Opportunity cost of putting down only 10% for a home.

NEW -> Contingent Buyer Assistance Program
You avoid MI only when you put 10% down on a 15 year fixed. Not many people are in a position to assume a 15 year note/payment but it is a selling point. If you have a 15 year assumable note at 4% in a 7.5% 30 year fixed market, the payments are about the same, plus you've got very fast principal reduction ahead based on when the loan is assumed.

The benefit of assuming a 30 fixed FHA is that there is very, very little re-qualifying needed. If the property is a condo and the HOA has issues or there is a high renter to owner percentage, that is of no issue to the lender. They just want continuing payments made.

My .02c

Soylent Green Is People.
 
USCTrojanCPA said:
The only loan that you can get to put down 10% is to get an FHA loan.
Click to expand...

Adding a personal spin to SGIP's earlier comment about the above...I have been the in the market to buy a home for over a year, and have been working with a very good credit union since my search started. I am able to secure a conventional 30-yr fixed loan for a $400K purchase price with only 10% down. In fact, the credit union has said that I am also able to put down 5% if I want, but of course, my monthly payments will be higher. I will have to pay PMI, but with only 10% down it's worth it to me.

I have also been looking at new construction. With that I have been qualified by various lenders who have approved me with 10% down as well on a conventional 30-yr fixed loan.

Realistically, I could put 20% down, but I would like something larger than a 400 sq foot shack in the middle of nowhere.  :P
 
SGIP PM'ed me a rundown of low down loans and their MI costs on TalkIrvine 1.0 but I didn't save my PMs so it's out in the Internet junkyard somewhere... can I request he post that information again here?

Thanks in advance.
 
Some of the premium costs will be changing soon and become risk/FICO based. Here's a quick review, but remember they are approximate costs. YMMV.

3.5% down (FHA)  2.25% up front, .55 annually.
5% down (FHA) 2.25 up front, .50 annually.
5% down (Conventional) 1.05 to .90 annually.
10% down (FHA) 15 yr loans only. No monthly MMI.
10% down (Conventional) .7 to .64% annually.

From there on down there isn't much of a change in rate and so few people put 15% down relative to 10%.

Conventional $417k max loan amount lender paid PMI 5% down is .75% to rate (IE: 5.0% + PMI or 5.75% LPMI)
Conventional $417k max loan amount lender paid PMI 10% down is .50% to rate (IE: 5.0% + PMI or 5.50% LPMI)

With rates in the 4's I'd suggest paying PMI instead of financing it. You'll be hard pressed to get a refinance out of LPMI when rates are in the 4% range, but will sooner see PMI removed once you hit 78% LTV.

My .02c

Soylent Green Is People.
 
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