We are looking for our first home and I need some schooling on mortgages and home buying. Vitals: Married 10+ years with children. $55k/year income with $12,000 cash. FICO score of 800. Lease ends at the end of June (last month and deposit of $2,600); current rent is $1,600. We are trying to move closer to work (commute is over 1 hour each way; hoping to drop that toward 30 minutes). Looking for long term residence, better living conditions, and better control on housing (we have had to move every 2 years and rent has gone up $700 in that time to accommodate the growing family). First time home purchase. Employment is very stable and improving; savings are not what we would like due to significant medical bills 2 years ago ($30,000) but everything is much better now. Live in an expensive area in the Pacific NW. We are looking at homes in the $250,000 range.
QUESTION: What options are available to pre-pay Mortgage Insurance (PMI, MIP, etc). I have read a couple articles about "Single Premium Mortgage Insurance" (e.g. https://www.fanniemae.com/content/fact_sheet/mi-plans-comparison.pdf) indicating, if I understand correctly, at one time you could pre-pay your MI at ~ 2% rate up front. Is this still possible? And if so with what loan programs? I would be very interested in pre-paying mortgage insurance up front!
A:
QUESTION: Grants for down payment assistance. We were alerted to NHF grants (National Housing Fund). Are there other notable ones? Any hidden warning on the NHF grants?
A:
QUESTION: Regarding NHF Platinum grants. Our understanding is they are 3% (close to market rate?) to 5% (above market rate). Likewise, that a Fannie Mae is 3% above market rate. Is that correct?--If yes, any links to the expected rates?
A:
QUESTION: Closing costs. Expect 2-5%? Is this an accurate closing costs calculator? Any tips on minimizing closing costs?
https://www.bankofamerica.com/home-loans/mortgage/closing-costs-calculator-results.go
A:
QUESTION: Mortgage Credit Certificate (MCC). If I understand correctly an MCC is a tax credit equal to 20% of your interest paid. If you annual interest is $12,000 you get a $2,400 tax credit. Your interest paid goes down over the life of the loan and thus the MCC amount reduces as well. There is a penalty for selling your home before 8 years pass. Any other gotchas, warnings, or issues of note?
A:
QUESTION: FHAs and MIP. It is nice to get the 3.5% down but the MIP (Mortgage Insurance Premium) seems outrageous. For our range it looks like MIP is a whopping 1.35% annual (plus the 1.75% financed into the home loan). That is double PMI. It also appears you are stuck with MIP for at least 5 years, even if you get the principle below 80%. Am I being too negative about FHAs? If you have 5% down and can cover closing I am not sure I can see a reason to go with an FHA.
A:
QUESTION: We are getting some mixed signals on our max loan. We were immediately pre-approved for $250,000. We have no debt. No car payments, no cell phones, etc. Just basic services (food, rent, utilities, gas and insurance, etc.) I have seen rates on the gross and the net income with a broad range. Some pointers here?
A:
QUESTION: Anyone know off hand the Fannie Mae 30 year fixed rate with a 3% NHF Platinum grant? Any warnings to avoid this approach? http://www.nhfloan.org/programs/NHF_Platinum/Guide_NHF_Platinum.html
A:
QUESTION: Homepath. FNMA is currently offering up to 3.5% back on closing and this caught our eye when the lender rep we spoke with noted they had no mortgage insurance. Upon review I am hearing the rate is a bit higher to compensate. I have not asked him the rate yet, any ballparks?
A:
QUESTION: I can take a $5,000 loan from my 401k. Obviously it isn't earning as much as it should if I have it invested elsewhere. Those warnings aside, any other issues? Major negative impact for DTI ratio or such?
A:
QUESTION: We just sat down with the lending agent last week so this isn't firm but what I am leaning toward based on my limited knowledge is a Fannie Mae with a 3% NFH Platinum grant. This will raise our rates some (not sure the exact amount yet.) We would put 2% down and then need to cover closing (2-5% ?). And hopefully we would work it out to pre-pay the Mortgage Insurance if that is still possible? (~2%, or another $5-$6k). is this possible? And any strong feelings on why this would be a mistake?
A:
QUESTION: Rolling closing costs into the loan. Expensive way to get closing. Even an option anymore?
A:
QUESTION: Any specific pointers?
A:
Btw, thank you for your time in reading this and offering advice. Obviously this is a massive undertaking and commitment. We have a real estate agent and lender, as well as having read a bit of material as of late, but I have found there are often very informed individuals here who can offer invaluable insight. So thanks!
QUESTION: What options are available to pre-pay Mortgage Insurance (PMI, MIP, etc). I have read a couple articles about "Single Premium Mortgage Insurance" (e.g. https://www.fanniemae.com/content/fact_sheet/mi-plans-comparison.pdf) indicating, if I understand correctly, at one time you could pre-pay your MI at ~ 2% rate up front. Is this still possible? And if so with what loan programs? I would be very interested in pre-paying mortgage insurance up front!
A:
QUESTION: Grants for down payment assistance. We were alerted to NHF grants (National Housing Fund). Are there other notable ones? Any hidden warning on the NHF grants?
A:
QUESTION: Regarding NHF Platinum grants. Our understanding is they are 3% (close to market rate?) to 5% (above market rate). Likewise, that a Fannie Mae is 3% above market rate. Is that correct?--If yes, any links to the expected rates?
A:
QUESTION: Closing costs. Expect 2-5%? Is this an accurate closing costs calculator? Any tips on minimizing closing costs?
https://www.bankofamerica.com/home-loans/mortgage/closing-costs-calculator-results.go
A:
QUESTION: Mortgage Credit Certificate (MCC). If I understand correctly an MCC is a tax credit equal to 20% of your interest paid. If you annual interest is $12,000 you get a $2,400 tax credit. Your interest paid goes down over the life of the loan and thus the MCC amount reduces as well. There is a penalty for selling your home before 8 years pass. Any other gotchas, warnings, or issues of note?
A:
QUESTION: FHAs and MIP. It is nice to get the 3.5% down but the MIP (Mortgage Insurance Premium) seems outrageous. For our range it looks like MIP is a whopping 1.35% annual (plus the 1.75% financed into the home loan). That is double PMI. It also appears you are stuck with MIP for at least 5 years, even if you get the principle below 80%. Am I being too negative about FHAs? If you have 5% down and can cover closing I am not sure I can see a reason to go with an FHA.
A:
QUESTION: We are getting some mixed signals on our max loan. We were immediately pre-approved for $250,000. We have no debt. No car payments, no cell phones, etc. Just basic services (food, rent, utilities, gas and insurance, etc.) I have seen rates on the gross and the net income with a broad range. Some pointers here?
A:
QUESTION: Anyone know off hand the Fannie Mae 30 year fixed rate with a 3% NHF Platinum grant? Any warnings to avoid this approach? http://www.nhfloan.org/programs/NHF_Platinum/Guide_NHF_Platinum.html
A:
QUESTION: Homepath. FNMA is currently offering up to 3.5% back on closing and this caught our eye when the lender rep we spoke with noted they had no mortgage insurance. Upon review I am hearing the rate is a bit higher to compensate. I have not asked him the rate yet, any ballparks?
A:
QUESTION: I can take a $5,000 loan from my 401k. Obviously it isn't earning as much as it should if I have it invested elsewhere. Those warnings aside, any other issues? Major negative impact for DTI ratio or such?
A:
QUESTION: We just sat down with the lending agent last week so this isn't firm but what I am leaning toward based on my limited knowledge is a Fannie Mae with a 3% NFH Platinum grant. This will raise our rates some (not sure the exact amount yet.) We would put 2% down and then need to cover closing (2-5% ?). And hopefully we would work it out to pre-pay the Mortgage Insurance if that is still possible? (~2%, or another $5-$6k). is this possible? And any strong feelings on why this would be a mistake?
A:
QUESTION: Rolling closing costs into the loan. Expensive way to get closing. Even an option anymore?
A:
QUESTION: Any specific pointers?
A:
Btw, thank you for your time in reading this and offering advice. Obviously this is a massive undertaking and commitment. We have a real estate agent and lender, as well as having read a bit of material as of late, but I have found there are often very informed individuals here who can offer invaluable insight. So thanks!
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