Buying a home can sometimes be stressful when you have so many different people giving you advice. It shouldn't matter if you use FHA loans, VA loans, USDA loans, or conventional loans for your financing. Keep in mind, you hold the power in your own hands, with the help of professionals. Just be wise in your decisions.
Just recently, there has been news of FHA Loans raising the monthly mortgage insurance (MMI), known in the conventional world as PMI, private mortgage insurance. The concept is the same, but the monthly percentages vary for each type of mortgage depending on the down payment and credit scores. Here is the recent article : The FHA monthly mortgage insurance increases and the upfront mortgage insurance.
Just the other day, a realtor made this comment in regards to the FHA monthly mortgage insurance being raised by the end of this year.
The realtor stated : "I guess we're just going to have to start encouraging our clients to save up for the down payment like we used to do years ago. After all, it worked."
In my opinion, we just can't compare the last few years to years such as 2005, 2000, or even 1995. The economy was totally different and we are facing more unemployment issues than ever before. People just can't pull cash out of the hat like they use to. Sure, we can say that they can save it, but how long would that take?
My point that I wanted to talk about is that if the FHA monthly mortgage insurance increased $167 extra a month, that another $10,000 down would not do as much as one would think. I am sticking with the $200,000 mortgage example that was used in the original post. Let's continue this....
This is another topic of discussion, but a borrower needs to have in mind what monthly mortgage payment they are comfortable with prior to shopping for a mortgage or even shopping for a new home. Not what they can max out to, which some loans officers care more about.
So, your mortgage payment is $167 more a month with the higher mortgage insurance. If you put an extra $10,000 down on the mortgage, your payment would only drop $54 a month. Again, another $10,000 down would only decrease your monthly mortgage payment by $54 a month, using a rate of 5.00% ona $190,000 mortgage.
I have to say, with today's economy, cash is king. I wrote this 3 part series, CASH is KING and the differences with different down payments.
Summary : Overall, you really need a good professional loan officer that will ask you the correct answers, talk about your goals, and get the borrower to focus on the mortgage payment, not the interest rate. As mentioned, I am a stickler when it comes to the first question asked of the borrower. That question is... "Borrower, what monthly mortgage payment would you be comfortable with, not to exceed?" Not, let's see what the highest purchase price that I can qualify you for. Again.. mortgage payment should be key. The interest rate just makes your payment. You live with the payment, not the interest rate.
- I need my quick fix, please pass that 4.5% rate over here. (please don't be disturbed about the first picture. Just trying to make a point.)
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For more information on FHA loans, please go to this link. The FHA Expert
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!
For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors
Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc
_____________________________________________________________________________________________________________________________
FOLLOW ME ON FACEBOOK
- FHA Loans - USDA Loans - VA Loans -
- Energy Efficient Mortgages -
- Conventional Loans - 203 k loans -
- FHA Home Loans - Mortgages -
Experience & Knowledge at its BEST !!!
Follow me on:
______________________________________________________________________________________________________________
For more information on FHA loans, please go to this link. The FHA Expert
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!
For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors
Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc
