We are just starting to think about moving into a bigger house. ours is on the small side and we are getting cramped.
I have been doing some basic research. Our credit is okay. I am very high sixes and dh is in the mid sevens.
we have 20% to put down but wondering if maybe going fha is better option bc then you can put 10% and we could use the other 10% for updates new furniture or whatever.
Just want info from someone who actually has one. thanks
If you qualify, conventional is a better deal IMO. the monthly mortgage insurance you have to pay when you put less than 20% down takes a big chunk out of what you'd keep
If you qualify, conventional is a better deal IMO. the monthly mortgage insurance you have to pay when you put less than 20% down takes a big chunk out of what you'd keep
THat is what I was thinking but thought maybe it was a wash... bc the rate is pretty low. But I think you are right
We considered it. However, the FHA loan max was far enough below the cost of our home that we would have needed to put down 15% anyways. For us, being trapped into 5 year minimum of PMI wasn't worth the extra 5% of wiggle room. However, it made things tighter for a while than they had to be.
We did FHA when we bought our house. Pluses: DP under 20%, and FHA is notoriously thorough in making sure any issues with the house are taken care of prior to closing. Cons: PMI drives up the monthly payment, and some sellers shy away from FHA financed-deals due to a slightly longer timeline to close and the (plus for the buyers) fact that FHA requires any issues with the house to be taken care of prior to closing.
MI has gone down for FHA mortgages, fwiw. FHAs are very thorough in regards to appraisals, reinspections, etc. If you can do conventional I would go conv. PMI for conv can be significantly cheaper. It can be either financed into the loan and you pay monthly or a lump sum at closing. I've seen lenders give lender credit to cover the lump sum pmi. Sometimes sellers will do the same.
If you're qualified for a conventional loan go that route. Especially if you have the cash for at least 10% down. It may seem like a better deal on the surface, but I promise it's not.
You don't have to put 20% down to go conventional either. We are in a HCOL area and of friends I have talked mortgages with I don't know anyone who has put down 20% and I only know one person who went FHA. You may have to pay PMI so figure out if it is worth it to you to keep the 10% liquid for repairs, savings, whatever.
We have FHA and our PMI isn't too bad, $102 on a $235k initial loan at 3.25%. Once we hit 20% ltv, we can ask that it's removed. I've heard it's "tough" to get FHA, but we didn't have any issues originally and our refi in 2012 was really easy as well.
FHA is expensive... So people do FHA because they don't need to put as much money down but in the end it ends up costing you a lot more money. It doesn't make good financial sense.
This. It's less down payment, but you have to pay PMI. When we were looking at houses, one or two we looked at the owners told the realtor they wouldn't even accept offers from people doing FHA. It's often a less sure thing than conventional because of some of the hoops you have to jump through.
You'd probably be better off doing 5 or 10% down on a conventional with lender paid PMI (saves you because it's built into your rate). You can redo down the road when you're below 80% LTV and lower your rate then.