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Started By
Message
What's the deal with PMI these days when purchasing a new home?
Posted on 3/25/10 at 9:30 pm
Posted on 3/25/10 at 9:30 pm
I recently had my bank work me up an estimate which states I must purchase PMI through FHA being I am only putting down 10%. This type of PMI calles for 1.75% of the loan amount tacked on to the total loan amount, paid over the life of the loan. My credit is very good so I was surprised I would have to go with FHA. My bank is Regions, they say they no longer offer their normal PMI. I plan to start pricing around soon but I noticed many threads here in th past with good information.
Any suggestions and/or advise would be greatly appreciated.
Any suggestions and/or advise would be greatly appreciated.
3
Posted on 3/25/10 at 9:36 pm to AcadianDisciple
Fha requires the 1.z5 on all loans withoiut 20 down.
Posted on 3/25/10 at 9:51 pm to AcadianDisciple
If you don't have 20% to put down, you can't afford your home yet. Keep saving, rather than throw away your money on PMI.
At least if you're throwing your money away on rent, you're getting something for it.
At least if you're throwing your money away on rent, you're getting something for it.
Posted on 3/25/10 at 10:04 pm to Luke4LSU
I hear you. My last home I was able to put 20% down. I relocated back to La.3 yrs later from the Rockies; just when to economy starting going down. Long story short, I took a big hit and now I'm trying to build my savings back up. I've been renting for a year now and it seems I'm pissing the money away as well. Figure I just as soon bite the bullet so to speak.
Posted on 3/25/10 at 10:24 pm to AcadianDisciple
quote:
I've been renting for a year now and it seems I'm pissing the money away as well. Figure I just as soon bite the bullet so to speak.
You're pissing away money on rent, which means you're getting something for it (free maintenance, amenities, etc.).
If you buy, you'll be pissing away at LEAST as much on closing costs, PMI, homeowner's insurance, property taxes, etc. While some of these are tax deductible, it doesn't make up for the fact that you're throwing it all down the drain.
Don't buy until you have 20% saved up.
Posted on 3/25/10 at 10:31 pm to Luke4LSU
Well frick, let me turn my house back over to suntrust...
Posted on 3/25/10 at 10:37 pm to Golfer
quote:
Well frick, let me turn my house back over to suntrust...
When did you buy it?
Things have changed in the past couple of years..
Posted on 3/26/10 at 1:28 am to AcadianDisciple
No need to pay PMI.....Did the following on my first house and it worked out great.
Get 2 mortgages.....one for the bulk, the other for the remaining 10%. PMI Boom outta here.
Get 2 mortgages.....one for the bulk, the other for the remaining 10%. PMI Boom outta here.
Posted on 3/26/10 at 7:23 am to TJG210
quote:
TJG210
I dont think this works anymore. No one will give you the second
Posted on 3/26/10 at 7:28 am to jmtigers
quote:
I dont think this works anymore. No one will give you the second
This is correct from what I understand..
Posted on 3/26/10 at 7:37 am to Luke4LSU
Uhhh ok...
I certainly didnt put 20% down.. I can CERTAINLY afford my home. I could have gotten approved for a 400k loan but I bought a 200k house. If anything with the rates being so low NOW would be the time to buy rather than wait to save 40k and most likely pay MORE in interest for the life of the loan than you would have paid for a few years paying PMI. I know I pay something like 85 a month in mortgage insurance. What you are suggesting would be completely asnine to take a risk of the rate going up to 7% again so I can save 85 a month for a couple of years.
Not to mention its a buyers market right now.
I certainly didnt put 20% down.. I can CERTAINLY afford my home. I could have gotten approved for a 400k loan but I bought a 200k house. If anything with the rates being so low NOW would be the time to buy rather than wait to save 40k and most likely pay MORE in interest for the life of the loan than you would have paid for a few years paying PMI. I know I pay something like 85 a month in mortgage insurance. What you are suggesting would be completely asnine to take a risk of the rate going up to 7% again so I can save 85 a month for a couple of years.
Not to mention its a buyers market right now.
This post was edited on 3/26/10 at 7:39 am
Posted on 3/26/10 at 7:42 am to Catman88
As we have seen in the last couple of days, it doesn't take but 2 weeks for Luke to save 40K so you should understand
Posted on 3/26/10 at 7:49 am to Catman88
Ok just went and checked. I pay 83.56 a month on a 200k loan.
In about 6 years it drops off assuming I do not make any extra payments. So thats close to 6k I would pay to have MMI.
If I say Im going to wait until I have 40k saved I take a BIG risk that the rate will go up. If that rate goes up just to 7% thats close to THREE HUNDRED a month for the life of the loan. Not to mention the cost of the same house would be likely higher. Taking your advice could lead to a 100k mistake.
In about 6 years it drops off assuming I do not make any extra payments. So thats close to 6k I would pay to have MMI.
If I say Im going to wait until I have 40k saved I take a BIG risk that the rate will go up. If that rate goes up just to 7% thats close to THREE HUNDRED a month for the life of the loan. Not to mention the cost of the same house would be likely higher. Taking your advice could lead to a 100k mistake.
This post was edited on 3/26/10 at 7:51 am
Posted on 3/26/10 at 7:52 am to Catman88
quote:
certainly didnt put 20% down.. I can CERTAINLY afford my home.
When my parents bought their first home in the 70's interest rates were around 12%. When I bought my home a few years ago interest rates were around 6%. For some reason this 20% rule of thumb has never changed. The cost of borrowing money should play a factor in determining whether or not you can "afford" a home.
This post was edited on 3/26/10 at 7:53 am
Posted on 3/26/10 at 7:55 am to Catman88
Catman88 pretty much nailed it
Posted on 3/26/10 at 8:46 am to Catman88
I have no problem paying the PMI. At the time we were both fresh out of school. Made good money but only put down 15%. My PMI payment is $68/month and will be dropping off in the next few months. At which point I will just continue to pay the same amount and let it go to principle. i pay $150/month extra anyway. PMI should be the least of your worries on whether or not you can afford a house. It just made sense to us not to take the full 20% out of our savings as we didn't have a house to sell for the down payment.
ETA: if your job is steady now is a fantastic time to buy with interest rates so low.
ETA: if your job is steady now is a fantastic time to buy with interest rates so low.
This post was edited on 3/26/10 at 8:47 am
Posted on 3/26/10 at 8:55 am to bayoudude
I got my pmi removed right at 2 years into my loan by doing a few improvements and my house increasing in value a little.
Posted on 3/26/10 at 8:59 am to LSU1018
quote:
homeowner's insurance, property taxes, etc
I know people always say that when you own a home you are spending $ on these whereas renting you arent but insurance and taxes are priced into your rent. You may be not paying them directly but you are still paying for them ..
Posted on 3/26/10 at 9:10 am to lsugradman
I paid 945 for a 1 br 600 sq foot apartment before I moved out. My mortgage is 100 more than that. When I moved in it was 820 a month too so it went up 125 a month in 1.5 years there. Not to mention I didnt get any of the 1800 dollars it cost me to move in back because i had a dog.
What apartment can you rent and have insurance included? Last I checked you had to get renters insurance to cover your stuff. Thats included in homeowners.
Im not going to even get into the total BS rules and managment. Want your own parking spot? that was an extra 50 a month. want a garage? 150 a month! Want a view of the lake? Thats 75 more a month.
What apartment can you rent and have insurance included? Last I checked you had to get renters insurance to cover your stuff. Thats included in homeowners.
Im not going to even get into the total BS rules and managment. Want your own parking spot? that was an extra 50 a month. want a garage? 150 a month! Want a view of the lake? Thats 75 more a month.
Posted on 3/26/10 at 9:13 am to lsugradman
The issue I'm having is not only paying monthly PMI around $112,which I can live with. The bank is saying they don't offer PMI any longer. They do however go through FHA, which requires 1.75% of the home purchase to be tacked on to your loan amount as an upfront premium. In my case, that a substancial amount I wasn't planning on. I'm calling around this morning to see if this is the case with all banks or just mine; as luck would have it. Thanks for the insight, I can wait until I have 20% to put down, but rates may be up to 7 -8 % by then.
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