[Homestead] It is happening
lkvp at floydva.net
Tue Feb 8 11:30:32 EST 2005
Don Bowen wrote:
> Sub prime?
> Loans for the less credit worthy borrowers.
>> Let's see $500k at 30 years....
>> At 4% it's 2378.03/month comes out to 859.347.53 over the life of the
I shudder to think. The first and most important definition of
'subprime' is for those with an average credit score of less than 620.
Average doesn't mean you take all 3 scores and use the median score, it
means which ever score is in the middle from the 3 credit bureaus is the
score lenders use. A 500k mortgage is a jumbo loan which carries
approximately a .50 higher interest rate than a regular (non-jumbo) 30
year mortgage loan. In my area, to secure a 4% rate for a 3 year ARM
loan (Adjustable Rate Mortgage loan) you'd have to pay 1.50% just to buy
down to that rate. You should only get an ARM if you plan to move in
the next few years, i.e. a 3 year ARM and move/sell before your 36
months is up. If you plan to keep your home longer than 3 years or are
uncertain, then stick with a 30 year fixed rate loan. I detest subprime
loans and am thankful that 90% of my business is 'conventional'. Today
I'm quoting 5.625% for a 30 year conventional mortgage loan in Virginia,
however rates vary in regions throughout the country. Add 1.5-2+% to
the going market rate for your area to get a valid subprime rate,
depending on the loan-to-value, your credit score, any outstanding
non-medical collections, if you have had a bankruptcy in the past (which
type--Chapter 7 or Chapter 13 and how long ago it was disbursed) and a
few other factors.
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