to be looking at houses that are in the price range of about $64,000.  Even at $100,000, you are only putting down about 12.5%.  So, you are also going to be looking at paying PMI (which is an insurance payment to cover the possibility that you will default), which will increase the effective percentage rate based on what you will have for a monthly payment.
Based upon the numbers you provided, your house payments will work out to about 40% of your total income of $70,000 (which is kind of high).  In addition, you need to look at your tax rate.  Assuming that you effectively end up with a 25% tax rate, that means that, between taxes and house payments, about 2/3 of your income is gone. So, then you have to look at property taxes (which could easily be another 10% of your income) and you are probably at the point of 3/4 of your income gone.  That means your entire non-housing living expenses have to amount to no more than about $17,500 a year (i.e. less than $1500 per month).
Now, if you have a $200 / month gasoline bill, a$100 /month electric bill, a $100 per month cellphone/telephone bill, a $75 / month cable bill, Insurance at about $200 / month, and a $250 Home Owner Asociation bil, you have about $1125 in bills and $375 discretionary income.  Out of that $375 you have to pay for food, (probably a minimum of $200 / month), entertainment, your car insurance, and any other misc. expenses.
That is what the bank is looking at and, frankly, they probably aren't really going to want to lend you the money because you are too high of a risk.  
If you were looking at a house in the $150,000 price range, your monthly payment would be about $885, with a corresponding lower property tax and insurance bill and, probably a lower HOA bill.  You would also have a lower property tax bill.  so, the same calculations would end up with something like $2500 per month instead of the $375.  Now, that is a more workable deal.
Based on your indicated down payment, I would imagine that this is probably your first home purchase.  If so, you need to really consider starting with a somewhat lower priced, entry level (i.e. "first time home buyer") house.  People who buy $365,000 houses either a) have a lot more to put down as down payment (e.g. at least $75,000), b) have a much higher income (so that the impact of adding that much long term debt is less), or c) both of those.
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