Home loan question - 20% down or FHA????

[ezbtr]

Re: Home loan question - 20% down or FHA????

and in 4.5 years, no child support ($700 mo.), re fi into a 15 yr loan? I think I'm going to do 10% down, comfort level is better w/ cushion in bank, 20% down would leave me w/ nada, course by next March, I'd have at least 12K more in bank.....

 

[ezbtr]

Re: Home loan question - 20% down or FHA????

and holy cow - I just got my 401K stmt - thats the best investment I ever had!! I dont want to gamble on stocks I think - just dump any free money into 401K 9.92% return for this quarter, sure it's been much less at times, but what else has these returns? And i know that i really dont have the time to figure out other investments....

 

[rivermouse]

Re: Home loan question - 20% down or FHA????

and in 4.5 years, no child support ($700 mo.), re fi into a 15 yr loan? I think I'm going to do 10% down, comfort level is better w/ cushion in bank, 20% down would leave me w/ nada, course by next March, I'd have at least 12K more in bank.....

My understanding is that with 20% down they cant forse you to purchase the title insurance which will cost you thousands over the course of the loan. Its a big money maker for lenders and you really dont get anything for it....They love to make you buy the title insurance.......NOT ME The extra you will pay every month for it wont reduce your loan by a penny,It just goes into someones pocket..Avoid it

 

[aspeck]

Re: Home loan question - 20% down or FHA????

and holy cow - I just got my 401K stmt - thats the best investment I ever had!! I dont want to gamble on stocks I think - just dump any free money into 401K 9.92% return for this quarter, sure it's been much less at times, but what else has these returns? And i know that i really dont have the time to figure out other investments....

My guess is your 401k is investing in stocks ... Probably either through mutual funds or with some combination of mutual funds, bond funds, and T-bills. It has been a strong quarter in the market.

 

[bruceb58]

Re: Home loan question - 20% down or FHA????

My understanding is that with 20% down they cant forse you to purchase the title insurance which will cost you thousands over the course of the loan. Its a big money maker for lenders and you really dont get anything for it....They love to make you buy the title insurance.......NOT ME The extra you will pay every month for it wont reduce your loan by a penny,It just goes into someones pocket..Avoid it

Maybe its different with lenders you work with but it is always been required to get title insurance. How else is the lender protected with a title that is later found to be clouded. Maybe you are thinking PMI.

 

[dingbat]

Re: Home loan question - 20% down or FHA????

Maybe its different with lenders you work with but it is always been required to get title insurance. How else is the lender protected with a title that is later found to be clouded. Maybe you are thinking PMI.

Yep, they're confusing title insurance with PMI. No way around title insurance

 

[bassman284]

Re: Home loan question - 20% down or FHA????

I was in a similar situation when I bought my place in 1998. I had enough cash for 20% down, but it was going to take most of my ready cash. So I decided to just put 15% down. The banker worked the numbers and when I looked at it and saw how much the PMI was, I just freaked. It was like 50 or 60 dollars a month. So I said nevermind, I'll put down 20%. He said he thought I wanted to hold some cash. I said I did but not at tha cost.

Bottom line, I see no reason to pay PMI if you don't have to. Pretty much lost money.

 

[rivermouse]

Re: Home loan question - 20% down or FHA????

I was in a similar situation when I bought my place in 1998. I had enough cash for 20% down, but it was going to take most of my ready cash. So I decided to just put 15% down. The banker worked the numbers and when I looked at it and saw how much the PMI was, I just freaked. It was like 50 or 60 dollars a month. So I said nevermind, I'll put down 20%. He said he thought I wanted to hold some cash. I said I did but not at tha cost.

Bottom line, I see no reason to pay PMI if you don't have to. Pretty much lost money.

Evidently I have my terms confused. Its been 25 years ago. However regardless of what its called there is a large extra cost if a person doesnt put down at least 20%. An extra 50 bucks a month for 20 to 30 years can add up to several hundred bucks I bet. Not to get off subject but I cant understand why people want to die have their homes 100% paid for anyway. If their kids sell it most likely it may be a cash grab and the buyer will reap a discount from the quick sale so why is it important.? People want to leave something to their kids but if the kids will just want to sell it quickly they are already throwing away what you have worked for by doing so...Is this not so?

 

[CanWoodsman]

Re: Home loan question - 20% down or FHA????

What is a 5 year fixed rate mortgage going for in the US?
I just signed up for one here in Canada for 2.99%.
(Our banking system came through the last few years in far better shape than the banks in the US. Far few foreclosures.)
Total cost only about $100 a month more than renting & to start off close to 40% of the payments will be building equity.
In the long run I'll be far better off.
As this place also has a wood stove I don't have now I'll be able to save the $1200 a year in heating costs for just some of my time cutting & splitting wood available for free to me.
Get the place on 01 Jun 12.

Rick

 

[dingbat]

Re: Home loan question - 20% down or FHA????

Evidently I have my terms confused. Its been 25 years ago. However regardless of what its called there is a large extra cost if a person doesnt put down at least 20%. An extra 50 bucks a month for 20 to 30 years can add up to several hundred bucks I bet.

Actually, you don't have to put anything down to eliminate the PMI requirement. The requirement only comes into play when your loan amount exceeds 80% of the appraised value of the home.

No need to pay PMI for the term of the loan. PMI can be terminated as soon as the value of your homes value exceeds your loan value by 20%. FWIW, PMI is tax deductable on mortgages taken out after 2007.

What is a 5 year fixed rate mortgage going for in the US?
I just signed up for one here in Canada for 2.99%.

It makes no sense to get a 5-year mortgage in the US given the cost of homes. If I had a 5-year mortgage my payment would run $15K a month

 

[jkust]

Re: Home loan question - 20% down or FHA????

I think my biggest issue is having the next egg first however you go on the mortgage. I can't sleep without at least a year's salary in cash, at the ready. After that I'd want to discuss the type of loan. Personally, I stay away from the gov and their stimulus/redistribution programs so FHA is not for me. I'd earn until I had at least 20% or adjust my subject house.

 

[bruceb58]

Re: Home loan question - 20% down or FHA????

It makes no sense to get a 5-year mortgage in the US given the cost of homes. If I had a 5-year mortgage my payment would run $15K a month

Also, the difference between a 5 year loan at 2.99% and a 30 year loan at 3.99% is relatively small. Way better to have the option of paying down the 30 year loan faster but still keep the mandatory lower monthly payment in case something happens where you only have to make the lower 30 year payment. When I recently refinanced I took out a 30 for that reason. I own 3 houses with loans on them and paying off the highest mortgage one the quickest first. I will have all 3 paid off within 10 to 15 years. They all have 30 year mortgages.

Not to get off subject but I cant understand why people want to die have their homes 100% paid for anyway. If their kids sell it most likely it may be a cash grab and the buyer will reap a discount from the quick sale so why is it important.? People want to leave something to their kids but if the kids will just want to sell it quickly they are already throwing away what you have worked for by doing so...Is this not so?

Not sure what the difference is if you have the money in an account that they will get or in the equity in a house. And if you don't want them to have a money grab that can taken care of easily. Put in your will that all proceeds of the house go you your favorite charity.

 

[Fly Rod]

Re: Home loan question - 20% down or FHA????

Buyer title insurance is a one time fee paid at the closing which protects you from foregery,errors and ommissions that may arise in the deed, undisclosed heirs, conflicting wills, could be liens on the property that were missed prior to closing. You want to be careful especially if you are purchasing a property that was previously purchased through MERS( mortgage electronic registration systems) some people that have lost their home are getting them back because of flaws in this system and you want to be protected.

ezbtr, you are from California... check and see if the seller pays for the buyers title insurance... every state may be differant.... on the west coast it is not unlikely for the seller to pay for buyers title insurance.... here on the east coast the buyer pays....also out your way U use title companies...Massachusetts uses attorney.....regardless humans make mistakes

two types of title insurance...lender loan policy and owners policy of title insurance and U want the home owners.

PMI is paid monthly till the loan gets down 20%... can add a couple hundred a month to your payment...wiser to put down 20% and save on PMI.

 

[jkust]

Re: Home loan question - 20% down or FHA????

Also, the difference between a 5 year loan at 2.99% and a 30 year loan at 3.99% is relatively small. Way better to have the option of paying down the 30 year loan faster but still keep the mandatory lower monthly payment in case something happens where you only have to make the lower 30 year payment. When I recently refinanced I took out a 30 for that reason. I own 3 houses with loans on them and paying off the highest mortgage one the quickest first. I will have all 3 paid off within 10 to 15 years. They all have 30 year mortgages.

Imagine if the mortgage interest deduction was removed as is being kicked around the beltway. Your effective interest rate is a lot lower than the stated rate. There are some really good spreadsheet templates out there that detail the above so there is no guessing or platitudes. I was suprised at how difficult it is to overcome the effect of the slightly higher 30 year rate vs the 15 year rate by paying more each month to preserve the just in case scenario. Kind of like the first time you were introduced to the effects of compounding. Take a look at this one here, it was really helpful in dediding the 15 year vs 30 year when we refied down to a 15 a couple years back. My paradigm was a bit different then since rates are quite a bit lower today.
http://www.vertex42.com/Calculators/home-mortgage-calculator.html

 

[CanWoodsman]

Re: Home loan question - 20% down or FHA????

It makes no sense to get a 5-year mortgage in the US given the cost of homes. If I had a 5-year mortgage my payment would run $15K a month

I didn't say a 5 year mortgage only a 5 year fixed rate. My mortgage is based on 25 years.
15K over 5 years without interest would still add up to $900,000.
You must make or have far more $ than me to even consider such a place.
As for "in the US given the cost of homes" I`m sure it`s not much different than Canada.
Yes in both countries there are more expensive places & places far cheaper for equivalent homes.
In the US you most likely have the extremes in both sides but I suspect on average Canada is a little higher.
For the equivalent house to what I bought across Lake Huron in Michigan in a similar type of small inland town would be around 20-30% cheaper. Maybe less.

 

[joewithaboat]

Re: Home loan question - 20% down or FHA????

I am not in the mortgage business and have only bought one house. I asked a lot of questions, researched and looked around. I'm sure its different in all states. For me i used a broker who looked at my situation and shopped the lenders he knew would fit me.

For me...

25% down (because i had it) no PMI and i pay my own taxes each year. They charge you for that too, while they are using your money all year.
5% fixed, really good for 6 years ago and self employed.

30 year with no penalty for early payment, i make quite a few double payments. Shooting for 15 year pay off.

If you have good credit and cash down you are in the drivers seat.

I'm working on a 3.75 fixed refi with no fee's as we speak. I cant figure out why they would even do it, they contacted me ?? Like i said, no fees lower rate, I pick the term.

Good luck, congrats!!

 

[CanWoodsman]

Re: Home loan question - 20% down or FHA????

Up here in Canada the longest fixed rate I could find was for 25 years at over 3 X the rate I got for 5 years of fixed rate.
With early repayment options I can knock down the principle quite amount in the first 5 years saving me quite a bit of money compared to the much higher rates for a longer term of fixed rate.
The rate difference would have added 1.75 X to my monthly payments or almost doubling them.
Far better to apply that money to the principle instead of interest.
Yes after 5 years the rate will most likely be higher but at the present rate I can afford to pay down the principle much quicker saving money in the long run.

 

[bassman284]

Re: Home loan question - 20% down or FHA????

FWIW, PMI is tax deductable on mortgages taken out after 2007.

The PMI deduction phased out Dec 31, 2011 and was not renewed.

 

[bruceb58]

Re: Home loan question - 20% down or FHA????

I'm working on a 3.75 fixed refi with no fee's as we speak. I cant figure out why they would even do it, they contacted me ?? Like i said, no fees lower rate, I pick the term.

My last refi a few months ago was 3.85 no cost. The mortgage broker actually gave me $3K of his rebate and applied it to my next years taxes. So not only did I refi with no cost, I made $3K.

 

[bruceb58]

Re: Home loan question - 20% down or FHA????

I didn't say a 5 year mortgage only a 5 year fixed rate.

Yes you did!

What is a 5 year fixed rate mortgage going for in the US?
I just signed up for one here in Canada for 2.99%.

What you got was basically an adjustable mortgage that adjusts after 5 years.