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Old 09-11-2012, 09:15 AM
 
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Can anyone give a brief explanation of the difference between a Conventional and FHA? There's a .4 rate difference on the sheet a lender provided.
Also, for a 10/1 ARM, their rate is 2.625% (teaser rate?) Would I be in the house for less than 10 years? I don't know. But, is it worth the risk of getting an ARM when 30 fixed is only 1% higher and less risk and at historical lows already?

Thanks in advance!
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Old 09-11-2012, 09:53 AM
 
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Conventional (PMI costs if less than 20% down)
FHA (no PMI costs, but higher interest rate and high closing costs)
ARM - Bad idea. Never do it, unless your uber-wealthy

Ask the lender to do a comparison. Only do a fixed number of years with fixed rate. If you do an ARM and real estate prices drop, lending standards tighten (which they will), you may not be able to refinance.

Me? I'd put 20% down and get the conventional. Even without 20% I'd get the conventional.
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Old 09-11-2012, 10:08 AM
 
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Quote:
Originally Posted by 399083453 View Post
Conventional (PMI costs if less than 20% down)
FHA (no PMI costs, but higher interest rate and high closing costs)
ARM - Bad idea. Never do it, unless your uber-wealthy

Ask the lender to do a comparison. Only do a fixed number of years with fixed rate. If you do an ARM and real estate prices drop, lending standards tighten (which they will), you may not be able to refinance.

Me? I'd put 20% down and get the conventional. Even without 20% I'd get the conventional.
I actually have a 40 year option ARM right now which kind of sucked for the first few years but has been great for about the last 3 (only paying in the 2% range). Granted, that's likely to rise in the next year or so but will be out of it by then.

Also, on the rate sheet, the FHA 30 yr fixed rate is lower than the conventional 30 yr fixed. 0 pts on both?
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Old 09-11-2012, 03:48 PM
 
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Quote:
Originally Posted by 399083453 View Post
FHA (no PMI costs, but higher interest rate and high closing costs)
ARM - Bad idea. Never do it, unless your uber-wealthy
You still have Mortgage Insurance costs w/ FHA if you put less than 20% down. Both an up-front charge and a monthly one. The only difference is it's government run instead of Private MI.
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Old 09-11-2012, 03:54 PM
 
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Is there mortgage insurance with an FHA loan if you put 25% down? upfront or monthly? Tks

Are there any conventional loans that are assumable?
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Old 09-14-2012, 06:04 AM
 
Location: Denver
3,197 posts, read 7,709,043 times
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Originally Posted by CREA View Post
Is there mortgage insurance with an FHA loan if you put 25% down? upfront or monthly? Tks

Are there any conventional loans that are assumable?
With an FHA Mortgage you are required to pay the MI for five years period.

If you don't have enough money for a conventional mortgage down payment then FHA may be the only way to get financing.

If you have enough of a down payment to go conventional then you should finance that way.

Between the Upfront Mortgage Insurance Premium and the Monthly Costs they are very costly mortgages.
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