Home Buying in Santa Rosa>Question Details

r24design, Home Buyer in Santa Rosa, CA

Almost going to sign on a fha loan with pmi, We just found out we had options on loans to not pay pmi. first time buyers, no experience

Asked by r24design, Santa Rosa, CA Tue Sep 11, 2012

Agent and loan co . never spoke about optional plans

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Maria Cipollone’s answer
Generally speaking Mortgage Brokers work with different lenders (private lenders, Banks). If you are working with a loan officer from a Bank may be that is the only option that they have. You still on time to explore your options.

Best of Luck,

Maria Cipollone
1 vote Thank Flag Link Tue Sep 11, 2012
The first question is: Why are you using FHA? High debt to income? Low credit score? Small down payment? Need co signer to make it work? If it's a combination of the above, then you probably need an FHA loan. If it's just the down payment, most folks, even in the real estate business, don't know there is a 3% down payment, non FHA loan available. You can also utilize a 5% down, lender paid mortgage insurance product, for which you can effectively "buy out" the MI at closing. An experienced mortgage professional will lay out all of your options early in the process.
0 votes Thank Flag Link Sun Nov 25, 2012
Not sure who is telling you that you have these other options. If you are currently working with a Local Mortgage Banker then your Loan Officer is Licensed under the National Mortgage Licensing System. We have strict guidelines to follow with regards to advising clients of ALL programs for which they may qualify.

The person who stated earlier, "One Trick Ponies" is mistaken. Loan Officers must review ALL potential programs available to a client and prequalify accordingly.

When I hear a consumer say, "We just found out..." that sounds like there's another person giving bad advice either through ignorance (because the person is not a mortgage professional) or through a desire to bring you in as a client (a classic "bad" sales technique).

Call your original Loan Officer and ask for an explanation of the reasons why you are applying for an FHA Loan.

You can verify the License of any Loan Officer on the NMLS Consumer Access website.

Trevor Curran
NMLS #40140
0 votes Thank Flag Link Tue Sep 18, 2012
Yes you have to be careful about that. Some loan officers are "one trick pony's" and don't know anything else but FHA. 3% down and 5% down conventional is definitely an option you should compare. Conventional does not have up front MI and has a lower monthly MI if you have a good credit score. But, conventional 30 year fixed rates may not be as good as FHA especially if you have less than a 720 credit score. Conventional loans are much more "credit score driven". Meaning there is a much bigger impact on the interest rate with a lower credit score conventional. FHA is not as much credit score driven and there is not much difference in the rate with a 720+ credit score and say a 660 credit score.
0 votes Thank Flag Link Mon Sep 17, 2012
You should be having this discussio in the beggining of the relationship. There are plenty of loans available with no mortgage insurance or lower mortgage insurance than FHA but there are reasons to use FHA even if you have 20% down.

It may be that you were put into the correct loan but not told why. That would be unfortunate as well. If you want to contact me, I would be happy to discuss with you.

Hans Bruhner
(707) 347-9250
0 votes Thank Flag Link Mon Sep 17, 2012
What were the options you just found out about? That would help me better understand the situation. Please feel free to contact me for advice.

Bill Sockolov
0 votes Thank Flag Link Tue Sep 11, 2012
Hi r24design,

Giving the benefit of the doubt, I'm guessing you do not have the funds required to avoid mortgage insurance after paying your down payment + property inspection fees + closing costs.

We obviously do not know whom you are working with; however, I think you should review the following post covering the type of financial scrutiny ALL BUYERS should seek in order to identify ALL financing options BEFORE searching for a property.

“Pre-Qualified vs. Pre-Approved vs. True Pre-Approval”

Best Regards, -Steve
0 votes Thank Flag Link Tue Sep 11, 2012
Most of the time that would be the very first topic of discussion.

"How much money you can put down?"

Normaly when there is less than 20 percent down there usually is PMI.

Many buyers choose loans that you can put as little as 3.5% of the purchase price

and it most definitely requires PMI.

So the real question that should have been asked is. Can you afford to put 20% or not.

Hope that clears it up for you.

Good luck

Shawn Hermosillo
707 280 5040
0 votes Thank Flag Link Tue Sep 11, 2012
What we have found , is that we could do 2 loans , one @ 80% and another at 10% and pay the balance with the down payment, have you had anyone do that?
Flag Tue Sep 11, 2012
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