Reminder **Mortgage Rates are way low ** Not an Ad, just a reminder

[GT1999]

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.

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.

You can do conventional with 5% down? I'd like to know how...

 

[purbeast0]

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

it's currently locked at 4.125%.

if it changes for the better we can lock it in at that rate as well.

but we can only re-lock it in one more time between now and 7 days before closing.

 

[slightlyhuman]

someone else who knows what's going on.

ha well i'm still in the bush league side of things. i took my national loan originator exam in the fall last year, failed it by 10%, that bitch was hard! been so busy with work(i plan to originate on the side for a buddy who owns a firm once licensed) that i've put studying away. hardest test i've taken to date. i have a lot to learn but love threads like these.

 

[kalrith]

You can do conventional with 5% down? I'd like to know how...

I've spoken with three local banks that will do a 15-year conventional mortgage with 5% down. I'm not sure if they'd do a 30-year loan with so little down.

The best deal I came across was 5% down, 3% up-front mortgage insurance, and 2.75% interest rate with no monthly PMI. Unfortunately my wife's score is just a hair too low to take advantage of that.

One thing to note is how much cheaper PMI is on a 15-year mortgage than a 30-year. It's basically cut in half. Also, it takes less than 4 years at 2.875% interest rate to pay it down below 78% LTV at which time the PMI should be removed. A 30-year loan at 3% interest would take 8.5 years to pay it down to 78% LTV.

If you go the online route, then I think Century Point Mortgage will do a conventional with 5% down.

 

[rcpratt]

I'm doing conventional, 30yr, 5% down. Some won't do it.

 

[GT1999]

I'm doing conventional, 30yr, 5% down. Some won't do it.

Which bank? Rate?

 

[OCGuy]

I'm doing conventional, 30yr, 5% down. Some won't do it.

LPMI or are you paying monthly mortgage insurance?

Most banks will do 5% down with a form of MI as long as you have good credit and 2 months PITI reserves.

 

[OCGuy]

You can do conventional with 5% down? I'd like to know how...

Simple, mortgage insurance.

 

[Blackjack200]

Question for those who know investment property finance. I'm leveraged out pretty good right now, probably upper 30s DTI ratio. I want to buy an investment property for about $40k in cash, and then borrow against it to finance the purchase of another property. How difficult/expensive is that type of loan compared to a more conventional investment property loan? I already have one investment property that I can document rental income from for 4 months. Will banks count that toward my income or will they make me wait a year?

 

[OCGuy]

Question for those who know investment property finance. I'm leveraged out pretty good right now, probably upper 30s DTI ratio. I want to buy an investment property for about $40k in cash, and then borrow against it to finance the purchase of another property. How difficult/expensive is that type of loan compared to a more conventional investment property loan? I already have one investment property that I can document rental income from for 4 months. Will banks count that toward my income or will they make me wait a year?

Your rental income will have to wait until it is reported on your Schedule E. Until then, you will have to take the full hit for the property you already obtained.

Are you saying you want to buy a $40k investment property cash and then take a loan out against it? That sounds like a lot of trouble....put 20-25% down on the investment property and then use the cash towards something else. Although getting loans that low is something I never see, only in HELOCs.

You can however use projected rent for the new home, which is based off of the 1007/216 portion of the appraisal.

 

[Blackjack200]

Your rental income will have to wait until it is reported on your Schedule E. Until then, you will have to take the full hit for the property you already obtained.

Are you saying you want to buy a $40k investment property cash and then take a loan out against it? That sounds like a lot of trouble....put 20-25% down on the investment property and then use the cash towards something else. Although getting loans that low is something I never see, only in HELOCs.

You can however use projected rent for the new home, which is based off of the 1007/216 portion of the appraisal.

That's what I did on the first one. 20% down on a $35k property. The bank put me through the wringer, In addition to about $4k in closing costs they wanted to see liquid reserves for 6 months of payments on my primary residence and the investment property, so I needed to come up with almost 30k cash to buy buy a $35k rowhouse with a $28k loan. Go figure.

I'm just trying to figure out if there's a better way.

 

[OCGuy]

That's what I did on the first one. 20% down on a $35k property. The bank put me through the wringer, In addition to about $4k in closing costs they wanted to see liquid reserves for 6 months of payments on my primary residence and the investment property, so I needed to come up with almost 30k cash to buy buy a $35k rowhouse with a $28k loan. Go figure.

I'm just trying to figure out if there's a better way.

The better way would be to take a cash-out loan or HELOC out against your primary residence and purchase the rental in cash (if you have the equity in your primary).

Just make sure your ROI is enough to justify it.

 

[Blackjack200]

That's the problem, I'm upside down on the primary. The ROI is ridiculous, only reason I'm doing this. I'm getting $900/mo on the property and the next two would be similar.

Oh well, maybe I'll just buy the next one for cash then focus on deleveraging a bit...

 

[onza]

I'm thinking I need to refi - 10 / 15 year rates are ridiculously low and my house payments would remain the same going from a 30yr to a 10 or 15 year.

 

[rcpratt]

LPMI or are you paying monthly mortgage insurance?

Most banks will do 5% down with a form of MI as long as you have good credit and 2 months PITI reserves.

Just regular PMI. For us it's a better deal than putting more down -- plenty of relatively high-rate student loan debt to pay.

 

[GT1999]

She just moved us to 3.25% from 3.3% but it isn't locked in. We just filled out our underwriting/FHA/HUD application and are dropping it off today. Once that goes through we will be locked in. We've found a lot of great houses, 14 on our interested list right now so things are looking good!

Can't wait to get out of our institutional apartment and get a house.

 

[rcpratt]

LPMI or are you paying monthly mortgage insurance?

Most banks will do 5% down with a form of MI as long as you have good credit and 2 months PITI reserves.

Still getting the mortgage worked out, so what I actually did when I spoke with our guy yesterday is have them roll the PMI into the mortgage. The premium was about 36 months of PMI (not sure how that compares), and due to the ridiculous rates right now, my payment is about $80/mo cheaper than just paying the PMI monthly (monthly PMI would only be about $95/mo). It also eliminates the pain of having to appraise when you reach 20% equity. Due to the low rates and our time frame for this condo (seriously doubt we will spend more than 10 years in it), it seems like the right thing to do. And again, we have higher rate debt that we plan on paying down first.

Thoughts?

She just moved us to 3.25% from 3.3% but it isn't locked in. We just filled out our underwriting/FHA/HUD application and are dropping it off today. Once that goes through we will be locked in. We've found a lot of great houses, 14 on our interested list right now so things are looking good!

Can't wait to get out of our institutional apartment and get a house.

You're going to lock before even finding a house? I thought most lenders charged a fee to lock any longer than 60 days prior to closing.

 

[Alienwho]

I haven't read this thread at all but I would like to thank the OP for posting it. Just reading the title inspired me to look into refinancing.

We bought a house 1 year ago with 5% down conventional loan at 4.875. Our new rate is 3.6 which saves us over $100 a month. Even better is our house appraised for so much more than what we paid for last year that we no longer have to pay PMI, which saves us another $100/month. All in all this was a freakin' sweet deal.

 

[GT1999]

Still getting the mortgage worked out, so what I actually did when I spoke with our guy yesterday is have them roll the PMI into the mortgage. The premium was about 36 months of PMI (not sure how that compares), and due to the ridiculous rates right now, my payment is about $80/mo cheaper than just paying the PMI monthly (monthly PMI would only be about $95/mo). It also eliminates the pain of having to appraise when you reach 20% equity. Due to the low rates and our time frame for this condo (seriously doubt we will spend more than 10 years in it), it seems like the right thing to do. And again, we have higher rate debt that we plan on paying down first.

Thoughts?


You're going to lock before even finding a house? I thought most lenders charged a fee to lock any longer than 60 days prior to closing.

She said the 45 or 60 day period doesn't kick in until we sign a contract.

 

[brotj7]

We owe ~198K on a house currently valued at 269K on a 6.7% loan, and are thinking of refinancing to a lower rate. However...

We purchased in July 2008 and took the 5K intrest free tax credit/loan at tax time(first time homebuyers, paid back over 15 years) and stashed it in the bank in case we ever had a home emergency and needed it. Does anyone know if it would be immediately due if we did a refinance???

Is it worth it to refi from 6.7% with the tax hassle?

 

[kalrith]

We owe ~198K on a house currently valued at 269K on a 6.7% loan, and are thinking of refinancing to a lower rate. However...

We purchased in July 2008 and took the 5K intrest free tax credit/loan at tax time(first time homebuyers, paid back over 15 years) and stashed it in the bank in case we ever had a home emergency and needed it. Does anyone know if it would be immediately due if we did a refinance???

Is it worth it to refi from 6.7% with the tax hassle?

It looks like you're good as long as it remains your main home:

Q. Do I need to repay the credit when my home stops being our main home? A. If you received the credit for a home purchased in 2008 and the home stops being your main home, you may need to add the entire remaining unpaid credit amount to your income tax on your next tax return.
Q. When does my home stop being my main home?
A. Your home stops being your main home when:

• You sell the home.
• You transfer the home to a spouse or former spouse in a divorce settlement.
• You convert the entire home to a rental or business property.
• You converted the home to a vacation or second home.
• You no longer live in the home for the greater number of nights in a year.
• Your home is destroyed or condemned.
• You lose your home in foreclosure.
• You die.

There are certain exceptions, but generally, if the home is no longer your main home. you must repay the entire remaining part of the credit on your next tax return. The IRS calls this “acceleration of recapture.” (Source)

If you refinance from 6.7%, you'll save a ton of money in interest. It's most definitely worth it (unless you like making donations to your bank ).

 

[Vdubchaos]

We owe ~198K on a house currently valued at 269K on a 6.7% loan, and are thinking of refinancing to a lower rate. However...

We purchased in July 2008 and took the 5K intrest free tax credit/loan at tax time(first time homebuyers, paid back over 15 years) and stashed it in the bank in case we ever had a home emergency and needed it. Does anyone know if it would be immediately due if we did a refinance???

Is it worth it to refi from 6.7% with the tax hassle?

By all means refinance. There is all kinds of "should I refinance calculators" out there that will give you a better picture and most importantly your break even point.

Guessing you will save around $200 a month and pay about 50-75k less in interest (over 30 years).

Your break even point should be within few months as well. You have plenty of equity as well so PMI shouldn't be a concern.

Go for it

 

[brotj7]

Thanks.

Now the question becomes: 20yr, 25yr for the lower interest? We have about 10K we could put in for the fees, and it looks like there is a local credit union with no fees(lawyer, loan origination, etc) besides NYS 1% tax. We will be making the same monthly payment, the refi would be to purely put more towards our principle. I was talking with one of my coworkers and it looks like we could shave 6years off the backend with the 20yr by the time everything is said and done.

 

[Vdubchaos]

Thanks.

Now the question becomes: 20yr, 25yr for the lower interest? We have about 10K we could put in for the fees, and it looks like there is a local credit union with no fees(lawyer, loan origination, etc) besides NYS 1% tax. We will be making the same monthly payment, the refi would be to purely put more towards our principle. I was talking with one of my coworkers and it looks like we could shave 6years off the backend with the 20yr by the time everything is said and done.

Something is not right. THere is ALWAYS a lawyer and there is always fees (Title, Tax escrow, etc)

It depends on your financial standing.

If you have 6-9 months of emergency fund and both have great/secure jobs...by all means go for Fixed 15 year (or 20-25).

You can run a comparo to see what you will save between the 2 in interest.

If you don't feel too financially secure I would just go for 30 year loan and pay extra every month (which will end up being paid off in 15-20 years as well) and you would probably pay more in interest. HOWEVER you always have a choice to make a lower regular payment.

With 15-20 year loan, you are stuck with whatever payment is agreed on upon signature.

 

[brotj7]

Something is not right. THere is ALWAYS a lawyer and there is always fees (Title, Tax escrow, etc).

Thats what I was thinking when I heard it. My coworker just refinanced her 100k house, got her first months bill, and said she is in the clear from hidden fees extra crap. We will probably talk with all the local banks, shop around and see who will put what in writing.

Emergency savings are replenished after a year of unemployment(man I never want to do that again). Thanks for double checking.

Honestly, I didn't really want to refinance when my wife brought it up. But if we can take 6 years off the back end of our loan because the bank is not earning as much, I am good with that.

Thanks all.