Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
As first-timers, we need more information on the pros & cons of those types of loans. We took homebuying classes a while ago and were working towards a NACA loan. But a relocation changed all that and we decided to try to buy instead of renting due to a lack of available rentals in the new area.
We are pre-approved for a Conventional loan now, but the RE agent suggested checking USDA loans due to no downpayment required. The area qualifies as it's very rural (that's why there's no that many rentals). We kind of dismissed FHA since you have to pay PMI for the life of the loan. We have excellent credit, but not that much of a downpayment (5% or less after closing costs) since our homebuying plan was a year or more away.
We meet the income requirements for USDA. I asked the LO we got the pre-approval from, but even though they appear in USDA list, they don't do them. So, that's why I'm asking here to get some pointers about each one and how to choose which one to take and how to compare them.
If you are going to use all your cash reserves for downpayment then I would recommend the USDA loan. Would be much better to have money left over after closing for all the things you are going to want to do to the new home. Such as new locks, blinds, ceiling fans, curtains, etc....
I have seen many people buy a home and use all their cash for downpayment, then they put everything on credit cards which can spiral out of control quickly.
Definitely stay away from FHA. The only clients I take FHA are the ones that don't have an option to go conventional due to not enough downpayment, higher debt ratios or lower FICO scores.
As first-timers, we need more information on the pros & cons of those types of loans. We took homebuying classes a while ago and were working towards a NACA loan. But a relocation changed all that and we decided to try to buy instead of renting due to a lack of available rentals in the new area.
We are pre-approved for a Conventional loan now, but the RE agent suggested checking USDA loans due to no downpayment required. The area qualifies as it's very rural (that's why there's no that many rentals). We kind of dismissed FHA since you have to pay PMI for the life of the loan. We have excellent credit, but not that much of a downpayment (5% or less after closing costs) since our homebuying plan was a year or more away.
We meet the income requirements for USDA. I asked the LO we got the pre-approval from, but even though they appear in USDA list, they don't do them. So, that's why I'm asking here to get some pointers about each one and how to choose which one to take and how to compare them.
I think FHA is a bad deal if you have other options. As you said, the PMI is for the life of the loan. Its always possible to refiance later into a non FHA loan, and get rid of PMI, but with interest rates still somewhat close to record lows, if interest rates go up, refinancing out of an FHA loan will not be cost effective.
USDA loans do have PMI (they call it a monthly premium) that is .4% of the balance owed, or about 33 per month per 100k owed. That is much less than FHA PMI (or MIP as they call it).
I would certainly look into USDA, its a much better deal than FHA. It is probably a wash between USDA and a conventional mortgage, the USDA will have lower PMI for life, the conventional mortgage will be higher at first, then drop to 0. A good lender can compare those numbers to see which is better deal for you.
Can you try to qualify for a conventional loan doing a 80/15/5? 1st mortgage would be 80% LTV, 2nd mortgage would be 15% LTV, and the 5% is your downpayment. That way you avoid PMI…
Ain't no 80/15/5. Second Liens top out at 89.99% CLTV. 80/10/10.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
