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Replies (11)
- Nic Netherton, "Colorado Lender"
- Contributions:7219
Musiclover- Sounds like the 'builders lender' is getting his info mixed up a bit. Can you swing the 15 year payment? If you'd like a second opinion on your options I would be happy to help you out, just send me an email and I can show you another route that may solve your issue.
- shapiroamg
- Contributions:3058
I would advise you to call Nick. He's the guy in CO.
- Clay Branch, "Georgia Loans"
- Contributions:7836
Agree, call Nic!!
- Christian Durland, "Christian Durland"
- Contributions:12
Hi Musiclover: Well...my advice will be a little more in depth...one must remember to approach the mortgage and home-buying decision in a comprehensive manner. With that said, and if we put our "financial planning" hats on, I would advise that you actually stick with the builder's lender, go with the 30 year, and put down the minimum down-payment FHA requires (3.5%) and get your closing costs paid...getting your closing costs paid is a HUGE bang for your buck. This may sound backwards, but here's the logic: With the FHA loan you will secure an interest rate in the high 3's, and with making the minimum "out-of'-pocket" investment possible, you give yourself the luxury of keeping all the money that you would have otherwise out down on the home and "locked" up in home equity (remember if you ever need that money, you can only access it by selling the home or refinancing the home)....yes....your monthly payment will be higher for putting less down, but remember it's a balance sheet neutral decision...you put the money you would have otherwise used for a bigger down-payment into a liquid savings account, money market, and/or CD that will earn you a nominal rate of return, but at least it's liquid, and then you have more choice and control over that cash, and can use it to supplement you if needed....in 5 years you request that the MI be dropped, and if the value of the home is still short or not enough to drop the MI, you will have the money that you kept in savings to then use to bridge the gap and get yourself to the balance you need to drop the MI...last and regarding the 15 year....again, I would advise against this as well....if you opt for this, you will always and every month have to come up with this higher payment...now that may be totally doable, but if it were me, I would opt for the 30 year loan, and then overpay the 30 year loan if accelerating is a goal, by making the 15 year payment, and you get the same result by "self-amortizing" your loan, and the best part is if Murphy's Law comes knocking one particular month, you can always fall back on the 30 year payment. Furthermore, having extra money in savings for putting less down helps with this plan as well, and if you are overpaying and building more equity that way, then your just putting yourself in a better position to drop the MI in 5 years. Last, and do remember, that MI is tax deductible, so it's not all bad :)
- Justin Sheftell, "Courtesy Mortgage"
- Contributions:3427
Is there any chance your spouse has enough income to qualify on her own? That would be the only way to qualify for a conventional loan because of the bankruptcy.
For your down payment size, there really isn't much available outside of FHA and conventional Fannie Mae/Freddie Mac loans. If you can't afford the 15 year loan and don't qualify for conventional you have to pay the MI for 5 years.
Getting any loan 2 years out of bankruptcy is something you should be happy to have available.
- Clay Branch, "Georgia Loans"
- Contributions:7836
@ Christian, your quote:
Last, and do remember, that MI is tax deductible, so it's not all bad :)
did you see where Congress approved MI deduction for 2012? If so, please post a link.
Last, and do remember, that MI is tax deductible, so it's not all bad :)
did you see where Congress approved MI deduction for 2012? If so, please post a link.
Clay, I was hoping you ripped the rest of his post apart... there is just so much in there that is ridiculous.
- Clay Branch, "Georgia Loans"
- Contributions:7836
Sorry, no time..
- Justin Sheftell, "Courtesy Mortgage"
- Contributions:3427
I liked the part about the 30 year being the better choice over the 15 even if the 15 was a comfortable payment. Paying an extra $238 per month in MI premium and being locked into it for 5 years is pretty steep.
- David Widlund
- Contributions:204
Actually it sounds like the broker you spoke with has a pretty good idea what he/she is talking about. Just about everything in your original post seems to be accurate.
As far as using the builder's lender, check around. Lots of brokers can pay your closing costs, and certain other expenses. Someone else may be able to do it at an even lower interest rate. I'm surprised how often my competitors are quoting rates a quarter to a half percent higher than what is possible.
On the rate topic, FHA rates are better by about a quarter percent, so if you did a 15-yr FHA with a quarter point of mortgage insurance but saved a quarter point on your rate, it's an even match. And with the FHA loan, the down-payment is much smaller and the mortgage insurance will eventually go away leaving you at somewhere around 3.25% for the rest of your short loan. If you can handle that payment, it's an easy choice.
You will find that there are lots of guys who are "The guy" in Colorado who can help you. Don't take an out-of-state lenders word for it. They have someone's best interests in mind, just not yours.
Good luck!
As far as using the builder's lender, check around. Lots of brokers can pay your closing costs, and certain other expenses. Someone else may be able to do it at an even lower interest rate. I'm surprised how often my competitors are quoting rates a quarter to a half percent higher than what is possible.
On the rate topic, FHA rates are better by about a quarter percent, so if you did a 15-yr FHA with a quarter point of mortgage insurance but saved a quarter point on your rate, it's an even match. And with the FHA loan, the down-payment is much smaller and the mortgage insurance will eventually go away leaving you at somewhere around 3.25% for the rest of your short loan. If you can handle that payment, it's an easy choice.
You will find that there are lots of guys who are "The guy" in Colorado who can help you. Don't take an out-of-state lenders word for it. They have someone's best interests in mind, just not yours.
Good luck!
- Nic Netherton, "Colorado Lender"
- Contributions:7219
Actually David, I have spoken to the OP in this situation and know the details and my initial assertion was accurate. The builders lender does not know how to structure the loan properly to avoid MI like the borrower requested. Builders lender offered them 3.0% and we are sending them one at 2.75%, sans the MI of course..
So in this case David, don't worry 'The guy' in Colorado has it handled. Thanks for your concern though.
So in this case David, don't worry 'The guy' in Colorado has it handled. Thanks for your concern though.
Mortgage brokers in Denver? Other advice...
I can get really good interest rates on an FHA loan but apparently they have different rules regarding the mortgage insurance and even if I put 20% down, I still have to pay it. The lender said the discount for mortgage insurance is capped at 10% so putting down more than that will not lower the monthly charge. Here's the amazing part...if we do a 15 year FHA loan with 10% down the price for the MI is $69/mo. If we do a 30 year FHA loan with 10% down the price for the MI is $307/mo!!
This seems incredibly crazy to me. I was told that they will not drop the MI on an FHA loan until you have paid 5 years of payments with no lates. So my question, has anyone else been in this position? I'd like to go with a conventional loan and avoid paying the MI or somehow find an FHA loan without the crazy MI pricing I was quoted from the builder's lender. My thought was to try to find a broker who can help get me a better deal. I love the idea of going with the builder's lender because they will pay all closing costs (approx 9k is what they said) and also give us a granite upgrade in the entire kitchen ($5500 is the value they stated). But paying an extra $300 a month for MI is insane!
Or, if anyone has any other ideas I should pursue please let me know.
Thanks!
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