Are the GFE rates ridiculous?

A friend of mine with credit scores of 648,622 and 621. No late payments for almost 4 years. Lines of credit is Auto, Installment and 2 revolving credit cards. Middle score was 634 but dropped because of to many inquiries searching for a mortgage loan. DTI around 30%. But they was quoted on the GFE of 90% LTV at 10% and on 95% LTV at 11%. With the way the market is today and lenders tightening standards and squeezing borrowers out with these scores. What do you suggest

1. Take the deal before you can't get a loan and refinance later after your score continue to rise.

2. Take a chance on finding another lender (which may be impossible in todays market.

3. Wait it out. But his lease on a townhome he has been renting for 2 years is up Sept. 15th.

Also I forgot to include he is getting a Alt -A loan becuase they are using his bankstaements as Income as well as his rent cancelled checks with lanlord verification of no late payments of arrears as documentation for qulification

Are the GFE rates ridiculous?

Subprime is the only division that uses bank statements at this point. At 90% ltv, my rates would probably be around9% but you'd have to pay a couple of points. 95% is probably the same, but there' s a good chance if you can use bank statements I could go 100%.

Are the GFE rates ridiculous?

The credit scores are too low...that is why the rates are so high.

They are using his bank statements as income, because evidently he must work at a job where he can't prove enough income to qualify for the loan...that is a common %26quot;fix%26quot;, but you'll pay through the nose in an interest rate for it.

Are the GFE rates ridiculous?

The rate is higher as it sounds like they are doing one loan to finance this property. Any loan over 80% LTV would result in a higher interest rate if there was not a second loan added on the property. I would shop around (with a mortgage broker) an office that deals with several different lenders instead of a mortgage banker ( in house lender like Washington Mutual, Wells Fargo, etc.).

Another thing to remember: Most likely this loan will have a pre-payment penalty (an extra fee if the loan is paid off early) ask the loan officer about that. When signing loan documents always look at the promissory note (it will be under if you pay the loan off early - it will list the term and cost to pay it off early). The pre-payment penalty is generally 6 months worth of interest payments.

Are the GFE rates ridiculous?

The Alt-A market has all but evaporated in the last few weeks and there are very few lenders offering the program at any rate.

Why does he need to use bank statements for his income documentation?

Are the GFE rates ridiculous?

The scores aren't really the problem. It's his inability to document enough income to make the payments using traditional methods, like W-2's and tax returns.

If you took his taxable income, what would his DTI be? If it's under 65%, he can probably get a Fannie Mae loan right now. Seriously.