Question:

mambwe asks:

I have agreed on a price for a house and I am in the process of looking for a mortgage. Combined we make ~$150,000 and have a 20% down payment. We also have enough money for closing costs. My credit scores range between 725 to 817. My fiance is 696(This is under dispute) to 781. We have a combined ~$90,000 in student loans and 1 car lease. Otherwise we have absolutely no other debt. My fiance has one small collection of $120 from a car accident from 2004 that still has not been cleared. On the credit report it says $120 but when we call to clear it they say it is $1500.

The purchase price of the house is $355,000, so the loan is for $284,000. Taxes are $10,021. The house will appraise for in the lows $400’s.

What rates should we qualify for? Would we get the best rates available?

Answer:

gmakerley answers:

you can get the best interest rates available, but that doesn’t necessarily mean you won’t pay points to get there. lenders are going to use your mid-scores, not your lowest. you didn’t state those, but of course, what you see when you pull them up isn’t what your lender will see. there is a difference in scoring for consumers vis a vis creditors.

you’ll likely pay a penalty for your fiance’s score, unless his mid-score (and yours, also) is 740 or more. that penalty won’t be terribly severe, though even .25 (a quarter point) is $710. his collection account may very well have to be paid in full in order for you to move on.

trism17 answers:

You’ll definitely want both middle scores to be 740 or higher right now. That can get you the best rate, but like he said the difference is going to be the profit margin each lender desires to make and how much of a fee you’d pay to get that best rate.

When we see “best rate”, we realize that as the rate where the lender does not pay us for anything. If a client is unwilling to pay any fee, they are then asking us to work weeks for free. That is where the flexibility and negotiation comes in.

The end result should be a combination of a rate and fee that you are comfortable with. Also know that without a formal loan application being completed, there are many other things that may come into play and alter the rate that lenders will offer. Without knowing all of the proper information, your “best rate” for a good credit score means nothing until all other information is revealed.

Source: MortgageFit.com