Did I pick the right interest rate?

[SmartMoney]

OP, don't let this discussion make you wonder if you're getting the screws put on you. The only thing that would make your rate higher is to purchase your condo as an investor.

The State of Florida was likely the hardest hit state on the east coast. Condos in Florida experienced record foreclosures and HOAs filed bankruptcy by the dozen. Only after Fannie and Freddie started financing these toxic units (without appraisals) did the condo market begin to recover. Many investors (lenders) charge a premium for Florida loans just because the home is in Florida. And then, Fannie & Freddie both have what is called a loan level pricing adjustment of 1/2 point for a condo w/ 25% down (3/4% point if only 20% down). The loan level pricing adjustments are charged across the nation. The only way to get out of paying the premiums is to work with a portfolio lender.

The good news, Florida condos are making a comeback and most real estate makes a come back in a big way. The further they fall, the more they have to climb to break even.....and when they do, they usually keep on going, giving you more equity. Good luck!

[thelopez2]

Originally Posted by Wordsmith12

Hi guys,

I am actually putting 25% down, so it looks like I would probably recoup the $470 in about 5 years. Twenty five percent down is what's required when buying condos, at least here in Florida. Lenders see them as riskier than loans for houses, so they want to see a heftier down payment.

My credit is very good, but keep in mind that the type of property factors into the interest rate. Since it's a condo -- again, viewed as riskier by lenders -- the interest rate is higher.

If you take the extra $5.32 you are saving on the lower interest rate and apply it to your principal, your break even is, at 51 months. Then every month after that you'd be saving an extra $5.32 due to the the lower interest rate. I would't lose sleep on it either way.