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Question About PMI/Home Buying (Update on pg 3)
Posted on 4/10/13 at 11:04 am
Posted on 4/10/13 at 11:04 am
Wife and I are looking at getting out of our 1100 sq foot house in the next year or two. We have a combined income of about $110,000 but she has student loans from PT school that are $1250 a month for the next 8 years. We both max out of 401k, have a 3 month emergency fund, and are paying down her car (doubled the payments to get it done in the next year.) At this rate, I don't see us being able to put down 20% on a nice home in our area ($275,000 or so) for another 4 years. It's crazy to think that we pay twice as much for her student loans as we do for our house.
Question is, although I'd like to put down the 20%, what are my other options? If I put down 10%, how much will I be paying on PMI? Once I hit 20%, will the PMI automatically fall off?
Before you say to suck it up and stay here, it's a 3 bedroom, 1 bathroom house and we are trying to make some babies right now. We can definitely stay here with 1 baby but I'm thinking 2 more years and I'll be ready to go.
Question is, although I'd like to put down the 20%, what are my other options? If I put down 10%, how much will I be paying on PMI? Once I hit 20%, will the PMI automatically fall off?
Before you say to suck it up and stay here, it's a 3 bedroom, 1 bathroom house and we are trying to make some babies right now. We can definitely stay here with 1 baby but I'm thinking 2 more years and I'll be ready to go.
This post was edited on 4/17/13 at 10:23 am
6
Posted on 4/10/13 at 11:12 am to LETSGEAUX2
quote:
what are my other options?
An FHA loan requires 3.5% down. USDA Rural Development loans are 0 down but might not be available in your area.
quote:
If I put down 10%, how much will I be paying on PMI?
I believe PMI is a fixed rate based on the loan amount.
quote:
Once I hit 20%, will the PMI automatically fall off?
With FHA, you have to pay it for the life of the mortgage and even if you go conventional, it's not automatic. You'd have to talk to your lender/servicer and possibly get an appraisal done.
You definitely have options to get out of there ASAP, but the question is how badly you want/need to move.
Posted on 4/10/13 at 11:31 am to LETSGEAUX2
You can prepay PMI at closing, and save some money. It's not something that's always mentioned, but I just did it when I refi'd about 6 months ago. You'll have to bring more to the closing table, but it won't be something you have to worry with monthly, and it takes out having to get another appraisal when you think you hit 20%.
Not to mention that PMI might be worth it to go ahead and lock in the low interest rates. They won't be low like this forever, so it may be worth it to pay PMI for a couple of years to keep your rate low. The lender should automatically remove PMI at 78% LTV (at least I believe that's true).
Not to mention that PMI might be worth it to go ahead and lock in the low interest rates. They won't be low like this forever, so it may be worth it to pay PMI for a couple of years to keep your rate low. The lender should automatically remove PMI at 78% LTV (at least I believe that's true).
Posted on 4/10/13 at 12:35 pm to LETSGEAUX2
quote:ugh, that sucks. sorry
she has student loans from PT school that are $1250 a month for the next 8 years.
quote:there are loans where you can put down less than 20% and not pay PMI, just have to do some research.
Question is, although I'd like to put down the 20%, what are my other options? If I put down 10%, how much will I be paying on PMI
You can try an 80/10 loan.
On my home, I put down 15%, and the seller held a 2nd mortgage (5%), then my lender gave me the 80%
no PMI
quote:i believe you must pay 5 years worth of PMI regardless if you get 20%, but you can always refinance and have the PMI drop off.
Once I hit 20%, will the PMI automatically fall off?
quote:we are in a similar situation. our current place is fine for 1 kid, but I want a big old house way out in the suburbs with a huge yard..so we're casually looking now
we are trying to make some babies right now. We can definitely stay here with 1 baby but I'm thinking 2 more years and I'll be ready to go.
Posted on 4/10/13 at 1:35 pm to LETSGEAUX2
275k with 20% down at 7% no PMI principal and interest is $1465/mo.
275k with 10% down at 3.5% with PMI principal and interest is $1233/mo.
PMI would be a non factor to me
275k with 10% down at 3.5% with PMI principal and interest is $1233/mo.
PMI would be a non factor to me
Posted on 4/10/13 at 7:41 pm to LETSGEAUX2
Can your wife change into a more lucrative PT specialty ? I would think you would be making more than that combined if she was working in a nursing home or doing home health.
Posted on 4/18/13 at 10:35 am to LETSGEAUX2
quote:
Question is, although I'd like to put down the 20%, what are my other options? If I put down 10%, how much will I be paying on PMI? Once I hit 20%, will the PMI automatically fall off?
I personally would avoid pmi at all costs, I was in a similar situation as you with my last two houses and this is how I avoided it.
First house I put down 10%, I then setup a subordinate second mortgage with Pelican State Credit union in BR. Couple of things here, the 2nd mortgage is at a higher rate but the principal is a small amount so you can pay it off early to where it isn't a big deal. I had the option of fha or conventional going this route. I did this in 2010 so hopefully it is still an option for you.
The last closing, yesterday, I did a HELOC instead of the subordinate second mortage. It worked the same way, I just put whatever principal I needed to to avoid pmi on it. I did that through a local bank. If your not familiar with a home equity line of credit I can provide more details on what those are about. Of the two options I would suggest this one to you first. Bottom line for me though is I am never paying a bank pmi, just like I am never paying to lock in a rate for a mortgage. I'll spare you my rant on that though, lol.
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