Jumbo Mortgage Loans Rates
Home Loan options?
Hi, we are the first time home buyers purchasing a new home. The builder has preferred lender who offered us following details on our jumbo loan:
1. 5/1 ARM interest only : On 80% the rate would be 6.275%
2. On 10% (2nd Mortgage) the rate would be 8.3%
We have excellent credit. Are these figures good enough to go for this loan? The builder is offering 15k off with preferred lender.
There are a couple of things you have to consider in this scenario that you presented.
#1 The builder is giving you a 15K concession ( I don’t know where this fit in the overall scheme of things since I don’t know the total consideration for the house
#2 you are getting a 10% second
#3 How much of out of pocket money did you have to come up with.
#4 The rate is important only if you can not make the monthly mortgage payment on the combined loans. You are not losing anything with the rate because the rate is a tax deductable item on your federal income tax, so you will get that back any way no matter the rate. Please check with your tax advisor.
If you go to another mortgage broker you will lose the 15K builder concession. You might be able to get a better loan, but your loan amount would be higher, thus you will be paying a little bit more in monthly payments.
The good thing about taking these loan since it is about 90% is that you will be able to refinace the first and second mortgage in about 6 months and still realize the builder concession of 15K thus having one mortgage payment and perhaps a lower interest rate. This is called a rate and term refinance.
The thing you must make aware to the lender is that you do not want to have a pre-payment penalty in your loan. If you refinace with the same company you might be able to avoid the prepayment penalty. There are 90% loans with excellent rates and does note require the dreaded PMI.
I have outlined the choices as I see them. You have to make a decison about the interest rate, and seller concessions.
I hope this has been of some use to you, good luck.
“FIGHT ON”
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