Edgewood, WA Real Estate Blog

Conventional mortgage rates are priced by the lowest mid-credit score of the borrowers on the loan application.    On October 1, 2008, Fannie Mae will be implenting another price adjustment for “adverse market conditions” on all loans delivered.  This means that lenders are all ready beginning to price rates factoring in the price adjustments as some loans locked today may not be delivered to Fannie until 10/1/2008.    As I priced these rates out, it was interesting to see which banks are all ready factoring and how dramatic the difference to rate is from lender to lender right now.   The gap will narrow as we near October.

These rates below are based on a sales price of $500,000 with a loan amount of $400,000 utilizing a 30 year fixed mortgage with a 30 day lock priced with zero origination/discount points.   (Remember, whether or not you have your mortgage priced with a point is up to you.  Typically 1% in origination/discount points = 0.25% to rate).

720 or better mid-credit score:   6.625% @ 0 pts (apr 6.690).  Principal & interest (based on $400k loan amt) = $2,561.24.

699 – 719 mid-credit score:  6.750% @ 0 pts (apr 6.816).  P&I = $2,594.39.

660 – 679 mid-credit score:  6.875% @ 0 pts (apr 6.942).  P&I = $2,627.72.

640 – 650 mid-credit score:  7.125% @ 0 pts (apr 7.194).  P&I = $2,694.87.

620 – 639 mid-credit score:  7.250% @ 0 pts (apr 7.320).  P&I = $2,728.71

FHA is becoming a gaining all the popularity it lost in recent years past during the subprime boom.  Home buyers and borrowers–please verify that your loan originator is legally able to provide FHA mortgages (many are not) by checking HUD’s site.

FHA  30 Year Fixed with mid-credit scores of 600 or higher and a loan amount of $362,790 for Pierce, King and Snohomish Counties:  6.500%  (apr 7.337).  Principal, interest and mortgage insurance (based on $362,790 and a 640-679 mid-credit score) = $2,493.75.

FHA-Jumbo 30 Year Fixed based on a sales price of $500,000 and a loan amount of $400,000 (to compare with the conventional scenarios above) with mid-credit scores of 600 or higher: 6.625% (apr 7.440).  P&I plus mortgage insurance = $2776.59.

Note: the FHA payments are also factoring in FHA’s upfront mortgage insurance which is typically financed into the mortgage.   The FHA Jumbo scenaro would have the same rate with as little as 3% down. 

Speaking of FHA, with the recent  passage of HR 3221, down payment assistance programs funded by the seller (such as Nehemiah) are slated for extinction as of October 1, 2008.  Lenders are all ready refusing to close loans with DPAs.   As of January 1, 2009, the minimum investment required by a buyer is being increased to 3.5%.   This 3.5% may still be a gift or may now actually be a loan from a family member assuming the borrower qualifies for both payments.   This should be a welcomed option for “the Bank of Mom and Dad” who might not really want to “gift” funds and would prefer loaning the money instead.  

Rates quoted by Rhonda Porter, CMPS and Licensed Loan Originator 510-LO-32047 with Mortgage Master Service Corporation.   To see live examples of rates I’m quoting, follow me on Twitter.