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re: What's the deal with PMI these days when purchasing a new home?
Posted on 3/26/10 at 9:20 am to AcadianDisciple
Posted on 3/26/10 at 9:20 am to AcadianDisciple
I think your bank is telling you that you have to get an FHA loan. FHA doesnt have PMI it has MMI which is generally a 1.5% premium and you have a yearly .05% amount until it falls off.
So if you have a 100k loan you will pay 1500 when you close and 41 a month for MMI.
If you get PMI its higher than MMI so that amount you paid upfront doesnt mean much.
On a 100000 values home and you take out say 95000 putting 5k down your PMI would be about $75 a month instead of 41 through MMI.
So if you have a 100k loan you will pay 1500 when you close and 41 a month for MMI.
If you get PMI its higher than MMI so that amount you paid upfront doesnt mean much.
On a 100000 values home and you take out say 95000 putting 5k down your PMI would be about $75 a month instead of 41 through MMI.
0
Posted on 3/26/10 at 10:21 am to LSU1018
quote:
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
Did your property taxes also go up after you got your house appraised to drop the PMI?
Posted on 3/26/10 at 10:57 am to Jason9782003
Pretty sure you dont have to share your findings with the tax assessor.
Posted on 3/26/10 at 12:07 pm to Catman88
Good points, Catman. I hadn't considered the retarded low rates.
Posted on 3/26/10 at 12:32 pm to TigerinATL
quote:
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.
Another good point I hadn't considered.
Back then (50s-80s) I don't think interest rates fluctuated with the magnitude and frequency that they do today (relatively speaking that is....and I could be completely wrong), so that may have played a part in the development of this rule of thumb.
Sorry for coming across as telling you you "can't afford it". I guess I was just echoing my father. That being said, consider all of the costs associated with both, develop a long-term cash-flow model, and you should be able to determine which is the smarted decision from a STRICTLY FINANCIAL standpoint.
Factor in emotions, and determine what to do from there.
Good luck!
This post was edited on 3/26/10 at 12:35 pm
Posted on 3/26/10 at 1:26 pm to jmtigers
quote:
I dont think this works anymore. No one will give you the second
Incorrect, I just did this (closed on Feb 26, 2010). You just have to find the right mortgage broker.
Posted on 3/26/10 at 1:51 pm to Catman88
quote:
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.
BOOM!
Posted on 3/26/10 at 3:28 pm to Luke4LSU
quote:
Back then (50s-80s) I don't think interest rates fluctuated with the magnitude and frequency that they do today (relatively speaking that is....and I could be completely wrong), so that may have played a part in the development of this rule of thumb.
I'd suggest revisiting history of the mid-80's and find short term rates rose north of 15%, we had an inverted yield curve, and inflation was ridiculous compared to the past decade. Artificially low rates due to Fed policy is what has, in large part, caused such a significant rise in housing costs compared to median incomes.
Posted on 3/26/10 at 5:58 pm to tirebiter
No my homeowners insurance didn't go up when I had my house appraised. I already had my insurance covered close to the amount that it appraised at.
Posted on 3/27/10 at 10:29 am to LSU1018
Incorrect, I just did this (closed on Feb 26, 2010). You just have to find the right mortgage broker
Who did you use??
Who did you use??
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