Profile picture for user3938896

Best rate and lowest monthly payments

Hi, I'm doing a 30y conventional loan with 15% down to keep monthly payments low. In my research to get the best rate a lender suggested to ask for seller's concessions and to put down 20%. I like the idea to cut out pmi and escrow account, but wonder if the higher loan amount is better? At the end am I not paying interest on a higher loan? How about transfer tax increase etc..and of course higher down payment is cutting down funds left to renovate. Can someone breakdown if one over the other is better in the long run? Am I losing out giving more money with higher loan? Thanks in advance. Also considering online lenders for best rates...thoughts? Thanks!!!
  • February 05 2014 - Brooklyn
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Answers (6)

I work for a JUMBO Direct Lender which has very competitive rates for a home purchase with less then 20% down and NO PMI.  Being that you are trying to buy the home and keep some funds available I would suggest to put down 10% down payment.

Below is a list of the programs available to you if you choose to put down 10% or less. For information on rates you must reach out by my profile since I am not allowed to post rates in this help section.

***THIS IS FOR LOANS UP TO A $2 MILLION PURCHASE PRICE (HIGHER UPON EXCEPTION)

PRIMARY HOME-     SINGLE FAMILY, CONDO OR 2 UNIT
SECOND HOME-    1 UNIT ONLY

30 Year Fixed
20 Year Fixed
15 Year Fixed
10 Year Fixed
10/1 ARM
7/1 ARM
5/1 ARM

I can also offer up to 85% for the following product (up to $4 million)...

5/5 ARM (Caps 2/2/5)

I hope this helps and please let me know if you have any questions or concerns about your specific scenario.  I would love to go over rates and costs with you if you have time and you can contact me by my profile.

Good Luck!!!!


  • February 20 2014
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Profile picture for Arizona Mortgage Pro
Great answers below, it's a complicated issue. Without the actual numbers, it is hard for us to help you determine which would be better. 

One thing not brought up yet is that the appraisal will have to support the higher price if you add that much in seller concessions. Make sure you are not pricing the home out of the market.
  • February 06 2014
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Good morning,

Ummm...did the mortgage lender do the basic arithmetic for you on that suggestion?  I mean, what will happen, as you rightly point out, is that you'll essentially borrow MORE money and this will drive up your mortgage payment.

I like that you're focusing on the monthly payment: the rate doesn't matter, the monthly payment matters most.  (I started in the mortgage business when 30yr fixed rates were 14%!)  So what you need to do is get the most accurate breakdown of the monthly payment in ALL possible scenarios (15% versus 20% with seller's concession OR 13% down and paying 2% Discount Points to lower the rate) from an experienced (at least 15 years) Mortgage Banker.

As a general rule of thumb, with current interest rates being so low, for a 30yr fixed rate loan, for every $10,000 you invest into the down payment (or, to put it this way, for every $10,000 LESS you borrow), your mortgage payment is LOWER by approximately $50.  Not much bang for the buck, is it?

All the best!
Trevor Curran
NMLS #40140
  • February 06 2014
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Profile picture for JustinLeffew
It's hard to calculate the best option for you without more info. How much is the purchase price, what are your closing costs, ect. Cutting PMI is typically a good idea if possible. A lender may also have a LLPA (loan level pricing adjustment) for 15% down vs 20%. You will need to get your Loan Officer to show you both options. As far as waiving escrows go, typically there will be a slight rate adjustment to do so. 

In the end, yes you would be paying interest on a higher loan amount with seller concessions, but that interest is tax deductible so the difference may not be as much as you think.

As far as online lenders, I have heard good and I have heard bad. Don't pick based on rate alone, as Thomas pointed out. You get what you pay for in life. There are some places out there who will quote you a low rate, then charge you more when the rate lock expires because they couldn't close your loan on time. There are some places that may not be able to close your loan period. What good is the best rate if you don't close on the house?

Best of luck to you!
  • February 06 2014
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Hello .. To answer properly we would need a bit more information,  (the actual loan amount, the amount of sellers concession, etc) 

Without knowing your specifics i would suggest avoiding the PMI if at all possible, the slightly higher Loan amount can be offest by avoiding the monthly PMI (again just speaking generally without seeing actual figures!) . Dont get caught up strictly with the "rate game", there are companies that will quote you a rate a lower rate but have some extra fees, have slower closing times, ect, ect

I can give more specific help if we know your actual loan terms

I hope this helped a little bit, if you have any more questions please feel free to reach out to me, Good luck!!


  • February 06 2014
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Mortgage insurance can be expensive (you can estimate is at about $100 per month for every hundred thousand you borrow). If possible you should avoid it and in order to do that you will have to go 20% down. If based on the funds that you have you do not have enough to go 20% down and pay for your closing costs, the seller's concession is a great option and will save you lots of money over the long haul.

If you do not plan on owning the house for a long time (less than 4 years) it probably will not make a difference how you do it. Also keep in mind that if you do a seller's concession, you have to put the 20% down based on the entire sales price including the seller's concession. You stated this may cut into your funds to renovate, well you can even take what they call a 203K loan and get borrow money to pay for the renovations.

With these ideas you will be paying a higher mortgage, but in the end you will be spending less money upfront. The seller's concession if need be is a no brainer, you must go 20% down if you can to avoid the mortgage insurance, that is a killer. Also keep in mind that interest on the mortgage for a primary residence is an income tax deduction and will save you money when you do your taxes.

If I can be of further assistance, feel free to contact me direct any time. Good luck!

Sincerely,
Mitchell Feldman
Associate Broker
[Self-promotion removed by Zillow moderator, see our Good Neighbor Policy]
  • February 06 2014
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