For your buyer with a 510 score, your lucky to get 85% LTV. The guy knew that he wanted to buy the house so why didn’t he pay his bills on time for the last year. For someone to have a 510 score, he wasn’t paying something on time. It isn’t easy to get an approval on someone with a 510 score.
You could always do another year of L/O or he could go to Benifical and get 22%. Really 13% isn’t that bad of a rate for the score he has. I see people getting 12 to 13% every day. Myself I pay 15% for hard money to do deals all the time, but I’m making money at it and its cheaper than paying 40 to 50% for a partner.
Good Luck. Tom
Am I Out of Line with my Broker? - Posted by Mike (IN)
Posted by Mike (IN) on April 04, 2001 at 10:35:46:
I am frustrated with my mortgage broker and would like some input;
Over the last 14 months, I purchased about 10 homes using the same mortgage broker. I always felt that his fees were way to high, but he was able to get all of my loans done for me. At that time I had approximately a 725 credit score. Anyway, he would charge me a $2,000 origination fee plus processing fees, etc for a total of about $3200 closing fees per loan. Most of the loans were in the 10.5 to 11.5 interest rate range.
Now, I have many of these homes that I have sold using lease/purchase contracts with my tenant/buyers. I had him help me pre-approve most of the tenant/buyers and he said no problem getting the a loan after 12mos in the home. (My exit strategy was to cash out after 12mos on most of the homes). However, it just seems that he is again charging way to much in fees and high interest rates.
Example; I have a tenant/buyer who moved in on 7/1/00. He has made every payment on time (I even make copies of the dated money orders for $550). He has been on his job for 15 years, makes about $4,000 per month ($2600 from job & $1,400 from his military pension). His credit score is 510. The amount he owes to refinance under my lease/option is $50,500 (started at 52,900 minus his $1500 down and $100 per month rent credit).
My broker (after 4-weeks of having the loan application, etc) tells me he finally got an approval with Soluna First Mortgage for 85% of APPRAISED VALUE and the interest rate is 13%. He again will charge them the high fees on top of this high interest rate!
It just feel like I can’t always trust what my broker tells me. I feel like he is bumping the interest rate higher for back-end points, etc on top of his origination fee.