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Started By
Message
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
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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 12:01 pm to LSUGUMBO
Another thing, I made the biggest financial mistake of my life last January. I wanted to surprise my wife with a trip so I put the hotel on a credit card I never use. Well, I forgot to get online and pay it. Needless to say, I was getting letters in the mail, thinking they were just statements so I would shred them. Well, they were late notices and I didn't notice until 6 months later. Ruined my perfect credit and it now sits at 678 so I doubt I can do much of anything yet. Pisses me off that I could be so dumb to ruin my credit over $200.
Posted on 4/10/13 at 12:27 pm to LETSGEAUX2
Damn that sucks. I'm sorry to hear that but it happens to the best of us.
Did you try to explain the situation with the CC company? If not, call customer service and ask to speak to a manager. Explain the situation to him/her and ask if you they will do a goodwill deletion of the lates from your credit report.
Assuming that you paid them in full immediately after you discovered your mistake, there's a pretty good chance that they will delete them.
Remember, they gain nothing by destroying your credit but they lose out if they believe you are shell shocked and won't use the card again. It's literally a couple of keystrokes and mouse clicks to make the lates go away, but if you tell them what a huge favor it would be they'll likely do it in the interest of keeping you as a happy card user.
Did you try to explain the situation with the CC company? If not, call customer service and ask to speak to a manager. Explain the situation to him/her and ask if you they will do a goodwill deletion of the lates from your credit report.
Assuming that you paid them in full immediately after you discovered your mistake, there's a pretty good chance that they will delete them.
Remember, they gain nothing by destroying your credit but they lose out if they believe you are shell shocked and won't use the card again. It's literally a couple of keystrokes and mouse clicks to make the lates go away, but if you tell them what a huge favor it would be they'll likely do it in the interest of keeping you as a happy card user.
Posted on 4/10/13 at 12:32 pm to ZereauxSum
Man, believe me, I begged Chase for weeks. I sent emails to every executive I could find. I actually got multiple responses from their offices. Unfortunately for me, they said it had been reported because I was so far behind. That really boils my blood to think about. I have no idea when it will be back to normal.
ETA - they did take all the late charges off which were a couple 100 bucks but I would have gladly paid that if I could have my credit back
ETA - they did take all the late charges off which were a couple 100 bucks but I would have gladly paid that if I could have my credit back
This post was edited on 4/10/13 at 12:34 pm
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 12:41 pm to Pilot Tiger
quote:
On my home, I put down 15%, and the seller held a 2nd mortgage (5%), then my lender gave me the 80%
Can you explain this a bit more?
Posted on 4/10/13 at 12:46 pm to LETSGEAUX2
quote:ya, basically at closing the seller holds a 2nd mortgage(mine was 5% of the house price) and I signed a promissory note to pay it back in 5 years at 5.25% interest.
Can you explain this a bit more?
Housing is super expensive here so it's tough to come up with 20%, sometimes you can find a seller willing to hold a 2nd. I get a home without putting 20% down AND avoiding PMI, he gets 5.25% interest for 5 years for loaning me 5%. win/win for us.
It may not be for everyone, but worth doing some research
Posted on 4/10/13 at 12:54 pm to Pilot Tiger
Interesting. And because of my dumb mistake, I will probably have a hard time getting approved for the 80/10 mortgage.
Posted on 4/10/13 at 12:57 pm to LETSGEAUX2
ya sucks, my wife's credit was meh because she racked up CC debt in college, so i paid off all of her CC debt before we got married and I make all the financial decisions so she doesn't ruin everything 
Posted on 4/10/13 at 12:58 pm to Pilot Tiger
You think 2 years is enough time for it to creep up to around 740 or is this going to take years to fix?
Posted on 4/10/13 at 1:01 pm to LETSGEAUX2
from 678 to 740 in 2 years? I don't believe that will happen
ETA: I don't even know if it would get to 700 by then, to be honest
ETA: I don't even know if it would get to 700 by then, to be honest
This post was edited on 4/10/13 at 1:02 pm
Posted on 4/10/13 at 1:06 pm to Pilot Tiger
Is there a credit agency I can contact (beg) about having this blemish removed?
I don't know why I started browsing through houses online, now I'm depressed
I don't know why I started browsing through houses online, now I'm depressed
This post was edited on 4/10/13 at 1:10 pm
Posted on 4/10/13 at 1:10 pm to LETSGEAUX2
quote:I think the only way is for the creditor to remove it. You can always continue to try to talk to them and beg them even more. $200 was really the amount?? seems pretty ridiculous imo
Is there a credit agency I can contact about having this blemish removed?
quote:It depresses me too, mainly because of FHA loan limits and the 6 month reserve requirement
I don't know why I started browsing through houses online, now I'm depressed
Posted on 4/10/13 at 1:12 pm to LETSGEAUX2
As long as you keep it clean from here on out, you can possibly get between 710-720 in 2 years, but I can't see 740.
You might want to try a free trial with MyFICO. They have a nice estimator that shows you what your score will be at certain points in the future given different courses of action.
Just remember to cancel it before they begin charging you. Or you might want to keep it. Their basic service is like $15 a month and it shows you your score whenever something new happens with your credit.
Don't beat yourself up too much over the card, it happens!
You might want to try a free trial with MyFICO. They have a nice estimator that shows you what your score will be at certain points in the future given different courses of action.
Just remember to cancel it before they begin charging you. Or you might want to keep it. Their basic service is like $15 a month and it shows you your score whenever something new happens with your credit.
Don't beat yourself up too much over the card, it happens!
Posted on 4/10/13 at 1:14 pm to LETSGEAUX2
If you are paying $625 per month for a 3 BR house I would remain there as long as humanly possible. That is an insanely good deal if comparable homes in your area sell for $275K. And that's easily enough room for 3 people, even four people if one is a baby and doesn't take much space. Unless you live in a crackhouse I would stay put.
Posted on 4/10/13 at 1:15 pm to Pilot Tiger
quote:
I think the only way is for the creditor to remove it. You can always continue to try to talk to them and beg them even more.
Yeah this is what I would do. All they can say is no.
ETA: also keep on mind that you are well above the min score for FHA
This post was edited on 4/10/13 at 1:24 pm
Posted on 4/10/13 at 1:18 pm to LETSGEAUX2
Don't pay PMI. Find a way to put down 20%.
Posted on 4/10/13 at 1:22 pm to RidiculousHype
quote:
Don't pay PMI. Find a way to put down 20%.
I used to feel this way, but I have the feeling that rates are going to start marching up soon.
Maybe paying PMI isn't so bad if the alternative is to save and wait to buy after rates have gone back up into the 5s.
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