Misconceptions with Mortgages..

I do this for a living and some of you FM me with questions from time to time so i just thought i would just put some info out there. Although the mortgage market has changed and is much tighter than it was, you definitely DO NOT need 20% down to buy a home. Loans are given with as little as a 3.5% downpayment and the rates are still very low for those who qualify! So those of you looking, make sure you meet with a qualified professional because you might have more options than you think!

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Posted by Smiley22

It is not that you cannot get a loan, but isn't there a significant tax if you don't?

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There is a monthly mortgage insurance if you dont have 20% down. But it usually only runs between $100-$200 a month , depending on how much you borrower. HTH

3.5% down is for fha only loans right?

We have been to so many banks and we got prequalified by many. You do NOT need the full 20% down on a regular loan if you have 'excellent credit' anything below that...you def need 20% down or very close to it.

If you dont put the 20% down on a home you will have to pay PMI...thats an extra on average 100$ a month to throw out the window, this is until you pay off 20% of the house, which can take awhile since you are paying mostly interest and low principle.

Also if you dont have the 20% you dont qualify for the BEST interest rate out there....You will pay thousands of dollars more towards the life of your loan just because of this...and over time can add up to ALOT of money.

SO all in all....we thought it was a better idea to wait until we had 20%...in the long run...we will save $$$$$$ between the interest/PMI

We have done so much research...correct me if Im wrong please.

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Posted by curiousgeorge
3.5% down is for fha only loans right?

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I know we qualify for the low interest rate loans since our combined income is considered low. FHA loan that is but if you don't qualify for it the rates are still pretty low out there. Also many communities have down payment assistance programs as long as you plan on staying in the house for 10 years they will match your dp up to $20k and this will help with closing costs, etc. Not sure though if you qualify because combined income is typically 62-63K a year.

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Posted by ChiefMT

DH has done tons of research on this and there are calculators to see if you are better off renting or buying a home. It seems that the answer lies in how long you intend to spend in a home. The rates are really low right now so even if you are paying PMI over the long term if you wait and get a higher interest rate you might pay less with a PMI. Also, if you are renting, you are sorta 'wasting' money paying rent. Hope that makes sense.

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ITA. Almost always makes sense to buy rather than rent. Rates are at a historical low right now. A healthy economy generally sees rates around 8%. So for anyone thats waiting to save 20% to avoid paying small PMI monthly, they might miss the boat with these rates and home prices. Its never been a more opportune time to purchase. JMO!

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Posted by nifheim

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Posted by curiousgeorge
3.5% down is for fha only loans right?

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I know we qualify for the low interest rate loans since our combined income is considered low. FHA loan that is but if you don't qualify for it the rates are still pretty low out there. Also many communities have down payment assistance programs as long as you plan on staying in the house for 10 years they will match your dp up to $20k and this will help with closing costs, etc. Not sure though if you qualify because combined income is typically 62-63K a year.

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When were were getting our mortgage we were told about the FHA loan but we were advised against it because you pay so much in closing costs.

Thanks for the info!