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I have checked with my bank, a mortgage broker, and another lender about getting a zero down %100 financing mortgage with no PMI. I have a better than average FICA score, and have a very low debt to income ratio. The best interest rate for a 30yr %100 financed fixed mortgage I rcvd was 7.5 (with lowest closing fees)
My friends and family insist I’m getting screwed over and should be getting a low 6 interest rate.
My question is should I expect a low interest rate when I have no money saved for closing, and no down payment? Does my rate sound normal for high my situation? Is 7.5 really that bad for %100 financing of fixed rate?
(I’m in Texas, 1st time home buyer, recent college graduate, single mother of three young kids—so unable to save a bunch of money)

9 Thoughts on 100 % Financing Mortgage Interest rates?
  1. Reply
    Scottie J
    February 5, 2014 at 3:27 pm

    You’re getting a good rate for a 100% ltv loan- especially without PMI. Low 6 rates are for 80% ltv loans on a 30 year term. Make sure it is a FIXED rate for the life of the loan so you don’t get caught in a variable rate nightmare in three to five years. And watch the points charged up front, one or one and a half should be enough. As a first time buyer, you may want your broker/banker to look for some downpayment grant money for you- if your state allows such programs.

  2. Reply
    exitbrian.com
    February 5, 2014 at 4:20 pm

    I think the numbers look pretty good. 100% financing is usually done with two separate loans. One loan for 80% at a great interest rate and one loan for 20% at a not very good rate. The combined rate( with closing costs rolled in) can look pretty high. Remember that you can pay off the 20% loan first thereby saving alot of years worth of interest.

  3. Reply
    John N
    February 5, 2014 at 4:49 pm

    I am just doing a loan at the moment with much the same aspects. 7.5% is right on the money. Rates have gone up over the last couple of weeks, so those who are saying low 6’s to you just might not be up to speed.

    Mortgage Broker

  4. Reply
    John T
    February 5, 2014 at 5:06 pm

    As a Mortgage Advisor/Loan Officer and a Realtor I can tell you that this could be on the high side but it depends on the program being used too. You have a few factors that play against you in this situation and they are…
    1. 100% financing; 2. NO PMI; and 3. lastly the fact that you are probably looking for little or no closing costs. So this is not out of the norm. Can you get a better rate – sure you can but I am willing to say that you are or do not have the funds to place into closing costs therefore those funds are made up or covered in the interest rate.
    As for family/friends telling you that you can get low 6% range this is INCORRECT unless you take an ARM program(dont do it!!!) or you buy down the interest rate, which means higher closing costs.

    Now hopefully you have a Realtor and a good one, if so then this realtor hopefully will have helped you to get the sellers to PAY CLOSING COSTS as this only puts you in a better position. I wish you all the best and if I can help you with any questions just let me know unfortunately I am not licensed in your state at this time.

  5. Reply
    Henry R
    February 5, 2014 at 5:08 pm

    LIsten let me tell you that a broker will tell you that you are getting the best deal but you have to remember that they have to make money and will try by giving you a high rate. I work for a mortgage company and I can deffinatly help you get your desired rate. Give me a call at this number and lets talk about it. 3056720092 ask for Henry

  6. Reply
    knowledge
    February 5, 2014 at 5:42 pm

    7.5??? consider yourself lucky! With a loan that you do not have to pay PMI means you were structured either for a sub-prime loan, or an 80/20. An 80/20 is actually 2 loans, the first for 80% of the value of the home the second for 20%…easy to follow..however if this were the case then you would have been quoted 2 rates. The fact that you have only 1 rate and no pmi tells me that it is a sub-prime loan. This is not a bad thing although the sub prime market has had some bad news lately (this is due to poor underwriting of the loan). Make sure this is a 30 yr FIXED rate. If it is an ARM (adjustable rate mortgage) then your rate could jump when when it adjusts. ARMs are 2/28, 3/27, 5/25 etc. Meaning that for the for the first 2, 3 or 5 years your rate will be at 7.5 and for the remaining years it will adjust with the market. (usually rate goes up, however it can go down). You have to understand that lending companies asess a risk to the borrowers ability to pay back the loan. As the LTV (loan to value)(loan amount to value of home) lowers so does your risk assesment, which means a lower rate. Find out what rate a Prime lender will quote you at, figure out what your payment would be with taxes, insurance, and PMI. Then compare that to what your were recently quoted with, make sure to include taxes and insurance, minus the PMI. But only if the loan you were quoted with was a 30 yr Fixed rate. If it is an adjustable rate, try to stave off the adjustment period for a longer time, this will allow you to build up equity, when the time comes for the rate to adjust you will need to refinance, most people opt to refinance to a fixed rate at this point. Because they now have equity in the home when they refinance, they are only asking for a loan amount that is below 100% of the value of the home and their risk assessment is better, but only if they credit during that time hasnt dropped. I can explain this better than typing it so if you’d like to call me 18882949990 I can explain in greater detail. I am a mortgage consultant, for 1st Liberty Mortgage Company in Philadelphia. Reference Chris.

  7. Reply
    www.JRealEstate.blogspot.com
    February 5, 2014 at 6:29 pm

    Here is REAL DEAL!

    Anybody that tells you that you should be getting a better interest rate or that is a good rate for you does not know what they are talking about. The reason for that is because there is more than just one factor to figure out what your interest rate will or is for your loan. With your simple statement that your FICO score is better than average and your DTI is low is not enought info to be “guesstimating.” I will tell you this though, the national average 30-year mortgage rate is around 6.5%

    Ok, now lets get you in the rigth path so you can the right decision. First educate yourself about the process so lets begin.

    Your loan is 100% no PMI therefore you are getting two loans and the reason why you only have one rate on 100% financing is because the broker or lender that quoted you that number is more than likely giving you the blended rate of both of your loans. Figure out what type of loan you are getting for your second loan. If it is a HELOC tell that broker/lender “bye” and run for the hills. You should not be buying a home 100% with a HELOC as your second loan.

    You state that you are receiving the lowest closing fees, I tell you BE CAREFUL!. Many times for most people it is best to pay upfront closing cost and/or points rather than paying no closing cost loans. The reason is because EVERYONE, and I mean everyone will get paid NOBODY works for free. You would not work for free? would you?

    Your home purchase is no different, everyone WILL get paid. The question here is how will they get paid. If the broker is telling you “I will charge you NO closing cost and/or NO points” on your loan, thats when you have to be very careful. Many times the interest rate they give you will more than enough cover the broker’s or lenders points/closing costs.

    Go to http://www.JRealEstate.blogspot.com and click on the link “Mortgage/Loan Education” and look for the article that talks about “No Point/No closing cost loans”. You can also find another article that talks about HELOC loans on that same section.

    Good luck

  8. Reply
    John r
    February 5, 2014 at 6:51 pm

    ok my sister went thourgh the same thing and you can get a better deal i give you the email and the website to this guys he is like so down to earth and he emails like every 2 days all you got to do is fill out a few forms and he will try to got o like 20 banks and he can let you know was up before runs you score and yeas you can at least get a 6.75 or something like that she just got her palce and i than went with this guy really want some one who is a real person this guy will help you JRIOS.A75385@mynlc.com thats his email try it out and his website is http://www.rioshomeloans.com/ there is email there i would email the 1st one maybe or both give them a try you got nothing to lose good luck !!!

  9. Reply
    stephen l
    February 5, 2014 at 7:00 pm

    You should be in the 6’s. Your loan officer is full of it. I recommend First National Banc Corp. They do business in most states and are your best opportunity for someone to say yes. ADDITIONALLY, IF YOUR CREDIT IS SUSPECT, THEY SOMETIMES FRONT THE MONEY TO GET YOU INTO A CREDIT RESTORATION PROGRAM SO THAT YOU CAN QUALIFY FOR A LOAN. Check out the free evaluation form at the source website and a First National loan officer will contact you within 24 hours. Good luck.

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