20% gets you out of having to pay PMI (Private Mortgage Insurance) which is normally a half a percent (of the total loan) a year extra until you cross the 20% equity mark. Also I would recommend getting a 15 year note as long as the payment is less than a fourth of your take home.
just bought a home myself...some things to consider:
- My lender would only let me avoid PMI (as hitman described) if I put 20% down on a home or 25% down on a condo
- 15 year mortgage is a smaller interest rate, but a 30 year is quite low (historically) right now
- points are worth paying for if you intend to own the home for a long amount of time (at least 10-15 years)
- When calculating how much your take home is (budgeting for a home), please take into account you will now have a HUGE interest deduction that should allow you to lower your federal withholdings and take home a higher paycheck
- My lender would only let me avoid PMI (as hitman described) if I put 20% down on a home or 25% down on a condo
- 15 year mortgage is a smaller interest rate, but a 30 year is quite low (historically) right now
- points are worth paying for if you intend to own the home for a long amount of time (at least 10-15 years)
- When calculating how much your take home is (budgeting for a home), please take into account you will now have a HUGE interest deduction that should allow you to lower your federal withholdings and take home a higher paycheck
Whale, I thouh tha for a while.
but what we are paying in rent, we could be putting into a house.
i want to have a yard to work in, things to do around the house. we have moved about 5 times in 7 years, across coutry, downtown, city, rural, etc...gets old.
we found a nice home very cheap for just the two of us
but what we are paying in rent, we could be putting into a house.
i want to have a yard to work in, things to do around the house. we have moved about 5 times in 7 years, across coutry, downtown, city, rural, etc...gets old.
we found a nice home very cheap for just the two of us
BigBet
The minimum down you can put on a house is 3.5% with an FHA Loan. That 3.5% can come from you or from an eligible gift source (like family member). The seller can pay up to 6% towards closing costs and pre paids. So, if one had 3.5% gift - they could literally move in for nothing out of pocket.
FHA is the only game around for less than 20% down (unless a bank has a special loan program - for example the bank I work for has a doctor program - up to 100% financing).
Without getting "crazy" Agency Loans 20% down FHA 3.5% down.
FHA - Is a great program obviously because one needs less money down. Also if one has less than stellar credit they still get a great rate. With FHA a borrower with poor credit gets the same rate as one with great credit (basically slight slight difference). Also FHA allows many items that other loans do not - such as 6% seller concessions, non occupant co borrowers etc.
With FHA - one obviously has mortgage insurance - but big deal - its the cost of money - a person also putting down less money. It is what it is. Remember no perfect mortgage - its what works for you.
Upfront mortgage insurance is 1.75% (that means 100k loan your true loan amount is 101,750) this gets factored into the mortgage - costs you nothing up front.obviously 1.75 does not make a big difference in mortgage payments. Second, you would pay monthly mortgage insurance .55 is the usual number times your loan amount. (btw the 1.75% and monthly mi .55 - will be going up slightly very soon - negligible difference though)
NOW - If you are interested in a 15 Year FHA. You would have the upfront 1.75 put into the loan but you would NOT have monthly MI. On a 30 year or ARM you would have both.
Qualifications for FHA - Credit Score this number varies with overlays but 620 would be a number you would at least need. Any loan these days one has to prove their income - self employed tax returns 2 years and income better not be declining severly. Income, Asssets and Credit.
FHA just like any other loan - if you have the min 620 plus can prove your income and the money down required - viola.
AGENCY - Fannie/Freddie 30 year, 15 Year and ARMS - Need at least 20% down. Rates are subject to price adjustments based upon credit score and loan to value. Subject to basically the same criteria - income, assets, credit.
If one has say a 640 credit score - they would do better with FHA even with MI!!
$8,000 tax credit you need a binding sales contract by April 30th. You must close on it by June 30th.
Should you buy or rent? Depends. Plus and minus for both. Obviously it is a great tax write off. Its yours no one can tell you to leave - unless they keep taxing us and force us all to leave lol - I would say to own one house is in most people's cases a great idea as long as they are comfortable with the payment PITI PRINCIPAL INTEREST AND TAXES. Will prices continue to drop? No one catches the bottom - and who cares its a ridiculous argument - prices may drop (depending on area) say 10% - they may not - but if your comfortable with payment who cares! You can't watch it like a stock. What about enjoyment? And if it drops like 50% more well then we are all screwed...whether you own a home or not....
If you want to talk more I would be happy to answer any of your questions.
The minimum down you can put on a house is 3.5% with an FHA Loan. That 3.5% can come from you or from an eligible gift source (like family member). The seller can pay up to 6% towards closing costs and pre paids. So, if one had 3.5% gift - they could literally move in for nothing out of pocket.
FHA is the only game around for less than 20% down (unless a bank has a special loan program - for example the bank I work for has a doctor program - up to 100% financing).
Without getting "crazy" Agency Loans 20% down FHA 3.5% down.
FHA - Is a great program obviously because one needs less money down. Also if one has less than stellar credit they still get a great rate. With FHA a borrower with poor credit gets the same rate as one with great credit (basically slight slight difference). Also FHA allows many items that other loans do not - such as 6% seller concessions, non occupant co borrowers etc.
With FHA - one obviously has mortgage insurance - but big deal - its the cost of money - a person also putting down less money. It is what it is. Remember no perfect mortgage - its what works for you.
Upfront mortgage insurance is 1.75% (that means 100k loan your true loan amount is 101,750) this gets factored into the mortgage - costs you nothing up front.obviously 1.75 does not make a big difference in mortgage payments. Second, you would pay monthly mortgage insurance .55 is the usual number times your loan amount. (btw the 1.75% and monthly mi .55 - will be going up slightly very soon - negligible difference though)
NOW - If you are interested in a 15 Year FHA. You would have the upfront 1.75 put into the loan but you would NOT have monthly MI. On a 30 year or ARM you would have both.
Qualifications for FHA - Credit Score this number varies with overlays but 620 would be a number you would at least need. Any loan these days one has to prove their income - self employed tax returns 2 years and income better not be declining severly. Income, Asssets and Credit.
FHA just like any other loan - if you have the min 620 plus can prove your income and the money down required - viola.
AGENCY - Fannie/Freddie 30 year, 15 Year and ARMS - Need at least 20% down. Rates are subject to price adjustments based upon credit score and loan to value. Subject to basically the same criteria - income, assets, credit.
If one has say a 640 credit score - they would do better with FHA even with MI!!
$8,000 tax credit you need a binding sales contract by April 30th. You must close on it by June 30th.
Should you buy or rent? Depends. Plus and minus for both. Obviously it is a great tax write off. Its yours no one can tell you to leave - unless they keep taxing us and force us all to leave lol - I would say to own one house is in most people's cases a great idea as long as they are comfortable with the payment PITI PRINCIPAL INTEREST AND TAXES. Will prices continue to drop? No one catches the bottom - and who cares its a ridiculous argument - prices may drop (depending on area) say 10% - they may not - but if your comfortable with payment who cares! You can't watch it like a stock. What about enjoyment? And if it drops like 50% more well then we are all screwed...whether you own a home or not....
If you want to talk more I would be happy to answer any of your questions.
Mortgages in Canada work completely different.
Most mortgage terms are only 5 years and you cannot lock in a rate much longer than that.
I just signed a mortgage.
I got a variable rate mortgage which was Prime -0.40%.
Prime is currently 2.25% in Canada so my current interest rate on the mortgage is 1.85% but it changes month to month if rates go up or down.
I have this deal locked in for 5 years, after 5 years I have to re-negotiate.
The loan is amortized over 35 years.
There are also penalties if you pre-pay, but you can prepay 20% per year off the original mortgage amount early.
Most mortgage terms are only 5 years and you cannot lock in a rate much longer than that.
I just signed a mortgage.
I got a variable rate mortgage which was Prime -0.40%.
Prime is currently 2.25% in Canada so my current interest rate on the mortgage is 1.85% but it changes month to month if rates go up or down.
I have this deal locked in for 5 years, after 5 years I have to re-negotiate.
The loan is amortized over 35 years.
There are also penalties if you pre-pay, but you can prepay 20% per year off the original mortgage amount early.
