Buying A Home
AshyRose
member
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Which is better?
For first time home buyers, there are two options where I live:
3% downpayment assistance but a rate at 4.2%
or
Paying 3.5% downpayment with 3.75% (FHA)
(We would have to pay closing costs, too, so that will make the initial payment higher.)
So which is better? What would you choose?
Re: Which is better?
If you get a 3% dp assistance, what is the total % down you will be required to have for the loan? I assume it's not just the 3%, right? So you'lll likely be paying at least another 3% on your own anyway, with a higher interest rate than the FHA where you're ONLY required to put down 3.5% with a lower rate.
PS-You can always ask the seller to pay some of your closing costs
We need some more information...how much $$ do you have saved for a DP? If doing FHA will go through all of your $$, I might think twice (you will need $$ for an e-fund and to furnish the place).
Then...what kind of sale is it? A "normal" sale? A short sale? Foreclosure? If it is a SS or Bank-Owned, you might not be able to convince a seller to pay closing costs. Plus, you might have to pay for inspections, repairs, etc. FHA requires that certain things be repaired BEFORE you can get the loan--do you have the $$ saved in case there is something big?
Just things to think about...
You need to figure out how much PMI will be and how that figures into your monthly payment as well. PMI on the FHA loan is usually pretty high. The FHA loans I looked at required PMI for 5 years at a minimum and I dont know if you'll have PMI with the other loan you listed above.
Thanks for the comments, but I figured it out.
The normal FHA loan without downpayment assistance is better because if we ask the seller to pay all or part of the closing costs, the offer will look higher right away on paper. And we have about $8,000 for a downpayment. That's pretty low right now, but with two solid incomes, we make save money pretty fast so it shouldn't be a big deal.
And this is a home we can see ourselves in for a longer time, not just a couple years. The lower rate is definitely the way to go. It's a normal sale. No competing offers.
We wrote up the offer yesterday. Just waiting to hear back now. So excited.
I would always put as much down as possible and get the lower rates...its still your money that you are going to have to pay either now or more in intrest. We put 21% down.
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