Home Buying in Pennsylvania>Question Details

Jessica, Home Buyer in 19330

I'm confused with what kind of loan to get on a 200K house? I have a safe 10% down, but 20% is stretching.

Asked by Jessica, 19330 Mon Oct 24, 2011

I'm confused with what kind of loan to aim for when buying a house. I am looking for houses around 200K, I can do 10% easily with closing costs, but the 20% will be a stretch (I will be left with about 20-25K in savings, and that will have to be emergency fund too). Not sure if I should stretch to avoid PMI. Also, my score is 801, husband 670, what kind of loans would we be elgible for (we both work).

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You would need a one to one consultation to come up with the right fit for you, but you are looking at it the right way. It is important to have money in the bank for an emergency fund for those things that may come up after you own the home. Don't think just 10 or 20% though. Putting 15% down will also drop your cost of PMI significantly and might be a safer middle ground. Then, as Carol pointed out, through time and appreciation, and perhaps additional principal payments, you can get the PMI removed.
1 vote Thank Flag Link Mon Oct 24, 2011
Hello jessica,

With 10% down I am advsing my clients with a good credit score to finance using LPMI. It's an upfront cha=rge of 1.25% of the loan amount that is built into the interest rate and no monthly mortgage insurance. It means that you pay approx 0.25% more in rate and no monthly mortgage insurance OR your pay 1.25% one time up front free and get the same rate as a conventional 20% down mortgage and with no PMI.

Best Regards,
Alan Openshaw
Cornerstone Lending
Southampton Pa
267 992 7276
VOTED BEST OF BUCKS 2010
1 vote Thank Flag Link Mon Oct 24, 2011
dont stretch to avoid PMI if doing so will compromise your abilitiy to meet the monthly mortgage in the future, in other, maintain cash reserves
0 votes Thank Flag Link Fri Dec 9, 2011
Hi Jessica, have you called a mortgage professional yet? There are a lot of options available but without knowing your full situation any answer given here is going to be at the least incomplete and at the most totally wrong. If you still need help just give a yell , I'd be happy to look over your scenario at no cost at all. Good Luck!

Tracy Jenkins
Gateway Funding
Horsham PA 19044
215-990-4939
tjenkins@gatewayfunding .com
NMLS#604188
0 votes Thank Flag Link Mon Oct 31, 2011
Hello Jessica,

You need to sit down with someone who can explain all of the options so that you can make an informed decision. Your score is going to get a better rate than your husbands so if you can qualify on your income alone, i woukd do that. Sometimes an FHA can be advantageous for someone doing a 15 year loan as the monthly PMI is significantly less for a 15 year loan. Unfortunately there are two many variables to discuss on a public forum so only when someone has a good graspof your situation can they give the right advice.
Feel free to give me a call and I would be happy to spell out your options.
Best Regards,
Alan Openshaw
Cornerstone Lending
Southampton Pa
Office 215 953 0800
cell 267 992 7276
VOTED BEST OF BUCKS 2010
0 votes Thank Flag Link Tue Oct 25, 2011
Thanks everyone for all your help!
0 votes Thank Flag Link Tue Oct 25, 2011
Jessica,

There are mortgages now available that only require a down payment of 5% or less. But, generally speaking, the larger the down payment, the less you have to borrow, and the more equity you'll have. Mortgages with less than a 20% down payment generally require a private mortgage insurance policy (PMI).

Nevertheless, PMI is a fact of life for many homeowners. Even if you begin your mortgage with PMI, with time and appreciation, you often can reach 20 percent equity – at which time you can have the PMI removed. Often, removing PMI is just a matter of asking the lender, paying for an appraisal, paying a fee to the lender (approximately $300 - $500) and providing the necessary paperwork.

Thanks,
Carol Perdew
Prudential California Realty
(209) 239-7979
Carol@PerdewHomes.com
DRE 985176
0 votes Thank Flag Link Mon Oct 24, 2011
Jessica, your best bet is to meet with a local and trusted mortgage broker, they can prequailify you at no cost, they will look at your credit plus your financials and let you know what types of mortgages that you may quailify for and what the down payment requirements for each will be.

http://www.trulia.com/blog/scott_godzyk/2011/08/how_do_i_kno…


PLEASE SEE MY BLOG FOR A FULL LIST OF TIPS AND ADVICE ON GETTING A MORTGAGE
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Mon Oct 24, 2011
In order to ease confusion, you really need to visit with any loan officer; after reviewing your overall financials, credit, income, debt, etc., a determination on qualification can be made, the type of loan, how much down, etc.; be aware that a mortgage pre-approval letter is required in order to determine your price range and for any offers to be taken seriously.
0 votes Thank Flag Link Mon Oct 24, 2011
Putting more money down is always a good idea, but not if you have to cut into your emergency fund. I'd consider waiting a bit longer and saving some more money if you really want to avoid that PMI and put down 20%. You may be able to have the seller pay for some of your closing costs, saving you some of that cash as well. You should consider speaking to a local lender (or two) and a Realtor about the specific loan programs you would be eligible/suited for.
0 votes Thank Flag Link Mon Oct 24, 2011
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