FHA or Conventional - Points or No Points - PMI at 22% and is that normal for FHA
I have an average credit score of 785 and my girlfriend has an average credit score of 805. We are looking to get a loan of $200,000 and we have $40,000 total in the bank. We have full time jobs that pay us about $120,000 combined yearly.
Question #1: FHA or Conventional? I realize the difference b/w the down payment numbers, but we're looking to save as much as we can given our fortunate situation with credit scores.
Question 2: Points or No Points?
Question 3: We were told that to avoid PMI we'd need 22% on a FHA and I thought it was 20%. Is this a ripoff?
Question 4: If we shopped around more would mortgage brokers and banks be clamoring for our business since we have such excellent credit scores?
Thank you so much!
Answer #1: If you are putting 20% down, you want to go Conventional. No up front MI and a great rate.
Answer #2: Rates are very close together right now so it is a great time to buy down you rate with points. You can still get a rate as low as 4.875% with relatively low fees.
Answer #3: FHA requires a 78% LTV to avoid MI but that is not your best option - go conventional
Answer #4: Banks don't clamor for your business as much as loan offcers do. Banks offer set rates throughout the day and your best bet is to find the best loan with the lowest fees. Simple as that.
If I were quoting your loan right now, you would be looking at 4.99%-5.25% with no points and 4.75% with 1 point. Let me know if you have any questions.
Luke Allison
Flagstar Bank
828-777-8828
Luke.Allison@flagstar.com
Apply Online: flagstarloans.com/lallison
John,
Your loan officer should be able to work with you to show you the pros and cons of each different scenario you just described. FHA or conventional, Points of no points, these are questions only you can answer based on your short and long term objectives. i.e. Keep the payments down (more money down), keep as much money as you can liquid (less money down), etc.
If you don't know the answers yet, then your loan officer hasn't done an adaquate job of explaining the details of each option.
If you would like a few names of loan officers, I would be happy to give you some referrals to some that I have worked with and know will help get you the information you need to make the best decision you can.
If you would like some help finding the 'perfect' house, I would be happy to assist you with that.
Best of Luck
Dan Ross
860-276-9660
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