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I would also ask - if they are offering mortgages w/ less than 20% down - how many points w/ the rate. That would be good to know upfront.
You can check out FHA lenders, but just be aware - they tag on PMI and it stays w/ the loan, unlike other mortgage products wh/ drop the PMI when appraised value exceeds loan payoff by more than 20%.
I would also ask - if they are offering mortgages w/ less than 20% down - how many points w/ the rate. That would be good to know upfront.
You can check out FHA lenders, but just be aware - they tag on PMI and it stays w/ the loan, unlike other mortgage products wh/ drop the PMI when appraised value exceeds loan payoff by more than 20%.
I am not sure if PMI stays on with all FHA loans. Also some conventional loans have PMI that is forever until you refi. Just another one of those wonderful sneak mortgage things that can bite you if you don't ask...
FHA loans require the entire PMI to be paid up front as a lump sum at closing and this can be several thousand dollars. I believe it is 1.5% of the loan amount. This is one of the downsides to these loans.
If you pay off the loan early, such as selling the home or refinancing, you can apply to have the un-used amount refunded. However this has to be done in the first 7 years of the loan. Otherwise you don't get this money back.
I would also ask - if they are offering mortgages w/ less than 20% down - how many points w/ the rate. That would be good to know upfront.
You can check out FHA lenders, but just be aware - they tag on PMI and it stays w/ the loan, unlike other mortgage products wh/ drop the PMI when appraised value exceeds loan payoff by more than 20%.
I would ask....
what did you just say Ani ?
I'm going to be a first time home buyer, where is the manual for this?
Most all banks are FHA lenders and there are lots of mortgage brokers who can originate FHA loans as well. Call BofA, Wells, and check with a couple local mortgage brokers to check rates. If you qualify for FHA, you can put as little as 3.5% down. It will have mortgage insurance, but the monthly premium is about half of what you pay with conventional loans with less than 20% down. You do have to pay an upfront mortgage insurance premium, but that can be financed in to the loan. Also, with FHA, the seller can pay up to 6% closing costs. Rates are usually a tad bit higher on FHA loans than conventional, but if you go with a bigger bank like BofA, Wells, etc, the rate won't be that much different, unless your credit score is low.
1 point = 1% of the loan. To be paid upfront at closing Sometimes lenders exchange a lower intrest rate with charging points.
PMI = Private Mortgage Insurance. Any time you have not put down at least 20% you will be charged PMI. It usually added into the monthly payments. Often once you have paid the loan down to 80% you can refinance and get the PMI dropped.
FHA = Government backed loan
As far as a handbook goes, you can find all the info on the internet! Good luck.
so if your loan amount is 200,000 then you would pay
3500 upfront (can be rolled into the mortgage)
91.67 mortgage insurance monthly for a minimum of 5yrs.
3.5% is required as a down payment, and lenders take 620 middle score
Sellers can pay up to 6% of your closing costs, BUT you have to pay the 3.5% as a down payment
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