Rick

You have a PM

an 80/15/5 would typically be the best overall option to gather the lowest overall monthly payments - historically, this is the most cost effective option. Of course, with most 15% options you will typically be faced with a balloon payment after 15 years (lower payments) or you can have a 15/15 amortized which pays off then, but of course that means a slightly higher payment.

With that much money down, it's possible to get a good conforming rate on the 1st, and depending on where your credit is exactly you may qualify for a decent rate on a 2nd mortgage. Of course, if your goal is to stay long term I suggest biting the bullet and doing a 30/fixed in 1st. If you THINK there is a possibility of selling, or moving on in the next several years, then as you have seen, maybe an ARM may be a better option.

5 years into an FHA and they have to drop the MI..

Good luck.

This is what a friend, who is in the business, says........

You can do a full 100% loan and not have to pay PMI. There are multiple ways around this depending on their credit scores. However, you would need to have the seller of the house you are buying pay closing costs or you will have to pay them out of your own pocket. Closing costs would be fairly minimal compared to putting 15-20% down.

If you go with the right lender, he can find better rates than Bank of America or Wachovia. We recently beat Bank of America by ½% and the guy actually works for them and received a discount.

30-year fixed would be my recommendation providing the payments are reasonable and in their range… otherwise the next best option would be a 40-year. Interest only and ARMs are becoming less popular right now due to market conditions.

My wife and I just refinanced today. 30 year fixed at 5.875% no points. There was a surprise at the settlement table though. The numbers on the "good faith" estimate looked fine to me when I reviewed them last week. Today when we went to review the HUD1 the lender had inserted a $525 "committment fee." Bastards! Of course I could have cancelled the whole deal, but at that point we had already paid the appraisel and would have lost other fees if we backed out. I called the broker and they ultimately offset $300 of the fee through a "broker credit." While this isn't directly related to the original posters question...it is wise to compare the HUD1 to the good faith estimate to look for surprises.

I was just asking these questions recently:
http://forums.pelicanparts.com/showthread.php?s=&threadid=293342&perpage=20&highl ight=mortgage&pagenumber=3

I'm going to check on the status of this. I found a REALLY good mortgage broker (and p-car enthusiast) that covers MD and VA. I'll see if he can broker loans in other states and let you guys know.

He beat everything I approached him with - gotta be a P-car guy though. That should be easy on this board!
:)

I am a loan officer, but my company does not lend directly to borrowers, but rather we go through mortgage brokers, so all I can do is recommend some other brokers to folks depending on your situation.

Depending on your credit score, you can get 100% loans with no PMI all day long and for decent rates too. FHA's insurance is called MIP or mortgage insurance premium. Since you pay an upfront premium at closing as well as a monthly, you can get a partial refund if you sell or refi. Don't forget to ask about this.

I've never ever done a loan with PMI. It's simply unnecessary. We will do 100% with no PMI for a full doc. loan with a minimum 600 FICO score. We'll do that for stated income loans with a min. 640 FICO. There are a ton of other companies who do this stuff, though most are tightening up their guidelines right now due to repurchases for poor performance.

If you have a chunk of equity from your last house to put into your next one, 5-10% down will get you an even better rate. But what a lot of folks around here do is rent out their old place and get their next one with 100% financing. If you rent out your old place, most lenders will count 75% of your rental income as income to offset the cost of the mortgage on that property. If you can rent your place for 25% more than your mortgage is running you, it's a wash.

I don't know what I'll do for my next house. I put 20% down on this one, but will probably keep it and rent it out, get a 100% loan for my next one and then figure it out before my next ARM expires. BTW, the average life of a 30 yr. fixed loan is 7 years. So unless you're retired or 100% positive you'll never move, I would never get anything longer than a 7 or 10 yr. ARM.

Oh, we also offer 40 and 50 yr. amortization as well as interest only. Lots of options out there. FHA is WAY behind the curve on this and they know it. HUD was a client of mine at my last job and they have been planning a big PR push on new FHA products for a while, still haven't gotten it off the ground.

Im in Broward County, Ft. Lauderdale area

Like Randy says, if you put 5% or more down, you can get the best rate on the 1st (assuming it's a conforming loan < $417K). If the 1st loan stays at 80% or less of the purchase price (and appraisal), you won't need PMI or a higher rate to pay for the same thing. If you really want 100% financing, right after the close go get a new 2nd to recover your down payment. It can be 20 year fixed if you want.

To me, the key on picking the loan is to have it be fixed for at least as long as you're going to be there. Why pay a 30 year rate if you'll be gone in 5? Nothing wrong with interest only, either, if you'll be gone before the loan becomes fully amortized.

I'd be curious to know if anyone has done the flat fee mortgage through someone like Costco. I've done 2 mortgages through a broker and payed a 1% origination fee on each, and felt like I got scammed...I know I didn't really since I got the best rate possible...but he did probably 20 minutes worth of work each time...

20 min. of work? It's possible if you have a 780 credit score, put 50% down and the property appraised for more than the sales price. Otherwise, just about every loan has very unexpected land mines that the borrower will never hear about. I've had them blow up because the appraiser's license was about to expire, oven hadn't been installed in the new kitchen yet, county had issues with a water main, new survey said a fence had moved a few inches since the last survey, seller didn't like splitting the real estate tranfer tax (usually the law) and a host of other reasons that no borrower could ever control or probably even know about. Believe me, it can be work to deal with this stuff at 10pm the night before a closing.

BE very very careful. There are a plethora of "creative" mortgages out there that have the potential to put you in the poorhouse. What do I recommend (as a former Real Estate Broker and a Financial Planner) is a conventional mortgage, preferably a 30 year with the option to pay extra on the principal whenever convenient. For example, you could pay as if it were a 15 year mtg but cut back if there were a family emergency. I am a firm believer in the less debt, the better. When looking at a mortage and its attendant inderest deduction on your income tax, without going into detail, just think of this: Being in the 25% tax bracket (just an easy figure to fool with), you get 25% of the interest back. If you had no mortgage, you would be paying 25% on the whole shebang and keeping 75%. Which is better? Keep in mind your FICO score has an effect on the rate you will be offered. Check it out.

I am sure some of you guys are far more sophisticated than I am, but the aim of my plan is to be mortgage free by the time retirement comes along. I am retired....No mortgage, no car payments, no outstanding credit card balances (paid 100% each and every month). Was it easy? No. Did it take sacrifice and time? You bet. Was it worth it? An unqualified "yes".

Then again, I am a lousy gambler and am always looking for the "sure bet". Translate that as ultra conservative.

Have you considered USAA? I have had good luck with them in the past.

Bob, another way to do it is to make one extra P&I payment per year. You just take your regular payment, divide it by 12 and add that much to each month's payment. That will make a 30 yr. loan into a 23 yr. loan, saving you 84 months of payments. 15 yr. mortgages have better rates, but the minimum payment can sting. Actually, you can even get an interest-only or even option ARM loan and just make big principle payments each month. If you're disciplined and smart about it, some of those exotic products can be very good for you. The problem is that a lot of very unsophisticated people get sucked into them by the low min. payment and then get upside down with the negative amortization.

Renting just sounds better and better. . .

20% down of a half million dollars for a "starter home"? Yea, that's fifty grand. Yep, lemmee pull that right out of my ass for ya'. :rolleyes:

Until lenders start realizing the absurdity of the situation out there, you're going to see first-time starts plummetting over the coming years. That is until (1) prices correct meaningfully and (2) lending institutions come up with ways to allow people to purchase that aren't so ridiculously risky or cost-prohibitive.

PMI is a rip-off. I'd never even consider it.

Actually, it's worse - 20% of $500k is $100k. And I can't see it ever getting easier to buy a house than it is now. If anything, the feds will start clamping down on lenders for giving too many loans to people who should not get them. 100% loans won't go away, but the guidelines for such will tighten up.

You're correct - sorry, no coffee yet.

Stuff like this just irritates me - housing has always been a sacrifice, but it's simply gotten beyond the reach of "normal" people now. There's something hugely wrong with what's going on in this country, and it's going to end badly.

Well Jeff, you don't have to live in LA if you really, really want a house. Lots of cheap real estate in flyover country. Some town in KS is even giving away homesteads to people who promise to stay for a number of years.

Any other credit union ? I try that one but you have to be an employee ?

Juan, it use to be that way but has changed. Call them!

While USAA has been very good to me for other things, every time they've offered me a car loan or a mortgage, I've had no problem finding a far better deal somewhere else. My credit union is great for car loans, but not for mortgages. If you're only shopping for rate and know exactly what kind of loan program you want, it should be pretty easy to just call a bunch of places on the same day and lock in when you find the best one.