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Old 04-30-2018, 03:40 PM
 
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On a $100K loan it's 1.75% up front so that's 1750

then 0.85% yearly if you only put the 3% down payment. So that's $850 a year for 30 years. That's about $70.83 a month. Which is worth it to get into a house, but in 30 years it's $25,500 extra you pay plus 1750 = $27,250, So if you get a 5% mortgage you will be paying almost 6% with FHA Mortgage Insurance. The only way to get rid of it is to refinance (plus all associated costs) if rates lower that your original rate or to pay off your loan earlier.

$200K home double that amount, etc, I think over $650K homes rates change.

Last edited by LifeIsGood01; 04-30-2018 at 04:32 PM..
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Old 04-30-2018, 04:01 PM
 
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Yep.

Get those scores over 660 and go HomeReady/HomePossible if you can. or put 5% down, and go with a Split conventional MI scenario and get the seller to pay closing costs. Or do an 80/15/5. Or go VA or USDA.
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Old 04-30-2018, 04:08 PM
 
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Quote:
Originally Posted by Pfhtex View Post
Yep.

Get those scores over 660 and go HomeReady/HomePossible if you can. or put 5% down, and go with a Split conventional MI scenario and get the seller to pay closing costs. Or do an 80/15/5. Or go VA or USDA.
You can't go VA unless you are a veteran and you can't go USDA unless it's a rural area and some sellers don't want to go thru the extra hassle of dealing with the extra steps involved, but if you do qualify it's better than FHA. Plus some lenders offer similar loans with competitive rates starting at 3.5% down but the mortgage insurance can be cancelled after a certain amount of years or when your ownership ratio, I forget what it's called reaches a certain %. There are certainly better options out there than FHA.
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Old 04-30-2018, 05:50 PM
 
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Quote:
Originally Posted by Pfhtex View Post
Yep.

Get those scores over 660 and go HomeReady/HomePossible if you can. or put 5% down, and go with a Split conventional MI scenario and get the seller to pay closing costs. Or do an 80/15/5. Or go VA or USDA.
Yep.
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Old 05-01-2018, 05:27 AM
 
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Quote:
Originally Posted by Pfhtex View Post
Yep.

Get those scores over 660 and go HomeReady/HomePossible if you can. or put 5% down, and go with a Split conventional MI scenario and get the seller to pay closing costs. Or do an 80/15/5. Or go VA or USDA.
I've never heard of HomePossible, but I've seen HomeReady online before. 80/15/5 sounds interesting too, I had never heard of that either, but anything where the mortgage insurance is not in the loan or only for a certain period of time is much better than FHA.
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Old 05-01-2018, 07:14 AM
 
Location: Great White North Hills
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Bust your hump, pay down your equity, refinance. FHA gives you a chance to get in the door, you can build on that.
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Old 05-01-2018, 07:38 AM
 
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Originally Posted by Copanut View Post
Bust your hump, pay down your equity, refinance. FHA gives you a chance to get in the door, you can build on that.
I got my FHA with 3.5% so the extra 0.85% makes it 4.35% so rates would have to come down back a lot for it to be worth it especially with refinancing closing costs.

that's what I used FHA for to get in the door. My credit was fine, but DTI ratio was high too. I really looked at my total payment which is very reasonable including PITI, it's just crazy when you estimate the mortgage insurance on it's own over the life of the loan. Plus I am able to pay extra on the principal every month.
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Old 05-01-2018, 07:47 AM
 
Location: Northern Virginia
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Quote:
Originally Posted by LifeIsGood01 View Post
On a $100K loan it's 1.75% up front so that's 1750

then 0.85% yearly if you only put the 3% down payment. So that's $850 a year for 30 years. That's about $70.83 a month. Which is worth it to get into a house, but in 30 years it's $25,500 extra you pay plus 1750 = $27,250, So if you get a 5% mortgage you will be paying almost 6% with FHA Mortgage Insurance. The only way to get rid of it is to refinance (plus all associated costs) if rates lower that your original rate or to pay off your loan earlier.

$200K home double that amount, etc, I think over $650K homes rates change.
We purchased our home with $0 down payment, and our PMI was roughly $250 a month. Once we had sufficient equity (80/20 LTV), we refinanced to drop the PMI and the interest rate was lower as well.

The key is to refinance the house when you have sufficient equity. There is really no need to pay PMI for the entire length of the loan.
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Old 05-01-2018, 07:55 AM
 
Location: Great White North Hills
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Quote:
Originally Posted by LifeIsGood01 View Post
I got my FHA with 3.5% so the extra 0.85% makes it 4.35% so rates would have to come down back a lot for it to be worth it especially with refinancing closing costs.

that's what I used FHA for to get in the door. My credit was fine, but DTI ratio was high too. I really looked at my total payment which is very reasonable including PITI, it's just crazy when you estimate the mortgage insurance on it's own over the life of the loan. Plus I am able to pay extra on the principal every month.


Looks like you know the drill! I bought a duplex with FHA back when the rates were 9%. Luckily, the market improved and I was able to refi in about 5 years. Yeah, it does add up, but FHA makes it easier to get in the game.


Good Luck!
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Old 05-01-2018, 08:00 AM
 
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OP, you aren't married to that 30 year loan forever. I mean, you might be stuck with it awhile if rates climb up, but if that's the loan you can get you can possibly refinance out of it into a conventional after a while. But a word of warning that you may have already seen somewhere - loan amortization will have you paying a lot of interest upfront and not much principal. On a 30 year loan at say... 5%, 75% of your P+I is going to interest alone. Meaning the equity you are growing in your house by way of paying down the principal is going to grow very slowly.

Mind you, that's how mortgages work. I guess the point I'm trying to make is:

Just be aware that while you can get out of FHA insurance by refinancing to a conventional loan, but that will require sufficient equity. The general rule of thumb used to be 80% Loan to Value. Depending on the market in your area, you might have the equivalent of 20% equity in that house from market fluctuation in a few years. But, just so you know, if the market stayed flat, it will take you 10 years on that loan to get to 80% LTV.
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