Financing in 80031>Question Details

Tgillespie, Home Buyer in 80031

I am debating whether to go FHA or conventional?

Asked by Tgillespie, 80031 Wed Aug 19, 2009

I was quoted 5.25% FHA and 5.375% conventional. Loan value would be $140,000. My credit score is in the 730s last time I checked. I have enough cash for a 5% down payment, but my lender is swinging me towards FHA. What is going to be the best option taking into consideration mortgage insurance and rates?

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If you only have the ability to put down 5%, it is likely that your only option will be FHA. Check with your conventional mortgage lender to see what they require...usually it's 20% down to avoid mortgage insurance.
0 votes Thank Flag Link Thu Oct 31, 2013
Many times it boils down to the down payment. FHA has a much lower requirement than a conventional loan.
0 votes Thank Flag Link Thu Oct 31, 2013
In most situations like this FHA is a better way to go. But all you really need to do is sit down and look at the numbers and compare payments and down payments and over 30 years one will be the cheaper way to go. Good luck
0 votes Thank Flag Link Tue Aug 25, 2009
FHA is better. Not only will it be a cinch to qualify for but you already have a cheaper rate and the monthly MI is cheaper.

My advice, put the minimum 3.5% down with the FHA and hold onto your cash. Not much a need to throw a few extra hundred into the deal when you can hold onto your money for painting, flooring, furniture, etc.

Luke Allison
Bank of America Home Loans
828-777-8828
luke.allison@bankofamerica.com
0 votes Thank Flag Link Thu Aug 20, 2009
My suggestions is FHA. It is very difficult to get PMI in todays market. Most MI companies will not insure the loan if you debt ratio is too high, if the house is in a declining market. etc. I always suggest to my borrowers that unless they put down 20%, there best bet at getting approved is FHA. The mortgage insurance should be cheaper with an fha loans as well.

Danny Castagna
0 votes Thank Flag Link Thu Aug 20, 2009
If you are using a mortgage broker, they can provide you with the bottom line costs for both options. The truth in lending statement should reflect all charges for both. Since you have a good credit score, you may also want to work directly with a lending institution (wells fargo, chase, etc, although I have never had good luck with B of A) They do their own underwriting and often have little or no closing cost.
With FHA you may have some down payment required, or may not depending on the type loan they get for you, but you will have costs if you are using a mortgage broker. They often charge 1%, plus processing fee, underwriting fee,and a broker's fee to name a few.
The bottom line is you are getting a good rate, and either FHA or conventional loans will get you into a home you want. If the lender can get you into the home for 5% down or less, and you are good with that, enjoy your new place!
Good luck!
0 votes Thank Flag Link Wed Aug 19, 2009
Every situation is different, and we are Realtors, not finacial advisors. Your lender should be giving you the pros and cons, and should be able to lay out the impact on your monthly payment, for both scenarios. You could also get a second opinion from banker or a different lender. For future planning, please note that you may eventually be able to drop any mortgage insurance (once your home equity exceeds 20% of its appraised value).
0 votes Thank Flag Link Wed Aug 19, 2009
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