FHA or 30 yr -fixed regular.

[crystalys]

You absolutely should shop the loan!!! Mortgage loan people (banks, mortgage loan companies, etc.) are willing to do what it takes to get your business. Do you have a realtor representing you with the purchase of the home? They can also help you with referrals and have basic information on the different loan types. They are NOT however experts on loans unless they have actually had formal education in the field. If you don't have a realtor, why not? It costs you nothing to have them represent you. Talk to everyone you know who owns a home and get referrals from them about who to go to for a mortgage loan. Do not blindly go with the builder's lender because as others have said on here, they do give great incentives but it is the hidden fees and miscellaneous charges that can wipe out the benefit of the incentive. Have you received a good faith estimate from the builder's lender as to the costs involved in your loan? You can ask for this and there is no obligation on your part to complete the loan with them. You have a right to get this estimate without going any further with the loan. Use it to compare the loan offers from others. Also keep in mind that this is just a good faith "ESTIMATE", so remember that they legally can add things to the final loan contract so that is when you can approve or disapprove the loan. Anyway, if you have any more specific questions you can PM me and If I can't answer your questions then I can find the answer for you. I hope your buying experience is a good one. Good Luck!

[pghquest]

Originally Posted by arun196

Builder lender is charging me around 6000$ for closing costs. I complained about high closing costs. Then they suggested me FHA, which has closing costs of around 2500$. Im going 100% financing. I read it online that unless if I cant afford closing costs, not to go with FHA. However I will be getting 10000$ as incentives from builder, if I go with the builder lender, which can be used as closing costs.

Bottom line- I will be saving around 3500$ for the closing costs , if I go with the FHA. I want to know, is it worth going out with FHA?. I heard I would have to pay PMI till 80% of down payment with FHA otherwise 20% with conventional loan.

Please help..

Shop around for places other then your builder. If the builder is arranging your financing, they are acting as broker, and not necessarily in your best interest. (i.e. reason for their $10K incentive, they are getting a kickback).

There is nothing that says you cant request the builder to give you a 3% concession to go through FHA or another bank, giving you the $0 down.

In todays day and age, negotiate the heck out of it, research your options, and dont think that your limited with the builder ONLY financing you. That $10K might cost you $25k over time because the builder is getting financing profits also.

[Brandon Hoffman]

Originally Posted by arun196

Builder lender is charging me around 6000$ for closing costs. I complained about high closing costs. Then they suggested me FHA, which has closing costs of around 2500$. Im going 100% financing. I read it online that unless if I cant afford closing costs, not to go with FHA. However I will be getting 10000$ as incentives from builder, if I go with the builder lender, which can be used as closing costs.

Bottom line- I will be saving around 3500$ for the closing costs , if I go with the FHA. I want to know, is it worth going out with FHA?. I heard I would have to pay PMI till 80% of down payment with FHA otherwise 20% with conventional loan.

Please help..

I highly recommend shopping the loan. If you get a better offer from another lender it may be worth it to forgo the builder lender. In some states I think it's illegal to tie incentives to a lender. Your agent should be able to help you shop the loan with a good lender or 2 and still help you keep your incentives if you go elsewhere. After all, you could potentially have that loan for a long time and save more than your cc in the long run. It's also possible the builder lender will reduce their cc if you shop it and get better rates elsewhere.

[charlotteengr]

Originally Posted by TimtheGuy

How can you tout what a minimum down payment should be for someone you don't know??

I see you are in the mortgage business. People who put down only a few percent are taking a risk. The only people who may make money if the housing price goes down are realtors, mortgage brokers, and a few others. The poor homeowner gets the shaft.

[TimtheGuy]

Originally Posted by charlotteengr

I see you are in the mortgage business. People who put down only a few percent are taking a risk. The only people who may make money if the housing price goes down are realtors, mortgage brokers, and a few others. The poor homeowner gets the shaft.

??? oh yea we are making bucketloads of money in this market.
Not sure what you are talking about there.

If a person puts zero down I would say it is the lender that is "taking a risk" not the borrowers.

There are many well qualified borrowers that put little or no money down. Some actually have substantial funds but do not want to tie it up in a house. Some invest all their available funds, some want to save their availble funds for emergencies and others want to use their funds to improve the property they are buying. And of coarse some have no available funds and we can often get them into a home as well if they so desire.

It is different for every person. Just because you would not feel comfortable in putting less than 20% down doesn't mean every other borrower shares your view.

If you read my numerous posts on the mortgage forums you will see that I always drive to get the best possible deal for people and I am not making a cent. So, you will have to do your preaching elsewhere.

[deuterdu]

Originally Posted by arun196

Builder lender is charging me around 6000$ for closing costs. I complained about high closing costs. Then they suggested me FHA, which has closing costs of around 2500$. Im going 100% financing. I read it online that unless if I cant afford closing costs, not to go with FHA. However I will be getting 10000$ as incentives from builder, if I go with the builder lender, which can be used as closing costs.

Bottom line- I will be saving around 3500$ for the closing costs , if I go with the FHA. I want to know, is it worth going out with FHA?. I heard I would have to pay PMI till 80% of down payment with FHA otherwise 20% with conventional loan.

Please help..

Currently FHA has much better rates vs. FNMA. You will have to pay PMI but it is refunded (or at least most of it) when you refinance or sell your home in the future provided no late payments etc. From that standpoint I think FHA is a much better deal. Whoever told you that FHA should be avoided may not be licensed to do FHA so they conveniently tell you this to save the loan. I looked at my rate sheets and FHA is much better priced than FNMA. As far as the builder I would tell them that you will use their financing person if you have no closing costs. They will hit you with a higher rate. Not to worry, as soon as you close escrow refinance into a good rate and pay the normal fees. This way they can't make you pay for a crummy rate during the purchase. If it's a refinance you can shop until you find what you want.

[deuterdu]

Originally Posted by charlotteengr

I see you are in the mortgage business. People who put down only a few percent are taking a risk. The only people who may make money if the housing price goes down are realtors, mortgage brokers, and a few others. The poor homeowner gets the shaft.

That is why if you cannot handle the risk of speculative investments one would be better suited to leaving this post and looking for posts on matress money 101

[charlotteengr]

Originally Posted by deuterdu

That is why if you cannot handle the risk of speculative investments one would be better suited to leaving this post and looking for posts on matress money 101

You have a point. Speculation is one thing but being responsible is another. One can do both I think. 10% down on any home you can afford is easy to do. If you can afford this home the down payment should be no problem if you save for a year or so.

My suggestion for those who want to get wealthy is use some of Dave Ramsey's advice. Then you can retire early like I did, see the world, and give back money to society for some really worthy causes.

There are some great mortgage brokers and realtors who work hard and are respectful. Unfortunately many don't post on this forum.