Asked by M, Alexandria, VA • Fri Aug 22, 2008
I am a first time buyer getting a 30 years fixed interest loan with 3% downpayment and 3% seller's contribution to closing costs. I qualify for and have to choose from 2 loans: FHA Insured Fixed or Conventional Fixed with PMI. The interest rate is the same for both. The montlhy payments are approximately the same on both, but I need to know if there are any benefits to going with FHA especially in this bad economic environment. FHA loan means paying a fee (upfront MIP). In my mind the downside of going with FHA loan is that you have to pay the mortgage insurance for 5 years while you can stop paying PMI when you reach 20% equity in your home. I understand conventional is for applicants with good credit and employment history while FHA Insured Fixed offers the most liberal credit qualifying â€“ and I donâ€™t need that with high FICO. Thank you for sharing your expertise.
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