Buying A Home
Jen748
member
Dear Community,
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.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
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.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
FHA or Other Low DP loans?
I need the scoop on FHA and/or other low DP loan options. With the market we won't get a huge profit on our house (maybe $7,000 - 15,000) and need to move in the next year to get in the right school district for DD.
Are there any loans to avoid or look into further?
I have emailed a loan officer that a friend/realtor recommended but I wanted to do a little research on my own too.
Thanks!
Sammie born 04/23/09 (Peanut allergy)
Emmett born 01/28/2013
2015 Books Read 3 * 2014 Books Read: 151
2013 Books Read: 90 * 2012 Books Read: 125
2011 Books Read: 150 * 2010 Books Read: 117
Jennie Writes Words ~~~ We Still Read ~~~ Presidential Challenge
Emmett born 01/28/2013
2015 Books Read 3 * 2014 Books Read: 151
2013 Books Read: 90 * 2012 Books Read: 125
2011 Books Read: 150 * 2010 Books Read: 117
Jennie Writes Words ~~~ We Still Read ~~~ Presidential Challenge
Re: FHA or Other Low DP loans?
I'm not a mortgage broker or anything, but here are some basics:
With an FHA loan, you can pay as little as 3.5% down. You will pay PMI, and the rates are a little higher on an FHA loan than with a conventional loan. I'm not sure if this is the case, but when I bought with an FHA loan several years ago (first house), I was told that I would have to pay the PMI for the life of the loan, not just until I got 20% equity. Not sure if that's still true. I guess you could always refi to a conventional when you get 20% equity to get rid of the PMI.
There are some conventional loans that allow as little as 5% down. You'll pay PMI until you have 20% equity.
I think 80/20 loans are a thing of the past (borrow 80% of purchase price on a first mortgage, borrow 20% on a second mortgage to avoid paying PMI with no down payment), but I know a few people who have purchased with 80/10/10 loans recently. You borrow 80% on a first mortgage, borrow 10% on a second 15-year mortgage and put 10% down. No PMI.
If you qualify for a USDA loan (for housing in rural areas) or VA loan (for veterans/military members), you can still get 100% financing with no PMI on those loans.
Mr. Sammy Dog
Regarding the bolded - we closed on an FHA almost 2 years ago, and neither of these were true at the time. We got the going rate, as low as any conventional loan would have been. We had to pay a portion of the PMI upfront, and will be paying PMI monthly for 5 years. We were told that the PMI then drops off, regardless of value (which would be beneficial is the market stays the same, or declines still). However, we could refinance into a conventional loan sooner, if we thought that the remaining loan value would be 80% or less of the current assessed value, or wanted to pay the difference in cash.
We could have put more down and done a conventional loan, but honestly, the FHA loan worked out great for us. We preferred to keep more cash in the bank instead. If you can find a good mortgage broker (good luck on that one, we've yet to actually find one), they can offer you different types of loans and it shouldn't be too complicated to figure out which would work out best for you.
We purchased mid-2011. With the FHA loans, they required monthly PMI for 5 years. The PMI calculator increased early last year so the monthly PMI is more than it would have been last year at this time. But like mentioned above, they require only 3.5% down. Sellers are allowed to contribute up to 6% for closing costs.
With a conventional loan, they were as little as 5% down (there was a 3% down first time homebuyer conventional loan too). Our loan only has 12 months PMI (our monthly PMI is much cheaper than an FHA loan's PMI). After 12 months, we can pay to have the home reappraised and the PMI dropped.
If you are in rural place, you can look into USDA but the location makes you qualify and then secondly, you have to qualify based on your income. When we looked into this early 2011, there was an "upfront" 3% fee that could be rolled into the mortgage. I believe now (from reading this board) that this loan also has monthly PMI but I think that is a newer development... don't quote me on that though.
Jewel is correct - we compared FHA vs. 5% conventional. Our interest rate with FHA is 3.875% and the PMI is until you've got 20% equity but for no less than 6 years (I think it's 6).
Our conventional interest rate is 4.125%, but i'm not locking in until it goes down to 4%. There are additional fees with the FHA that steered us towards conventional.
Mr. Sammy Dog