Home Buying in Watertown>Question Details

Smr, Home Buyer in Easton, MA

Hi, what do you think is a reasonable interest rate for $400K with $80K down payment i.e 20% down payment?

Asked by Smr, Easton, MA Tue Aug 26, 2008

Is FHA better than Conventional in the above scenario i.e with 20% down payment? Can I get the rest of the money with my 62K income proofs.

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6.25%, and conventional would be better, as FHA will have PMI even with 20% down.

I would love to help. Email me!



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0 votes Thank Flag Link Fri Aug 29, 2008
With regards to your 8/28/2008 response and question. This is for a single owner occupied residence? If so I believe your investment will be better secured with a conventional fixed rate. Depending on the purchase price and use of the property you are looking at will determine if you want to show proof of funds with your incomes combined or individual.

For example: Some properties my husband wants me on the note and others not. Placing a property into a corporation or LLC with only one of our incomes is a offensive move - i.e. if another property popsup later down the road.... Depends on our exposure and plans for each property (flip vs. keep).

However, I'm not a Lender or an Accountant and the rules have changed on the lenders home fronts. If you like I can recommend a few good banks and mortgage companies in the area. Call my office anytime and I would be happy to share some names and numbers.

See profile for details
0 votes Thank Flag Link Fri Aug 29, 2008

If you are putting down 20% you don't need to worry about PMI lender paid or borrower paid. With a 20% down Payment FHA will almost never be the better option. In MA today a 30 year fixed rate around 6.375% is a fair price. If your or your wife's credit score are less than 720 that rate gets worse the lower the score.

As for credit pulls, multiple credit pulls while shopping for a mortgage do not negatively impact your credit score, as long as the previous credit pull was done within the last 45 days it counts as 1 inquiry.

You definitely want to get your ducks in a row prior to finding a property. I had a loan that the borrowers middle score was 718. If we had 45-60 days prior to closing we could have increased the borrowers score the 2 points it needed to increase by simply charging 10 dollars on a charge card and not paying the card off. Would have saved the borrower $2,000 because of the new fannie Mae Loan Level Price Adjustments for credit scores. Get pre-approved by a lender that has the ability to offer you suggestions to improve your credit scores.

Good luck with the home purchase.

If you have any questions feel free to call or e-mail.
0 votes Thank Flag Link Wed Aug 27, 2008
Thanks for the input. Adrian Huntington had mentioned that it should be better to go LPMI if the income is above 100K. I make only 60 and my wife who is on the mortagage makes another 60.......so is it the collective income that needs to be considered or the individual income?

0 votes Thank Flag Link Wed Aug 27, 2008
0% of course.

Don't mean to be flippant but that would be a great deal. I have seen my clients with good 600-800 credit scores walk out of the closing with a 5.7 - 6.7% 30 year fixed rate attached to the scenario you describe above. If you can do better congrats, you should take it and RUN!

0 votes Thank Flag Link Wed Aug 27, 2008
Rates change on a daily basis and you don't lock in to a rate until you find the home that you are going to buy and put an offer in. It is more important to find a lender that you trust or someone within your Realtors network that they trust to give you a competitive rate and not have any of the surprised that have been reported in the news over the last 2 years. You are in a very good position and doing a little homework on your lender will save you more trouble than worrying about what the set rate is for that day.

If you are going to shop around, make sure that when you first get your credit pulled you get a copy to give to other lenders. This will prevent your score from dropping due to several credit checks.
0 votes Thank Flag Link Wed Aug 27, 2008
If your credit is 680 and above, you have reserves for 2 months Principle, Interest, Taxes, and Insurance (after you put 20% down), then conventional is better. Now you do not have to put 20% down to get a decent rate, but if you don't put 20% down you with have to pay Mortgage Insurance. Convential loan interest rates through Fannie Mae and Freddie Mac are always better then FHA rates. FHA is a great loan program if you need to go above 90%. loan to value. FHA allows one to borrow up to 97%. With Nehemian and down payment assistance until the end of Sept. people can get 100% financing. FHA is also good for people with lower credit scores, lack of credit, and who don't have much money in the bank. If you are able to show your income, have good credit, good job time, a good mortgage/rental history, and reserves get a conventional loan. A good rate at par pricing with no points is at 6.125-6.25% today on a 30 yr fixed loan. Depending on the financial markets these rates sometimes go up as much as a .25 In other words 6.5% for a 30 yr fixed has been the average. You can go above 80% and depending on the bank 90-95%LTV. Above 80% you must pay Buyer paid Mortgage Insurance, or Lender Paid Mortgage Insurance. If you make under 100K then the MI is tax deductable. Lender Paid MI is an add to the rate and is best for those who make over 100k, because it can then be deducted from your taxes as part of your interest deduction. If you qualify for 6.125%, LPMI would be added to the rate. If the banks add was .5 for LPMI then your rate would be 6.625%

If you have other questions, give me an email

Adrian Huntington
Welcome Home Real Estate & Finance
53 La Serena Ct.
Alamo, CA 94507
0 votes Thank Flag Link Tue Aug 26, 2008
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