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Old 12-13-2008, 08:49 AM
 
1 posts, read 2,652 times
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Hello,

Looking to buy a SFH in northern VA (declining mkt). My loan amt is 490k (after putting down 10%). FICO score is 780-800. I'm getting offered 5% 30 yr fixed FHA, with 1 point from one lender (this was offered on Dec 12 2008). I am looking to close in 2 weeks.

10% downpayment is a threshold on my end.

Qs -
a) Shd I buy points to bring down the rate? (plan to stay in this house atleast 5 years if not more)
b) Shd I be looking at conventional at all given the rate & my downpayment limitations?

Thanks in advance!
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Old 12-13-2008, 09:48 AM
 
Location: NOVA
4,521 posts, read 5,595,823 times
Reputation: 1940
Quote:
Originally Posted by digdug_333 View Post
Hello,

Looking to buy a SFH in northern VA (declining mkt). My loan amt is 490k (after putting down 10%). FICO score is 780-800. I'm getting offered 5% 30 yr fixed FHA, with 1 point from one lender (this was offered on Dec 12 2008). I am looking to close in 2 weeks.

10% downpayment is a threshold on my end.

Qs -
a) Shd I buy points to bring down the rate? (plan to stay in this house atleast 5 years if not more)
b) Shd I be looking at conventional at all given the rate & my downpayment limitations?
Definately go conventional vs adjustable (arm). Rates are about as low as they can go. If you are maxed out on 10% down then you likely don't have the extra money to buy points (to help buy down your interest rate). With your loan amount, any points are going to significantly increase your closing amount and not significantly affect your monthly payment. Crunch the numbers but I'm guessing it will take you 5+ years to break even where your lower rate is recouped by lower monthly payments covering the difference over time.

While figuring in your numbers, do not under estimate property taxes. You will probably add another $600-800 a month in property taxes even though you got a great buy on this purchase.
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Old 12-13-2008, 10:04 AM
 
28,461 posts, read 76,075,824 times
Reputation: 18533
Yes, I have seen several lenders offering those terms -- THEY ARE POSSIBLE, not guaranteed.

The simplest way to do this is have the information from your current loan and then entering the details from the proposed NEW loan with the points and CALCULATE the break even. If this is within the window of when you'd like to sell it may still make sense, if you end up having to live their longer...

Refinance Breakeven - Financial Calculators from Dinkytown.net
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