What rate should I expect?

[Dan K.]

My husband is looking to purchase a property (owner-occupied) in Dallas, TX.

He has an 800+ credit score, no credit issues. good reserves, and consistent W2 income without significant debts.   He qualified for a $500,000 loan.   

The lender said the best he could do is 7% and 1 point. That didn't seem competitive and we pushed a bit, and the lender came back with 6.625% (6.825% APR) and no points.

They're showing $10,322.06 in fees ($2,571.86 in APR and $2,795.20 in no APR costs, and $5,205.00 in prepaid costs).

Is this the best rate that he should expect?

If not, I'm definitely up for connecting with anyone who can offer a better rate! Would love advice and feedback.

[Taylor L.]

Rates have been going up quite a bit this year, so what he's been quoted isn't totally out of the park. It feels a bit high, but that may be because rates are much higher now than they have been for a few years. 

I would absolutely shop around. We did that earlier this year and saved about 30 bps. The worst quote we got was from a popular online lender, but the best was from a referral through our broker. 

[Erik Estrada]

Quote from @Dan K.:

My husband is looking to purchase a property (owner-occupied) in Dallas, TX.

He has an 800+ credit score, no credit issues. good reserves, and consistent W2 income without significant debts.   He qualified for a $500,000 loan.   

The lender said the best he could do is 7% and 1 point. That didn't seem competitive and we pushed a bit, and the lender came back with 6.625% (6.825% APR) and no points.

They're showing $10,322.06 in fees ($2,571.86 in APR and $2,795.20 in no APR costs, and $5,205.00 in prepaid costs).

Is this the best rate that he should expect?

If not, I'm definitely up for connecting with anyone who can offer a better rate! Would love advice and feedback.

 Work with a mortgage broker instead of shopping and risking another rate hike. Also one credit pull will allow the broker to shop multiple lenders. A great one will be up to date on what's going on in the secondary markets. 

[Caroline Gerardo]

Rates will be lower Monday. You are mixing up APR which is just a way to see total cost averaged over the first year.

If you switched to a jumbo loan product or non QM product you can have rates in high five/low sixes for ten year interest only. This assumes you have that FICO and reserves.

Do not shop for a high balance conforming loan the GSE's are price crazy for those sold to Fannie and Freddie.

You need a broker with options at fifty "shops" 

Don't let everyone pull your credit- provide the report, the w-2/paystubs and bank statements then someone can tell you on the phone what they really can offer and how many days of rate lock. 

Calling without exact information will get you cloudy results.

[Nancy Brew]

Try credit unions also..We have had some luck with good #s in the past.

[Matthew Crivelli]

Quote from @Caroline Gerardo:

Rates will be lower Monday. You are mixing up APR which is just a way to see total cost averaged over the first year.

If you switched to a jumbo loan product or non QM product you can have rates in high five/low sixes for ten year interest only. This assumes you have that FICO and reserves.

Do not shop for a high balance conforming loan the GSE's are price crazy for those sold to Fannie and Freddie.

You need a broker with options at fifty "shops" 

Don't let everyone pull your credit- provide the report, the w-2/paystubs and bank statements then someone can tell you on the phone what they really can offer and how many days of rate lock. 

Calling without exact information will get you cloudy results.

Multiple credit pulls won't affect the borrowers credit nearly as much as you are leading them to believe. At most, you will see a 10 point decline from multiple pulls in a 12 month period. In my experience people who are worried about credit pulls have bad credit to begin with. It's not the pulls that cause bad credit, it's being an irresponsible borrower that causes bad credit. @Dan K.

[Dan K.]

Quote from @Erik Estrada:

Quote from @Dan K.:

My husband is looking to purchase a property (owner-occupied) in Dallas, TX.

He has an 800+ credit score, no credit issues. good reserves, and consistent W2 income without significant debts.   He qualified for a $500,000 loan.   

The lender said the best he could do is 7% and 1 point. That didn't seem competitive and we pushed a bit, and the lender came back with 6.625% (6.825% APR) and no points.

They're showing $10,322.06 in fees ($2,571.86 in APR and $2,795.20 in no APR costs, and $5,205.00 in prepaid costs).

Is this the best rate that he should expect?

If not, I'm definitely up for connecting with anyone who can offer a better rate! Would love advice and feedback.

 Work with a mortgage broker instead of shopping and risking another rate hike. Also one credit pull will allow the broker to shop multiple lenders. A great one will be up to date on what's going on in the secondary markets. 

Hey, appreciate that but my experience has been that lenders are all looking at the same set of requirements and haven't gotten any value from putting all my trust in a broker.  I've never seen a mortgage broker deliver anything that I don't see online or from folks on BP... if you're able to do better, i'd love to see those rates and terms.

[Dan K.]

Quote from @Matthew Crivelli:

Quote from @Caroline Gerardo:

Rates will be lower Monday. You are mixing up APR which is just a way to see total cost averaged over the first year.

If you switched to a jumbo loan product or non QM product you can have rates in high five/low sixes for ten year interest only. This assumes you have that FICO and reserves.

Do not shop for a high balance conforming loan the GSE's are price crazy for those sold to Fannie and Freddie.

You need a broker with options at fifty "shops" 

Don't let everyone pull your credit- provide the report, the w-2/paystubs and bank statements then someone can tell you on the phone what they really can offer and how many days of rate lock. 

Calling without exact information will get you cloudy results.

Multiple credit pulls won't affect the borrowers credit nearly as much as you are leading them to believe. At most, you will see a 10 point decline from multiple pulls in a 12 month period. In my experience people who are worried about credit pulls have bad credit to begin with. It's not the pulls that cause bad credit, it's being an irresponsible borrower that causes bad credit. @Dan K.

You're 100% right and I'm glad you said that.  Those pulls have very little impact and I think this myth that you can't shop around or risk damaging your credit is a really cheap marketing move to scare people into grabbing the first lender that calls them. 

I'd rather take a 2-3 point hit on my credit report and save $3k in fees (and tbh, I've never had a problem disputing a credit pull and getting those taken off my report). 

[Dan K.]

Quote from @Caroline Gerardo:

Rates will be lower Monday. You are mixing up APR which is just a way to see total cost averaged over the first year.

If you switched to a jumbo loan product or non QM product you can have rates in high five/low sixes for ten year interest only. This assumes you have that FICO and reserves.

Do not shop for a high balance conforming loan the GSE's are price crazy for those sold to Fannie and Freddie.

You need a broker with options at fifty "shops" 

Don't let everyone pull your credit- provide the report, the w-2/paystubs and bank statements then someone can tell you on the phone what they really can offer and how many days of rate lock. 

Calling without exact information will get you cloudy results.

Those are great general tips, well said! I'm shopping with specific info.  Maybe it's just because I'm used to looking at this from the political/regulatory side, but the lender requirements are consistent across the board.  

If a lender won't disclose their fees early, I assume they're just trying to string me along and then drop a big fee (and then try to scare me that I can't close on time without them).

We're definitely moving away from an environment where consumers are ok with lenders hiding fees and limiting folks ability to shop around. Lenders that accept that and are more transparent are going to find themselves on the right side of changes to the market.  Those that don't are going to see fewer and fewer customers.
 

[Dan K.]

Quote from @Taylor L.:

Rates have been going up quite a bit this year, so what he's been quoted isn't totally out of the park. It feels a bit high, but that may be because rates are much higher now than they have been for a few years. 

I would absolutely shop around. We did that earlier this year and saved about 30 bps. The worst quote we got was from a popular online lender, but the best was from a referral through our broker. 

 Thanks Taylor! Appreciate the gut check on the rate, very helpful.  

[Caroline Gerardo]

@Matthew Crivelli  what is your NMLS license number ? I worked for Fair Issac. 

After the first inquiry you can pull three more in less than 29 days and have a 2-3 point hit. After 31 days each hard inquiry can reduce 4-5 points. The math allows a consumer to shop in a short window. Lenders will pull your score often again before closing. Since the score is vital to GSE pricing (loans sold to our government) a 800 gets the best rate while a 754 gets a sixteenth haircut and a 721 a quarter. 

Right now we use the middle of three. When I was at MBA in Nashville two weeks ago, the FHFA announced they are playing with a duo score model (two not three). This new model was news to Vantage scores which were announced in the past and not adopted by lenders as there is few to zero products to match. Credit scoring is being reviewed by our government, as it can be manipulated.

In this time where rate may mean a no go verses back in December when a borrower's debt to income ratio was more favorable, understanding each piece is important.

The actual "hit" depends on number of months history of paid as agreed and types of credit used.

@Dan K. Lenders are not the same. We do not have the same resources, pricing, warehouse lines, appetite for risk, or costs. Some have only chocolate chip cookies while others have a full menu. You have not found your broker partner yet. 

I advise you to find your insurance agent, contractor, CPA, broker, Realtor, and legal team that can help you to find the right choices for you.

[Eliott Elias]

Happy to connect you with my lender, can be competitive here 

[Stacie Smith]

I second the credit union recommendation. After working with a great mortgage broker multiple times, I was amazed the Eastman CU showed me rates upfront. We're doing a cash-out refi of a sfr investment property currently and have 5.750% rate with no points on a 25-year, 10/5 ARM.

[Lucia Rushton]

@Dan K. There are definitely options in financing today. If you want to DM I can make a recommendation.

[David Dachtera]

Quote from @Matthew Crivelli:

Quote from @Caroline Gerardo:

Rates will be lower Monday. You are mixing up APR which is just a way to see total cost averaged over the first year.

If you switched to a jumbo loan product or non QM product you can have rates in high five/low sixes for ten year interest only. This assumes you have that FICO and reserves.

Do not shop for a high balance conforming loan the GSE's are price crazy for those sold to Fannie and Freddie.

You need a broker with options at fifty "shops" 

Don't let everyone pull your credit- provide the report, the w-2/paystubs and bank statements then someone can tell you on the phone what they really can offer and how many days of rate lock. 

Calling without exact information will get you cloudy results.

Multiple credit pulls won't affect the borrowers credit nearly as much as you are leading them to believe. At most, you will see a 10 point decline from multiple pulls in a 12 month period. In my experience people who are worried about credit pulls have bad credit to begin with. It's not the pulls that cause bad credit, it's being an irresponsible borrower that causes bad credit. @Dan K.

Remember that Home ("Mortgage") Loans have "shopping windows" - multiple hard pulls within 30 days (I believe) are "deduplicated" to a single inquiry. 

[Brad S.]

I am assuming that loan scenario is for an 80% ltv, 30yr loan

If so, I found 2 better live rate online quotes from 2 lenders. 

Provident Funding (provident.com) is typically among the best rates for owner occupied, typical scenario (20% down, etc) "A" paper borrowers. 

As of now, they are quoting
6.25% w/no points and Administrative fee of $1,425, escrow $450 and then the other typical fees and prepaids
$625k purchase,
$125k down payment,
$500k loan,
780+ fico

My other go-to is aimloan.com, which are usually better with investment property.
They currently are at: 6.5% w/ $225 Lender Fee plus typical 3rd party fees and prepaids

Good Luck!  :)

[Albert Bui]

Quote from @Dan K.:

My husband is looking to purchase a property (owner-occupied) in Dallas, TX.

He has an 800+ credit score, no credit issues. good reserves, and consistent W2 income without significant debts.   He qualified for a $500,000 loan.   

The lender said the best he could do is 7% and 1 point. That didn't seem competitive and we pushed a bit, and the lender came back with 6.625% (6.825% APR) and no points.

They're showing $10,322.06 in fees ($2,571.86 in APR and $2,795.20 in no APR costs, and $5,205.00 in prepaid costs).

Is this the best rate that he should expect?

If not, I'm definitely up for connecting with anyone who can offer a better rate! Would love advice and feedback.

 The new CPE (core inflation) and CPI inflation numbers just released on thursday so its your lucky day and rates have dropped to the lower 6's (prior was around 7 or little over - range).

Once monday mortgage bond market opens at 630PST or 830 CST yourtime you'll have different pricing so definitely check in on monday and to accurately compare you'd need to get everyone's quote at the same time and same day because the mortgage bond market trades in real time and could reprice multiple times perday.

In the end most lenders should be so close that you'll want to work with the best you can find.

Hope that addresses the real life situation of conventional mortgage pricing (bank and portfolio mortgage prices change a lot less frequently and is another topic for another time).

Best Regards,

@Matthew Kwan@Carlos Valencia

[Daniel Apke]

Thats a solid rate, I would lock it in. I made the mistake to get too many quotes and delay it and missed out. So my advise is lock it in when you can before the next rate hike in December comes.

[Kyle Deutschmann]

Quote from @Dan K.:

My husband is looking to purchase a property (owner-occupied) in Dallas, TX.

He has an 800+ credit score, no credit issues. good reserves, and consistent W2 income without significant debts.   He qualified for a $500,000 loan.   

The lender said the best he could do is 7% and 1 point. That didn't seem competitive and we pushed a bit, and the lender came back with 6.625% (6.825% APR) and no points.

They're showing $10,322.06 in fees ($2,571.86 in APR and $2,795.20 in no APR costs, and $5,205.00 in prepaid costs).

Is this the best rate that he should expect?

If not, I'm definitely up for connecting with anyone who can offer a better rate! Would love advice and feedback.

He probably quoted you lower the second time because average market rates on 30 yr fixed mortgages dropped by about .6% on Thursday after inflation came a little lower than previously expected, and the market reacted in a big way. 

If you're still looking for a recommendation, I know a great lender/mortgage broker licensed in Texas you could talk to who will walk you through all your options for various mortgage products and current rates. 

[Tyler Maten]

Hey Dan! I’m a mortgage broker located in Dallas, Tx! Would love the opportunity to be apart of your team if you still need some assistance!

[Nick Belsky]

@Dan K.

Yeah, that sounds quite a bit high.  I recently priced out a similar scenario under 7% with no origination, lender, nor broker fees.  If they wanted to go borrower paid, it was 2 points and the rate dropped to 5.75%.

I am fully licensed in Texas.

Cheers!

[Bruce Lynn]

@Dan K.  Your quote sounds a bit high, but in the ballpark on rates...fees seem high.   There are just so many variables it is hard to shop...I feel your pain as I am very much a shopper myself.   I read two of @Caroline Gerardos answers and thought she was spot on.   I'm not on the lender side, but on the realtor side studying quotes and better yet looking at closing statements.   In my experience stay away from the online lenders....almost every single one of them.  Way too many people get burned in the end, seems like especially the shoppers.  Very tough to cut the accurate honest ones from the gypsies.   Almost every single time I see people shop online for the very lowest rates, something bad happens....like the lender just quits returning phone calls, or they do call and tell you they just can't close....or they tell you that credit line disappeared....and on and on and on with the excuses.  Finding out the day before you're supposed to close or even 3-4 days before, that they won't do the loan or won't call you back....that's the online lender from NJ can cost you way more than the 1/10 pt you saved by shopping.

People have mentioned credit unions here...and while at one time years and years and years ago, CUs were great places for home loans, I've found in the past 10 years or so they are more expensive than what people think or have been told. The problem I find is that whatever credit union you're using is not really doing the loan....they're outsourcing it to a 3rd party....and taking a fee to do...maybe 1/2 point to 1point.   Probably someone better than me has some insight to this.  They never seem to tell you this as it is some type of private label service...you call and you think because they answer X CU, that you're talking to X CU, but in reality you're talking to their 3rd party outsourced loan vendor, probably Colonial or Credit Risk Solutions.    This article is old....but maybe gives you more info on that idea.
https://www.computershare.com/...
https://blog.swbc.com/lenderhu...

From what I've seen last year or two or three is CUs can be super competitive on commercial loans...when they are handling those themselves...where they have the loan officer, where it's their money, and where it is their loan committee...but I think this is rare on home mortgage side any more.

I've found a great local broker is normally your best bet.  I'm super picky about who I recommend, normally based on fees not rates.  The rates are good too and normally very competitive, but may not be equal to online shop or even just random phone shop.   I remember one of the first training sessions I had with a lender was how do my customers get the best rates...and he said, when someone calls and is focused on rate...I can do that and then charge fee.  I can also flip that around....care about high fees I can give you low fees and play the rate.  You've figured this out...many people don't.   Then I asked how much he knew to charge, and the answer was ...whatever I can get away with....he still advertises on TV in DFW to this day.  I swore I would never recommend him....but there are plenty like that in the industry...I don't think he is unique.

There are probably questions most people forget to ask up front....like what is your rate lock policy?, is there a cost to lock?, how long can I lock?, can I float down?, how many times or when?   All that can have somewhat of a dramatic affect on your final loan.   Then again have any of the lenders asked you how long you intended to stay in the home or in the loan?

You didn't mention any of the big name banks and I think that is good too.  I've had good luck a couple of times, but 99% of the time I would stay away from any of the named banks.  It's just too risky.  Almost like CU, for example you think you're dealing with a loan officer in a branch, but I call most of them order takers....they're just plugging stuff in a screen..they have no relationship with the processors or underwriters or even know where they are.  The 2-3 loans I've seen closed that had no problems and closed on time with big banks seemed to be with their own group, where loan officer, processor, and back office team were all in the same office.

Good luck and best wishes.