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Old 09-09-2008, 07:32 PM
 
Location: Broward County
2,518 posts, read 9,694,697 times
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I am pre-approved and home shopping right now. Are FHA rates affected by this big news ?
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Old 09-09-2008, 07:46 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,097,622 times
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FHA rates went down as well.

they've been the almost the same as conventinal in the last 2-3months
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Old 09-10-2008, 08:55 AM
 
Location: Broward County
2,518 posts, read 9,694,697 times
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thanks Renriq02
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Old 09-10-2008, 04:00 PM
 
Location: Plano, Texas
1,676 posts, read 6,334,862 times
Reputation: 684
Yes, FHA rates went down as well. If your credit score is over 680, you might want to do conventional financing. You will have to put down 5% where FHA only requires 3%. But a big advantage of conventional over FHA is the costs. FHA will charge an upfront fee of 1.25 to 2.25% of the loan, which on $200,000 equates to $2500 to $4500. So, if you can get the same rate on conventional that you can get on FHA but not have to pay that upfront fee, it is better to go conventional. One drawback to conventional is the monthly mortgage insurance is higher, but you can split your mortgage into a 1st and 2nd and avoid mortgage insurance completely. I am yet to find a loan that the payment was less doing 1 loan with mortgage insurance then if you broke it up into 2 loans. Also, if you can go conventional you do not have to set up an escrow account for taxes and insurance where FHA will require. With 5% down, it is a 80/15/5. 80% first lien, 15% 2nd lien and 5% down. Now, if your score is under 680, then go FHA even though more expensive you will get an overall better deal. Hope this helps.
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Old 09-11-2008, 07:16 PM
 
Location: SE Michigan
1,213 posts, read 4,240,652 times
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if you have a builder to pay closing cost... all but $100... is it still better to go conventional?

I prefer my house payment to include PMI, insurance and taxes...just for convenience.

My scores are 700's. I have 5% to put down... but if the rates are comparable, would it be wiser to go with FHA and leave a little dough in my pocket for rainy day fund?
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Old 09-11-2008, 08:58 PM
 
Location: Plano, Texas
1,676 posts, read 6,334,862 times
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Whoever pays the cost has no relation to which is the better financing. I am a little shocked that you want to pay pmi. I have never had a client say that before. Before 2007 pmi was not tax deductible but today as long as your family income is under $105000 it is tax deductible. So, consider your income when choosing whether you want to pay pmi. By the way, pmi which is private mortgage insurance, is basically insurance you pay so if you default(to into foreclosure) on your mortgage, your lender does not lose money when they sell your house in foreclosure. For example, purchase price 200k, if you put down 5% which is 10k you have a loan of 190k. Lets say you go into foreclosure a year later owing 185k, when the banks take the home back and sells in foreclosure for lets say 140k, the bank would cash in the mortgage insurance for the 45k they are still owed. Hope that makes sense. If you prefer to have just 1 loan, the fha payment will be a little less then a conventional rate due to pmi on conventional would be more then the mi on fha loan, and they will have the same rate. Before you choose fha also know that fha will charge a upfront mi fee of any where from 1.25 to 2.25% of the loan, that is part of the reason why the mi is less on fha then conventional. In my opinion, your best option for best rate, lowest payment, maximum tax benefit, most flexibilty(conventional you can waive escrows, fha you must escrow) and lowest cost loan would be the conventional as a 80/15/5 loan.

Last edited by VictorBurek; 09-11-2008 at 09:00 PM.. Reason: want to add
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Old 09-12-2008, 09:10 AM
 
Location: Yardley PA
689 posts, read 1,997,642 times
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My bank is charging me LLPM is that different than mortgage insurance and something new fannie mae is charging people for loans?
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Old 09-12-2008, 09:55 AM
 
Location: Cary, NC
1,036 posts, read 3,628,214 times
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Quote:
Originally Posted by ooodsie View Post
My bank is charging me LLPM is that different than mortgage insurance and something new fannie mae is charging people for loans?
I assume you mean LPMI, lender paid mortgage insurance. All that means is that the lender pays your mortgage insurance upfront as a lump sum. In exchange, your interest rate is slightly higher.

I did this for a client yesterday, even though the interest rate was .25% higher, the monthly payment was ~$150 lower because they did not need to pay monthly MI. There are pros and cons to this, and the lender should give you a disclosure explaining the differences.


The only new fee I am aware of is the .25% "adverse market adjustment" Fannie Mae is making. It is a .25% fee (or you can take a higher interest rate) on all loans because of the market turmoil. Its supposed to boost their bottom line so they can try to stop the losses.. and this was in the works before the government takeover.
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