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[Triumph]

Its tough because the people who are truly qualified to answer your questions are prohibited by Dodd Franks. What you're asking about is one of the trigger terms.

Wha...

 

[Vdubchaos]

Originally Posted by Vdubchaos
a) go with local small (reputable) bank or credit union /Stay away from big banks is the rule of thumb
Small banks and credit unions had noticeably worse rates when I was recently getting my mortgage and would have cost me hundreds extra a month. Also, getting your loan through a small bank is no guarantee that they'll hold on to it.

Not true, I refinanced twice past 2 years and each time my local bank and credit union had MUCH better rates.

Both of them do not sell their loans. It depends on which bank, do the research (some do and some don't).

Generally, BIG banks are the ones that bundle them and sell them off.

I'm a big believer in "if you don't have 20% down you cannot affort a house". In your case, if you don't have 20% equity/down payment you cannot afford to refinance.
He already owns the house. If he refinances and gets something that aligns better with his plans (lower payment including the PMI, paid off sooner, etc) it could be very beneficial. You're applying a rule of thumb that doesn't make much sense in his situation.

It depends, I know few people that don't have equity in their home and cannot get a refinance loan for the life of them...

 

[GT1999]

Guys, is $160/month PMI normal for a $250k house through FHA with only 3% down (just running the numbers, we may put more down)?!

Based on what I'm reading online, it's your loan * 0.05 which is $104/mo. I'm wondering how our loan officer got $160. She said "that's on the high end".

Is she smoking crack, or what? Is PMI through them or FHA/HUD (I though it was FHA/HUD, not the bank?)

 

[edro]

Guys, is $160/month PMI normal for a $250k house through FHA with only 3% down (just running the numbers, we may put more down)?!

Based on what I'm reading online, it's your loan * 0.05 which is $104/mo. I'm wondering how our loan officer got $160. She said "that's on the high end".

Is she smoking crack, or what? Is PMI through them or FHA/HUD (I though it was FHA/HUD, not the bank?)

Yes, that sounds very typical.

 

[GT1999]

D'oh. I just ran it again and it's $187/mo actually so she's right... actually it's more. I didn't do the math right above. Damn that sucks. it looks like if you put 5% down it puts you in the next bracket which is $162/mo so there's obviously a benefit to putting more down.

I think we're just going to take all of our money from the wedding and put it ALL towards the down payment.

Source: http://www.dailyinterest.com/library/PMI/How_to_calculate_PMI.html

 

[kalrith]

D'oh. I just ran it again and it's $187/mo actually so she's right... actually it's more. I didn't do the math right above. Damn that sucks. it looks like if you put 5% down it puts you in the next bracket which is $162/mo so there's obviously a benefit to putting more down.

I think we're just going to take all of our money from the wedding and put it ALL towards the down payment.

Source: http://www.dailyinterest.com/library/PMI/How_to_calculate_PMI.html

I believe that source is for conventional loans. If you're going FHA, then I believe I have some bad news for you. A $250k 30-yr FHA loan at 3% down would have $260/month PMI. At 5% down it would be about $250/month. Here's the source: http://www.fha.com/fha_requirements_mortgage_insurance.cfm

You'll see 120 bps and 125 bps next to the loans in question. For 120 bps, you take .0120 and multiply it by the loan amount (I used $250k). Divide that by 12, and that's your monthly PMI.

Note that the monthly PMI on a 15-year FHA loan with 3% down would be have that amount with only 60 bps. With the 15-year FHA, you have to put 10% down to reduce the PMI to 35 bps.

I checked those numbers with an online lender, and they're all within a few dollars of what I mentioned above.

 

[GT1999]

I believe that source is for conventional loans. If you're going FHA, then I believe I have some bad news for you. A $250k 30-yr FHA loan at 3% down would have $260/month PMI. At 5% down it would be about $250/month. Here's the source: http://www.fha.com/fha_requirements_mortgage_insurance.cfm

You'll see 120 bps and 125 bps next to the loans in question. For 120 bps, you take .0120 and multiply it by the loan amount (I used $250k). Divide that by 12, and that's your monthly PMI.

Note that the monthly PMI on a 15-year FHA loan with 3% down would be have that amount with only 60 bps. With the 15-year FHA, you have to put 10% down to reduce the PMI to 35 bps.

I checked those numbers with an online lender, and they're all within a few dollars of what I mentioned above.

Oh wow, that's going to hurt. Seeing we pay $1300/month now for rent and I don't think we save enough, I don't know how we we're going to do $2000/month with all the fees added into the mix.

Might have to look at cheaper houses like 200-230k and hope to get them for cheaper like a 10% discount

190k mortgage would be 1655/month approximately with all PMI, insurance, fees and taxes, that's more reasonable.

 

[Elbryn]

Oh wow, that's going to hurt. Seeing we pay $1300/month now for rent and I don't think we save enough, I don't know how we we're going to do $2000/month with all the fees added into the mix.

Might have to look at cheaper houses like 200-230k and hope to get them for cheaper like a 10% discount

190k mortgage would be 1655/month approximately with all PMI, insurance, fees and taxes, that's more reasonable.

not sure if asked before, how handy are you? can always find a house in the area you want that needs a bit of work. you can replace up front cost with sweat.
dont forget all the normal stuff you need when you buy a house too. money for things like lawn mowers, edgers, furniture to fill out the 1000+ extra sq ft you now have.

 

[sunzt]

Oh wow, that's going to hurt. Seeing we pay $1300/month now for rent and I don't think we save enough, I don't know how we we're going to do $2000/month with all the fees added into the mix.

Might have to look at cheaper houses like 200-230k and hope to get them for cheaper like a 10% discount

190k mortgage would be 1655/month approximately with all PMI, insurance, fees and taxes, that's more reasonable.

Any foreclosures/bank sale/short sales around your area? You probably should look at those, but it probably will be hard to score with only a 3% FHA.

 

[EagleKeeper]

Nice thing about the VA is you pay a 0.25% premium but 0 down and no PMI. :biggrin:

 

[EagleKeeper]

Oh wow, that's going to hurt. Seeing we pay $1300/month now for rent and I don't think we save enough, I don't know how we we're going to do $2000/month with all the fees added into the mix.

Might have to look at cheaper houses like 200-230k and hope to get them for cheaper like a 10% discount

190k mortgage would be 1655/month approximately with all PMI, insurance, fees and taxes, that's more reasonable.

Seems steep:
I started with a 190K and with insurance & taxes I was under $1300.

Granted, my insurance and taxes combine to 2500/yr and I have no PMI to worry about.

 

[GT1999]

Any foreclosures/bank sale/short sales around your area? You probably should look at those, but it probably will be hard to score with only a 3% FHA.

Unless if we want to wait another year that isn't going to happen. Our lease is up in the beginning of October. Not enough time for a short sale or foreclosure. Also 3% down is a problem.

 

[dabuddha]

Just went through lendingtree and got a 30 year fixed rate @ 3.5% from roundpoint mortgage. Only have to pay $400 for the appraisal and $1500 for the titling company.

My old rate was 4.5%

 

[GT1999]

Seems steep:
I started with a 190K and with insurance & taxes I was under $1300.

Granted, my insurance and taxes combine to 2500/yr and I have no PMI to worry about.

The PMI for me is $260, and then I did $100 a month for mortgage insurance (regular through State Farm or the like). so that's $360 right there.

 

[TerryMathews]

Any foreclosures/bank sale/short sales around your area? You probably should look at those, but it probably will be hard to score with only a 3% FHA.

Also look at Fannie Mae Homepath properties.

 

[Vdubchaos]

Oh wow, that's going to hurt. Seeing we pay $1300/month now for rent and I don't think we save enough, I don't know how we we're going to do $2000/month with all the fees added into the mix.

Might have to look at cheaper houses like 200-230k and hope to get them for cheaper like a 10% discount

190k mortgage would be 1655/month approximately with all PMI, insurance, fees and taxes, that's more reasonable.

I hate to ruin your dream but honestly, if you don't think you save enough now....with a house you will be saving THAT much more.

You are cutting it to close IMO.

Another general rule of thumb is your House payment (PITI + PMI) should not be more than 35% (+/- 5%) of your total GROSS income.

You keep talking about PMI being $50-100 more or less. If you were ready, those amounts really wouldn't matter much.

And if you were REALLY ready, you would have no PMI as you should be putting down 20%

 

[vi edit]

And if you were REALLY ready, you would have no PMI as you should be putting down 20%

Sadly 20% isn't even going to cut it for some lenders/loans. When I was refinancing it was 78% at one bank.

 

[Vdubchaos]

Sadly 20% isn't even going to cut it for some lenders/loans. When I was refinancing it was 78% at one bank.

Glad SOME banks are doing it again.

I think 20% equity is a good safety net for both owners and banks.

If owner gets into trouble they can sell the house and still have money left over for closing costs and to work with (rent etc).

If you put down 5% that will basically cover closing costs when you sell (assuming home value stays the same of course...BIG IF)

 

[GT1999]

I hate to ruin your dream but honestly, if you don't think you save enough now....with a house you will be saving THAT much more.

You are cutting it to close IMO.

Another general rule of thumb is your House payment (PITI + PMI) should not be more than 35% (+/- 5%) of your total GROSS income.

You keep talking about PMI being $50-100 more or less. If you were ready, those amounts really wouldn't matter much.

And if you were REALLY ready, you would have no PMI as you should be putting down 20%

Our income is $115-$120k so going for a $230k house is well within question. The reason I'm penny pinching is in case if I'm the only one paying it, or she is. Death, divorce, a new job, or one of us losing our jobs.

 

[boomhower]

Unless if we want to wait another year that isn't going to happen. Our lease is up in the beginning of October. Not enough time for a short sale or foreclosure. Also 3% down is a problem.

Also look at HUD foreclosures. Link I purchased one in 45 days from app to closing using Wells Fargo, and that was using an agent out of town faxing and emailing everything. A lot of HUD properties qualify for $100 down payment if you use an FHA loan. I went that route and it worked great, no hidden gotchas.

Before everyone starts screaming about not paying 20% down I live in the poorest county in the state with the highest unemployment so no one is buying anything, I paid $58k for my house.(1500sq/ft, 3 bed and two bath with a $135k replacement value) It will be paid off quickly, took 15 year loan and plan on paying it off in half that. I wanted to use the cash I had saved for furniture and such as we started with basically nothing after having recovered from some pretty nasty circumstances and living with the in laws.

 

[slightlyhuman]

80% if you request in writing once you reach that point.

he's right. the lender is responsible for canceling PMI once LTV is 78% but if you're aware(which you should be) your LTV is 80% you can request to have it canceled then.

 

[purbeast0]

aaannnddd the sellers took our offer.

so we're looking at a 418k purchasing price, 5% down (just under 21k) and the loan is @ 4.125% with no PMI.

and we have this freedom lock thing where if the rate changes from now until 6 days before settlement (for the better) that we can lock in a new rate.

mortgage w/out the taxes and insurance is about $1925/mo and w/insurance and taxes probably close to $2300/mo.

what im wondering is if in a few years when we have some actual equity if we could refinance for even lower rates. we'll have to wait and see how that plays out.

 

[TerryMathews]

he's right. the lender is responsible for canceling PMI once LTV is 78% but if you're aware(which you should be) your LTV is 80% you can request to have it canceled then.

someone else who knows what's going on.

 

[TerryMathews]

aaannnddd the sellers took our offer.

so we're looking at a 418k purchasing price, 5% down (just under 21k) and the loan is @ 4.125% with no PMI.

and we have this freedom lock thing where if the rate changes from now until 6 days before settlement (for the better) that we can lock in a new rate.

mortgage w/out the taxes and insurance is about $1925/mo and w/insurance and taxes probably close to $2300/mo.

what im wondering is if in a few years when we have some actual equity if we could refinance for even lower rates. we'll have to wait and see how that plays out.

If your rate is floating, what happens if it floats up?

 

[kalrith]

he's right. the lender is responsible for canceling PMI once LTV is 78% but if you're aware(which you should be) your LTV is 80% you can request to have it canceled then.

I spoke with my lender about this today. It sounds like with conventional loans they'll take appreciation into account, but with FHA I have to pay it down to 78% of the original purchase price. I ran the numbers, and I'll be at that point after 44 payments with a 15-year loan.

Assuming that I can actually get it cancelled at that point, I'll have paid $4,365 in PMI, including the up-front PMI. Over the life of the loan, we'll pay the same that we would on a 3.125% mortgage with no PMI, so I'd say that our deal is a good one. Even if we can't get it canceled, it will effectively be a 3.875% interest rate.

If my wife's credit score were just 2 points higher, then I could do a conventional loan with 5% down and 3% of prepaid PMI with no monthly PMI payments. Unfortunately that's not an option.