Will Obama Throw Obama Under the Bus?Jeez, at this point, the entire campaign is
under the bus.
The freshman Democratic senator received a discount. He locked in an interest rate of 5.625 percent on the 30-year fixed-rate mortgage, below the average for such loans at the time in Chicago. The loan was unusually large, known in banker lingo as a "super super jumbo." Obama paid no origination fee or discount points, as some consumers do to reduce their interest rates.
Compared with the average terms offered at the time in Chicago, Obama's rate could have saved him more than $300 per month.
You may recall that the last member of Obama's campaign team to get a sweetheart loan was allowed to resign; presumably that option isn't available here.
Five thirty-eight does
a yeoman's job of trying to rescue Obama:
So Obama's rate was 30 basis points better than the average. However, the amount of the loan and the nature of the property are not the only factors that determine a mortgage rate. Another major consideration is the creditworthiness of the borrower. According to current rate quotes from myFICO.com, a borrower with very good credit can expect a mortgage rate about 30 basis points better than someone with pretty good credit, and a borrower with excellent credit can expect about a 50 basis point discount.
But Obama was going for a very high mortgage amount (over $1.3 million). Contrary to what you might expect, those loans are a little more expensive than average-sized loans. And (as you might expect) borrowers on those loans tend to be credit-worthy individuals.
