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Old 05-04-2015, 08:05 PM
 
176 posts, read 132,896 times
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Quote:
Originally Posted by VictorBurek View Post
Depending on the state where you are buying, 80/15/5 may not be available. I do them all the time for my Texas clients.

Currently, the mortgage insurance on FHA with 3.5% down is .85...so your FHA rate of 3.75 + .85 for MI, gives you a total FHA rate of 4.6. And the MI never falls off, it will decrease a little but that's it. Oh, and don't forget the 1.75% upfront FHA fee that you are also paying. It will be added to your loan amount. So, the 95% conventional may have a slightly higher payment, but much less expensive in the long run.

I would also suggest you find another lender. They don't want to offer as they are a bit more work and as a loan originator, we are unable to make money doing 2nd liens. Maybe quicken doesn't want to offer since they cant make money on it.

In Texas, a 15% 2nd would be 5.75. A conventional 80/15/5 is better than doing 1 conventional loan to 95% and much much better than FHA. I am only doing FHA loans for clients that cant qualify for conventional. Only way the rate would be 4.5% is if you have questionable credit. if you have fico over 720, then that is a horrible rate. If you do have over 720 and they offered 4.5% conventional and 3.75% fha, it seems to me that they are trying to steer you toward FHA. Banks make the most money on FHA.
The problem for me is the closing cost. With conventional my closing cost can be as high as 23-24K which is too close for comfort. With FHA I can bring it down to like 13K. So I am forced to go into FHA despite having excellent credit 750+ (700-710 mortgage score)..


So my strategy was to start off with FHA and refinance it into conventional at some point in the future.

One more problem is the tight closing date - I am not sure if I initiate process with another lender like Bank of America, they will be able to close it out quickly enough for the deal to go through!
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Old 05-05-2015, 12:39 PM
 
Location: Plano, Texas
1,676 posts, read 6,333,376 times
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What? the type of loan doesn't change the closing costs. FHA is more expensive then conventional. The lender fees are same with both loans, the title fees are same with both loans. However, FHA charges 1.75% extra in costs.

You are getting bad information from your lender. It seems to me that they are steering you toward fha for a reason. FHA is a much more profitable loan to the lender.
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Old 05-05-2015, 01:59 PM
 
176 posts, read 132,896 times
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Their order of preference is FHA > LPMI > BPMI > Conventional with 20% Down! From the feeling I got.
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Old 05-05-2015, 02:21 PM
 
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I agree, it seems like you need to speak with another few lenders. 85/15/5 is a good option for those who qualify vs FHA. Even if, for some reason, your payment is still the same in a piggyback as a FHA, you can take a tax deduction for the interest. You can't do the same for the PMI you're taking on w an FHA.
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Old 05-05-2015, 02:29 PM
 
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On paper FHA mortgage insurance is for life of the loan but in practice? Not sure. Seldom 2 or 3 years pass without an FHA rule change. So, that "life" of the loan may be a couple or three years--just my crystal ball of course based on history. It seems to me that they have all these rule changes occurring every year or so, keeping the refinancing business going .
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Old 05-05-2015, 02:38 PM
 
176 posts, read 132,896 times
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Quote:
Originally Posted by Pragmaticus View Post
On paper FHA mortgage insurance is for life of the loan but in practice? Not sure. Seldom 2 or 3 years pass without an FHA rule change. So, that "life" of the loan may be a couple or three years--just my crystal ball of course based on history. It seems to me that they have all these rule changes occurring every year or so, keeping the refinancing business going .
Another reason why its a bad deal to enter FHA loan!
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Old 05-05-2015, 04:40 PM
 
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Quote:
Originally Posted by YelloJacket View Post
Thats because I am paying only 5% downpayment. I will be getting like 4.0%ish if I put down 20%.

I am too but both places I got GFEs from came in at 3.75 and 3.875. One of them was Bank of America and the other was my credit union.
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Old 05-05-2015, 04:45 PM
 
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I had the option to go 5 percent conventional and do a one time pmi buyout. It was around 4000
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Old 05-05-2015, 05:56 PM
 
176 posts, read 132,896 times
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Quote:
Originally Posted by piyf View Post
I am too but both places I got GFEs from came in at 3.75 and 3.875. One of them was Bank of America and the other was my credit union.
Sure but what are your closing costs! My bank of america closing was quoted at 24K with 5% downpayment. Thats a lot!

Thats a good 10K more than my quoted closing cost.

Saving 10K and paying over 30K over 30 yrs is nearly as good as paying 10K more in closing cost and saving 30K over 30yrs...
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Old 05-05-2015, 07:11 PM
 
Location: Denver CO
18,977 posts, read 10,040,378 times
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Quote:
Originally Posted by Pragmaticus View Post
On paper FHA mortgage insurance is for life of the loan but in practice? Not sure. Seldom 2 or 3 years pass without an FHA rule change. So, that "life" of the loan may be a couple or three years--just my crystal ball of course based on history. It seems to me that they have all these rule changes occurring every year or so, keeping the refinancing business going .
In my experiences, changes to the FHA program are generally not retroactive, so a loan that originates with lifetime PMI is likely to keep that unless you re-fi, even if they modify the program.
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