I am about to graduate from college, and I have about 15,000 saved up. I am looking to buy a condo for about 85000. I have two options when it comes to the mortgage....
100% loan, 6.75% payments about 550 a month (no PMI required)
95% loan, 6.375% payments about 540 a month (including PMI) (4250 cash for down payment)
My qestion is this....? does it make any sense at all to make a down payment when it will only lower my payments by about 10 dollars a month? I would like to have equity in the property, but I could also use the money to finish paying off my car completely, which would free up 115 dollars a month.
Market is Tulsa, OK.....appreciation rate of about 3-5% a year, not really affected by national market, thus there are never really any sizeable downturrns. I am looking to be in the house for about 5 years.
2007-01-14 12:03:52 · 8 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
For people asking how I can get around PMI on the 100%, please note the additional interest rate. It is usually around .5% higher than the other mortgage loans available.
2007-01-14 13:30:07 · update #1
Where did you get a 100% loan with no PMI? Sounds like a winner to me. Don't forget about your closing costs. How much is the PMI with the 95% loan. You can always send extra $ every month towards your principle.
2007-01-14 12:12:55 · answer #1 · answered by NH Realtor 2 · 0⤊ 0⤋
one thing is strange here, just like NH realtor says, which is: how can you obtain 100% financing without paying PMI? there has to be a catch, but what is it? find out.
since you can write off all the interest on your mortgage as well as the real estate taxes against your federal taxes, if no tricks are involved, take the 100% financing.
she is correct also in that you cannot be penalized if you pay off your home mortgage before the note is due (different almost always on commercial investments). since you cannot be penalized, then you should do what those that want to save money do:
you send any extra money you have at the end of each month to your lender, marking in the memo section of the check, as well as where the endorsement goes on the back of it, that it's for "principal only [payment]" with your loan number after that.
if you never received an income tax return from uncle sam in the past, you will now! i'd use it again to pay on the principal of the loan. why is that?
1. whenever you pay down the principal balance, less interest is assessed on the loan, since it is always assessed against the principal balance; therefore:
2. you save money on the total interest you pay over time; and
3. you reduce the number of months you will be paying off the mortgage!
just to see how that works, ask your Realtor (or the proposed lender) to give you one 30-year amortization schedule and one 15-year amortization schedule on a loan of $70,000.
look at what the principal balance is at the end of each year.
then, look at the total number of dollars in interest is at the end of each year!!!
boy! will you be pleasantly surprised by what magic you will do for yourself if you pay your principal early, if you pay extra "principal only" payments!
but...learn what little tricks or hidden charges may come up at closing for each loan, then talk to your tax advisor. buy smart and try to stay out of long term debt. when you sell, you will have much more money in equity and appreciation to put down on your next house.
much happiness to you! congratulations! buying a home so young is one of the very best things you will ever do for yourself!
2007-01-14 12:43:21 · answer #2 · answered by Louiegirl_Chicago 5 · 0⤊ 0⤋
Definitely; 100% loan at 6.75%. That is the way to go, IF YOU DO THE SMART THING. The smart thing is paying off the car note and putting $100 per month additional on your mortgage.
The quick accumulation of equity, $100 per month over 5 yrs, plus mortgage pay down will make your future very bright. Smarter still pay $325 every two weeks plus half the escrow and you will save a lot of money.
Please note your figures only indicate the mortgage payment not the Insurance and Taxes. Allow $200 to $300 per month. Please contact me, I can share some information that will make owning a mortgage so much fun you will not want to do anything else.
2007-01-14 12:26:51 · answer #3 · answered by whatevit 5 · 0⤊ 0⤋
You should put the money on the house, and then if the car interest rate is high, get a Home Equity Line of Credit to pay it off. You have to remember that the .4% difference, or $10 a month, will really add up over 25 or 30 years.
2007-01-14 12:12:31 · answer #4 · answered by Kim K 2 · 0⤊ 0⤋
I think Home premium is a Happy Medium. Has all the stuff you need, i have had no problems with any compatibility on Windows 7 Release Candidate, SO that should not be a problem. Go For Home Premium! (and 49$ for an upgrade that it SOOO Great! I'm so excited for Windows 7!!)
2016-03-28 21:52:20 · answer #5 · answered by ? 4 · 0⤊ 0⤋
Do not spend all your money in the buying process. Go with the 95% and put the rest in a CD for 5 years. When you sell the place you will have the equity of the home and the earnings of your investment.
2007-01-14 12:11:56 · answer #6 · answered by Anonymous · 0⤊ 0⤋
I have bought a number of newer houses in foreclosure or just before they go into foreclosure. Get to a bank loan officer and let him know what you want to do and many times they will steer you to someone who doesn't want to ruin their credit by loosing their house. You can even get around a Real Estate agent sometimes doing this and save yourself thousands of dollars. Any Abstract company can close the house for you without an agent. I own 6 homes and a 4 plex rental and have done them all this way.
2007-01-14 12:44:22 · answer #7 · answered by Anonymous · 0⤊ 1⤋
no, do 100% financing so you'll have funds to pay off your car and maybe buy a nice couch.
2007-01-14 13:06:09 · answer #8 · answered by Anonymous · 0⤊ 0⤋