Hi,

I have credit score between 690-705 (among 3 credit bureaus). My agent recommended me to a mortgage broker who pre-approved me for the loan. I am planning to put 10% down and she is offering me a 6% rate (while national average is around 5.3). I always thought a credit score of around 700 should give me a better rate? Can there be such a big difference (0.7) in the national average and what I am offered (6%)?

I have not shopped around with others brokers, but I planning to do now. Also, are there any benefits for a first time home buyer?

Thanks

Well, average means just that - its an average. For every loan rate under the average, there has to be one equally higher than it.

As for a better rate, I am sure there are some available out there. You might have to pay a point or put more down. Try Yahoo Real Estate - they have mortgage rates in your area, as do many of the other sites. Or just call someone local and see what is out there.

700 is a good score but not great. Great is what gets you 5s. But you should probably be able to do better than 6%.

Thanks, are there any benefits/options for a first time buyer that I can make use of?

Most first time buyer programs give you a worse rate. They are intended to help people without equity from a previous sale qualify for mortgages (low down payment).

Your mortgage broker will help you through the process but I *believe* that you won't get rate help from first time buyer programs.

Most "national average" survey rates are low. One "provider" of such survey services got sued a year or so ago on this very issue. Besides... it's not the "rate" that counts, it's the APR. The APR takes into account any "points" and "points disguised as fees" a.k.a. "Origination Fee" et al. that are charged. On average (based on the Federal Survey) lenders charge between 0.6 and 0.7 "points". In reality this means that 60 to 70% of lenders charge 1 point, the rest 0.

Additionally, the "rate surveys" are for 20% down purchases. Less than 20% down triggers PMI (Mortgage Insurance) that increases your effective rate.