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Old 06-29-2015, 01:18 PM
23 posts, read 21,286 times
Reputation: 14


I am about to close a mortgage loan for a HUD property which I had originally opted for a USDA Rural @ 3.25% for a sale price if $135,500 for 30 years. I just got the bank appraisal which states its value at $157,000.

The current Conventional loan rate is at 3.875% and they ask for at least a 5% down payment.

If I put in a down payment of $15,000 for the conventional loan, would I be able to automatically get rid of the Mortgage Insurance or do I still need to put in 20%+ down payment? Should I just stick to my 3.25% USDA Rural loan then?
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Old 06-29-2015, 02:03 PM
50 posts, read 41,651 times
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The lender will use the apprasial or purchase price - whichever is lower. So even though the appraisal came in much higher than the purchase price you cannot use that equity to offset PMI.

However if you put down $15k you would be putting down approx 11%. You have 9% to go. You may be able to refi or go back to your FNMA lender and requst the PMI be removed. You will probably have to wait at leasta year.

Rate is 1 piece of the equation. PMI is another. What is the mortgage insurance amount of the USDA loan? Find out what the PMI will be on the Conventional loan if you put down 10%. PMI on Conventional loans are dictated by percentage down and credit score.

Then compate P & I & PMI to P & I & PMI.

Also does that $15k include Closing Costs? The down payment and Closing Costs are 2 separate pieces.

I'm a mortgage loan officer. Be careful who you listen to. I've seen people who bought 1 home in their life giving advice on City Data. It boggles my mind.
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Old 07-01-2015, 06:10 PM
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If you have 10%, why not do an 80/10/10? Look into it for a comparison.
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