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First Time Home Buyer Mortgage Questions
Posted on 4/9/26 at 5:47 pm
Posted on 4/9/26 at 5:47 pm
I am in the middle of applying for financing on my first time home and figure some people here can help me out 
. After what feels like 15 calls with mortgage brokers today, I have several options and trying to narrow down my options but could use some help in figuring out the best path. Traditional 30 yr mortgage in FL.
Home price- $535k
Down payment- $20%/$107k
Remaining loan- $428k
Option A- 5.99%, underwriting fee of $1250
Option B- 5.875% at cost of $4280 for 1 pt, underwriting fee of $1250
Option C- 5.875% with broker fee of $6420 and a lender credit of $1280, underwriting fee of $1295
Option D- 5.5% with cost of $4280 for 1 pt, broker fee of $6420, underwriting fee of $1295
Where I'm struggling is trying to determine whether reducing the mortgage by 1 pt is worth the upfront cost or if it's better to just use the $$ saved towards principal of the loan? I've already lowered my 401k contributions to the lowest max (6%) so will have a higher cash flow for the foreseeable future. Using most of my reserve cash for the down payment so would ideally like to build that back up quickly after getting the house.
Any input is appreciated
. After what feels like 15 calls with mortgage brokers today, I have several options and trying to narrow down my options but could use some help in figuring out the best path. Traditional 30 yr mortgage in FL. Home price- $535k
Down payment- $20%/$107k
Remaining loan- $428k
Option A- 5.99%, underwriting fee of $1250
Option B- 5.875% at cost of $4280 for 1 pt, underwriting fee of $1250
Option C- 5.875% with broker fee of $6420 and a lender credit of $1280, underwriting fee of $1295
Option D- 5.5% with cost of $4280 for 1 pt, broker fee of $6420, underwriting fee of $1295
Where I'm struggling is trying to determine whether reducing the mortgage by 1 pt is worth the upfront cost or if it's better to just use the $$ saved towards principal of the loan? I've already lowered my 401k contributions to the lowest max (6%) so will have a higher cash flow for the foreseeable future. Using most of my reserve cash for the down payment so would ideally like to build that back up quickly after getting the house.
Any input is appreciated
11
Posted on 4/9/26 at 5:52 pm to CuseTiger
How long do you reckon you will stay in the house?
Posted on 4/9/26 at 5:53 pm to CuseTiger
Can you offer the p&i payments for each scenario because I don't want to break out my amortization calculator?
Posted on 4/9/26 at 6:10 pm to CuseTiger
Idk but there seems to be no way that C could possibly be the best option
Posted on 4/9/26 at 6:15 pm to BestBanker
quote:
How long do you reckon you will stay in the house?
Work is going well so at least 5-10 years. House has more than enough room for expansion for hobbies. No HOA too
quote:
Can you offer the p&i payments for each scenario
I added in the estimated taxes + insurance to this, but here it goes
Option A- 5.99% no pt
3313.33
Option B- 5.875% 1 pt
3281.78
Option C- 5.875% no pts, includes credit, but broker fee
3281.78
Option D- 5.5% 1 pt, no credit, has broker fee
3180.14
Posted on 4/9/26 at 6:50 pm to CuseTiger
quote:throw it at the principal
Where I'm struggling is trying to determine whether reducing the mortgage by 1 pt is worth the upfront cost or if it's better to just use the $$ saved towards principal of the loan?
You’ll get that point down the road when you refinance
Congrats on the home ownership
Now go learn how to be a journeyman electrician, carpenter, hvac tech, foundation guy, chimney cleaner, plumber, and appliance serviceman!!
Because if you don’t, you’ll be broke anyway
Posted on 4/9/26 at 7:01 pm to CuseTiger
Ok. From comparing A to D plan, the additional costs of 10700 free up 130 mo. That equates to 6.85 yrs of prepayment. Using a simple 5% earnings rate on the difference of 130 per month at 6.85 yrs comes to @$12,400. It's not that big of a difference, but youd most likely not be giving up cash on the front end but rather financing it in the note.
If paying cash out of pocket, of the 10700, I wouldn't do D. I'd consider D if financed in the note, especially if staying longerthan 6.85 yrs. Again, I only used 5% on earnings calculation.
My humble offering of my opinion.
If paying cash out of pocket, of the 10700, I wouldn't do D. I'd consider D if financed in the note, especially if staying longerthan 6.85 yrs. Again, I only used 5% on earnings calculation.
My humble offering of my opinion.
Posted on 4/9/26 at 7:58 pm to SuperSaint
quote:
throw it at the principal
You’ll get that point down the road when you refinance
Was leaning that way to save some cash upfront, sounds like it makes the most financial sense as well
quote:
BestBanker
Thank you
. I'm not the financial person in my family, but am learning it's a necessity to understand situations like I'm going through currently to have a better financial outlook in lifeThis post was edited on 4/9/26 at 8:01 pm
Posted on 4/9/26 at 9:35 pm to CuseTiger
Go FHA put 3.5% down save the other funds
Ask for Borrower paid and get a 4.75% or 5 with 1pt broker cost for 5100
The difference is 300 in payment but you have 80k in your account making you money
Ask for Borrower paid and get a 4.75% or 5 with 1pt broker cost for 5100
The difference is 300 in payment but you have 80k in your account making you money
Posted on 4/9/26 at 9:58 pm to SDVTiger
You mentioned 30 yr traditional....
Are these fixed rates or ARMs? I assume you mean fixed rate.
I just bought a second home because I didn't sell my first home in time that has my VA eligibility attached to it prior to closing.
I had options. VHA or traditional. For me, the difference was the VHA was a little cheaper on payments and cost to close, BUT all the money from closing was basically going to FHA funding.
I decided to do the conventional loan, on a $540K home, I still paid about $40K for closing cost, BUT, MOST of it went towards my mortgage.
So, I now have a $513K mortgage vs $530K ish. I was surprised I still had to pay PMI, even though my house appraised for over $700K and I had over 20% equity in the house the moment I closed. I plan to refi within the year once I get my VA eligibility restored, will shed the PMI and best the rate.
Are these fixed rates or ARMs? I assume you mean fixed rate.
I just bought a second home because I didn't sell my first home in time that has my VA eligibility attached to it prior to closing.
I had options. VHA or traditional. For me, the difference was the VHA was a little cheaper on payments and cost to close, BUT all the money from closing was basically going to FHA funding.
I decided to do the conventional loan, on a $540K home, I still paid about $40K for closing cost, BUT, MOST of it went towards my mortgage.
So, I now have a $513K mortgage vs $530K ish. I was surprised I still had to pay PMI, even though my house appraised for over $700K and I had over 20% equity in the house the moment I closed. I plan to refi within the year once I get my VA eligibility restored, will shed the PMI and best the rate.
Posted on 4/9/26 at 11:34 pm to soccerfüt
quote:
How long do you reckon you will stay in the house?
This is the question that you must answer.
The longer you will be in the home, the more important the lower rate is.
The shorter you are in the house, the more important the lower acquisition cost (closing fees) is.
Posted on 4/9/26 at 11:37 pm to CuseTiger
$420,000 x 0.5% is about $2k interest savings in the first year.
How long do you anticipate being in the home? The longer you are in the home, the more valuable this amount of interest savings are.
How long do you anticipate being in the home? The longer you are in the home, the more valuable this amount of interest savings are.
Posted on 4/11/26 at 6:24 am to CuseTiger
Option A
Posted on 4/11/26 at 1:02 pm to CuseTiger
I'd go with Option A — the 5.99% with minimal fees. Keep your cash, skip the points, and refinance later when it makes sense.
If you're using most of your cash for the down payment, it's best to skip paying points. The 5.875% rate saves little each month and takes about a decade to break even; the 5.5% option costs over $10k upfront and still needs 6–7 years. Most buyers move or refinance before then. Prioritize liquidity—choose the 5.99% with low fees, keep your cash, and refinance when rates improve.
FYI, we've been in our house over 27 years. Refinanced several times. Depending on your expected timeline, this is just the beginning!
If you're using most of your cash for the down payment, it's best to skip paying points. The 5.875% rate saves little each month and takes about a decade to break even; the 5.5% option costs over $10k upfront and still needs 6–7 years. Most buyers move or refinance before then. Prioritize liquidity—choose the 5.99% with low fees, keep your cash, and refinance when rates improve.
FYI, we've been in our house over 27 years. Refinanced several times. Depending on your expected timeline, this is just the beginning!
Posted on 4/11/26 at 2:22 pm to BestBanker
Quick hijack, is there ever a reason to not put down 20% and avoid PMI?
Assuming you have the 20%.
Assuming you have the 20%.
Posted on 4/11/26 at 4:05 pm to GREENHEAD22
quote:
is there ever a reason to not put down 20% and avoid PMI?
If the math works in your favor, yes. The short answer is, it depends.
Funny you posted this because I was just talking about this exact topic with my son, on his house purchase. He just sold his house to purchase another and his annual capital appreciation rate was 3% on the sale.
Factors to consider are house value appreciation, earnings rates on money, PMI expense, and your monthly loan P&I payment.
Again, it depends.
Posted on 4/11/26 at 5:56 pm to meansonny
quote:
This is the question that you must answer. The longer you will be in the home, the more important the lower rate is. The shorter you are in the house, the more important the lower acquisition cost (closing fees) is.
This!!!
Sounds like your timeline in home is long to where lower interest rate matters most.
Some other general things in our approach to home ownership FWIW:
Do not think of home as an investment asset like stock, bond or cash. It’s way more than that! It is the place you will make life lasting memories, perhaps build a family, enjoy holidays, etc. Yes, home equity is part of “net worth” calculation. And it is indeed an asset that will likely build net worth for you. However, it is way more than a tradable asset.
Perhaps I missed but am assuming these are fixed rates, not adjustable. Fixed rates can serve as inflation shields (cost of money will go up and down. You can refinance down so low risk to you. You can float down with interest rate decrease. Your fixed rate protects you from the upside. You are capped at fixed rate if interest rates clime higher than your rate).
Cash is still king. At these interest rates, I believe there is still future market returns (ie, stocks/equities) that can exceed your mortgage interest rate over long term. Keeping some cash to invest (eg, S&P 500 index) that returns > than your mortgage interest rate is smart thing to do. While your home is not a tradable asset, your cash is.
Congratulations! Home ownership is exciting and will pay you back in so many ways. Many financial ways. Many more life ways.
Enjoy!
This post was edited on 4/11/26 at 6:33 pm
Posted on 4/13/26 at 11:40 am to CuseTiger
You need to look at it from a breakeven standpoint (and I'm speaking here as a loan officer myself).
1st, average life of a loan, whether it's you selling, or refinancing, etc is 7 years (84 mos).
Immediately Option C is off the table - it is comparatively worse with Option B. Extra broker fee, for the same rate = NO.
Option B compared with Option A - additional cost of $4,280/ $31.55 savings per month = 135 months breakeven. I would go for A in this scenario.
Option D compared with A - additional cost of $10,295 ($4,280 + $6,420 + $45) divided by $133.19 monthly savings = breakeven time frame of 78 months. I personally would still defer to option A here.
ETA:
The 1 point you are paying is not to reduce the mortgage by 1 point - it's you paying 1% of the mortgage, just to lower your rate by 0.125%. Mortgage amount is staying the same with you paying points.
1st, average life of a loan, whether it's you selling, or refinancing, etc is 7 years (84 mos).
Immediately Option C is off the table - it is comparatively worse with Option B. Extra broker fee, for the same rate = NO.
Option B compared with Option A - additional cost of $4,280/ $31.55 savings per month = 135 months breakeven. I would go for A in this scenario.
Option D compared with A - additional cost of $10,295 ($4,280 + $6,420 + $45) divided by $133.19 monthly savings = breakeven time frame of 78 months. I personally would still defer to option A here.
ETA:
quote:
determine whether reducing the mortgage by 1 pt is worth the upfront cost
The 1 point you are paying is not to reduce the mortgage by 1 point - it's you paying 1% of the mortgage, just to lower your rate by 0.125%. Mortgage amount is staying the same with you paying points.
This post was edited on 4/13/26 at 11:43 am
Posted on 4/13/26 at 11:48 am to GREENHEAD22
quote:
Quick hijack, is there ever a reason to not put down 20% and avoid PMI?
Assuming you have the 20%.
Well, I won't say it was smart financially, but it definitely paid off from an enjoyment perspective. Had the 20%, kept 5% back to build our boat dock & lift - we use the boat so much more with the kids since I can have it in the water in 5 minutes. Also, ended up paying the PMI at closing in lump sum - that way it's not tacked onto my monthly payment starting me in the face. It was like $2,500 if I recall? Paid approx $2,500 to keep $23K in the pocket for the boat lift. One of the best decisions we made.
So yeah, there are some scenarios
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