Question by dma: mortgage question regarding 3% down..?
Hi,
My friend is buying a house and she was telling me a couple weeks ago about the type of mortgage she is getting but I can’t remember exactly what she said. Something along the lines of 3% down, but then can refinance in a year with no penalty. She has to pay PMI. Has anyone ever heard of something like this and can explain more details about it?
I hate these funky mortgages and am a 30year fixed kind of girl myself. She previously did a 20% interest only mortgage on her condo with a 5 yr arm. She has 3 yrs left but luckily found a buyer in this market.
Marty: I am not looking for a broker. If you read my question this is in regards to a friend of mine. I already have a mortgage and don’t need a broker. Stop soliciting work on yahoo answers
Best answer:
Answer by chatsplas
3.5% is generally the minimum FHA down payment. . . . .
She needs to carefully check out the deal she’s getting
Interest only loans are a BAD idea, and a horrible idea at 20% interest.
PMI is normal whenever you pay down less than 20% because you are a riskier buyer, and it guarantees that the down payment amount is secure.
Hopefully she has a GOOD attorney and she knows exactly what kind of deal she is taking out. However with her past history. . . . . .
I prefer a fixed rate, but find 15 years is an even better deal, and not much more than the 30 year, but saves you SO much over the life of the loan.
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It sounds like a FHA mortgage. FHA requires 3% down, there is no prepayment penalty, and PMI is required for 5 years or until the mortgage is payed down to 80% of the original loan amount.
Probably FHA loan. She will also have to pay Mortgage Insurance since she won’t have 20% equity in the property. Mortgage Insurance is about $100 a month. If her property value goes up over the next few years she can refinance and get rid of the Mortgage Insurance.
It would still most likely be a 30 year fixed mortgage it’s just a FHA loan.
Its an FHA secure mortgage …. you can refinance without problems or additional costs too with it, called “streamline” refinance…. You can qualify for this type of mortgage with a credit score in the 500′s …. as long as you can prove that your facing hardship and had previous loss of income if you were ever late on payments… Yes you do have to pay a PMI tho ….. For most people nowadays, this seems welcome news…
It’s a FHA loan. It’s 3% down (until Jan 1 when it’s 3.5% down). There IS!! PMI. And PMI will stay in place until there is 20% equity in the property. There is no time limit to PMI. Its based on equity ONLY.
The FHA loan is a 30 year fixed rate. It’s a GREAT and SAFE program.
Have the seller pay the closing costs.
FHA loan requires 3% down and the seller can pay closing cost and prepaid expenses. It does have MIP and it is on there for the life of the loan. It is a 30 or a 15 year note. The MIP reduces over time but never is totally gone. It will probably be a fixed note as the rates are about the same for this as an ARM. You can refi this loan in a year or two or more. But it will not be worth it unless rates go down a bunch or until she is shure the home has increase in value enough or she has paid down enough to get below the 80% conforming thresh hold as to not have PMI
I am a mortgage banker in TN & KY