Buying my first house **update** offer accepted, I got a house.

[ChadTower]

Maybe you should reread my post and then try commenting again  I guess anyone who gets an FHA loan is an ---uvula--- since they are only putting 3 percent down? Not everyone can save up 20,000 to 40,000 dollars for a down payment.

I am not quite sure how you came to the conclusion that I am not researching, I thought I made it abundantly clear that I was in the process of researching the PMI fees and as I said in my prior post, I will be discussing all of this with my lawyer tomorrow. Just my .02, ofcourse.

Or he should just stop trying to give advice to people who act like a tool about it.

IIRC shardian spoke recently about using a first time buyer's loan on his own house and his down payment wasn't far from yours.

[shardian]

IIRC shardian spoke recently about using a first time buyer's loan on his own house and his down payment wasn't far from yours.

I was fortunate to have a 20% down payment and did not have to pay the outrageous PMI. It takes a LONG time to reach the 80% mark the way payments and interest is structured.
I don't think buying would have even been in the plans if we did not have a small nest egg saved up.

[ChadTower]

I think I only put down about 7%.  I was out of PMI in 18 months, though, because the property value increased by about 30% in that time, changing my equity to well over 20%.

[shardian]

because the property value increased by about 30% in that time,

I don't think that will be happening in the current market.

[ChadTower]

I don't think that will be happening in the current market.

Fully agreed.  I wasn't counting on it at the time, either.  It just happened.  I wanted no part of speculating on value increase being necessary to pull the deal off properly.

[knave]

PMI insurance really sucks...it adds to the amount you have to pay each month but is not part of the loan.  A good morgage broker can usually find you a loan without it.


really it is the banks way of charging you more because you might not pay your bills.  I think it's bunk.  So check with a good broker. Preferably one who knows good appraisors.

As for the selling agent.  A good one can be truly great. However, Most likely if it's not your agent then they don't have your best interests in mind.  Plus like folks here have said if you get your own agent the two share any commision so no money out of your or your families pockets.

You can bring in a new agent at any time.  I also advise you to check out some other loan sources... PMI really sucks. 

[lordtodd75]

My apologies to the BYOAC elite. Chad can't you find someone else's thread to pad your post count. I also don't appreciate the name calling. We all are adults here, yes?

Shardian I took offense to your post, maybe I shouldn't have but everything has been so crazy. I did do research. I read 2 books and I spent countless hours pouring over websites and talking to people in the industry. I think there were some misunderstandings between you and I about the PMI thing. I put a 3 percent downpayment on my home. There is a fee in my good faith estimate from the mortgage broker called PMI Premium, it is under the "mortgage origination costs" and is roughly $2600.00(this is roughly 1.5% of my purchase price). I also noticed this fee is not due at closing, but it is added to my purchase price of the home. In the same estimate I noticed there was also a monthly fee for PMI of $70.00. From what I understood some people opted to pay for there PMI up front, so they didn't have a monthly fee, which would explain the $2600.00. I was simply wondering why I had the big up front fee for PMI as well as the monthly payment.

I found out this is all standard for an FHA loan. FHA makes there money by selling there PMI insurance to people who get an FHA loan. They say the up front fee is so you can have a lowered monthly PMI payment. FHA also lets you finance the up front PMI fee so your closing costs won't go through the roof. I hope that was a little more clear.

[ChadTower]

My apologies to the BYOAC elite. Chad can't you find someone else's thread to pad your post count. I also don't appreciate the name calling. We all are adults here, yes?

I had been in here advising you on issues for which you requested advice.  I won't make that mistake again.  Good luck with your house.

[zaphod]

I actually learned something from this thread.  I had no idea FHA got you both ways on PMI (or MMI) when you put down less than 20%.  For clarity I googled and came up with this thread: http://origin.bankrate.com/brm/news/DrDon/20040928a1.asp

Something I found out when I refied my house some years ago is that PMI rates are tiered.  95% is one rate, 90% is lower, 85% lower still, 80% non-existent.  Whatever rate you start with is the one you stick with until you either refinance or reach the 20-22% ownership.  It made a large difference whether I paid 10% or 15% (20% was no feasible at that point).   

[shardian]

By you saying they are tacking it onto the price of the home, do you mean that it will be included in the interest calculations?

Anyways, there was another option that was presented to me when I was doing mortgage calculations. The fact you haven't mentioned it makes me even more suspicious of your mortgage broker. If your budget allows, you can get a 2nd mortgage for the down payment. For instance, if you had 5% to put down you could do an 80/15/5 mortgage plan. This will get you out of paying PMI, and of course the interest on both loans is tax deductible - PMI is NOT tax deductible. So I guess my question is two fold: would this be a viable option and did the mortgage broker even tell you about it?


No harm no foul on the offense thing. I shouldn't have made the offending comment.

[shardian]

And to be clear on my loan, I went with WVHDF - that is a state level home buyers assistance group instead of Federal. I'm not sure what state you live in, but it might be to your benefit to see if your state has a first time home buyers plan. I would have never known about mine if I wasn't told by a family friend.

[lordtodd75]

Yes, I am being charged interest on the PMI fee, it is added into the mortgage. I know about 80/15/5 loans(well it is actually 3 loans) and the variations. The problem with those loans is that the smaller loans have a much higher interest rate and I am actually saving money with FHA. I am not locked in yet but I was given a 5.325 apr (that was the rate at the time of my good faith estimate), that is ridiculously low. Ofcourse I had to pay 1 1/2 points to get it that low, but again, I am saving money in the long run.

Thank you for the info on the state level assistance, that I do not know about, but I will have to check it out. I have 10 days from today to get a mortgage 

EDIT: Chad, if your advice comes with name calling then I am not sure I want it in the first place.

[Sprucemoose]

lordtodd75,

I know this is a stressful time, but I can't help thinking that you are getting taken by your mortgage guy.  The $2600 sounds way to strange.  If that is the 1.5 points that you bought up Front then I understand, but if it is not then I would talk to another mortgage guy.  Don't break your current deal, but just go talk to someone else.  Layout your mortgage for them and see if they can beat the offer that you have on the table.  My guess is that they will be able to in a heartbeat.  I went through my bestman for my first mortgage years ago and he ran me through the ringer.  I paid him way to much.  Instead of looking around I counted on our friendship and trusted that he would give me a good deal.  Never hurts to talk to someone.  Especially when it could save you thousands of dollars for 30 min of your time. 

I know FHA are usually pretty good, but if you have good/excellent credit then there are loans that sound better that you current one including the 80/15/5 or 80/20 or even 0% down, but buying out PMI up front.  PMI up front is what I did on my last house and I highly recommend it.  This option will pay itself off in 3.5 years as opposed to the 80/20.

Anyway, good luck.

[lordtodd75]

I thought the same thing you did spruce, my lawyer didn't even know why they were charging that amount up front for PMI. Then I talked to a lawyer that has more experience with FHA loans and he said that payment was normal. I also talked to a real estate agent that I am friends with and she also said it was normal. So I am confident that the 2600.00 up front for PMI is normal. Thank you for your help, I do appreciate everyone trying to make sure I am not screwed. Can anyone with FHA experience chime in on this?

[Jdurg]

This will get you out of paying PMI, and of course the interest on both loans is tax deductible - PMI is NOT tax deductible.

Actually, yes it is.  New tax laws which went into effect stated that on your 2007 taxes, if you closed on a mortgage during the calendar year you can claim ALL of your PMI if you make less than $150,000 (I believe) as a single person.  This tax "break" has been in effect for a few years actually and I believe was recently renewed for the 2008 calendar year.  So what it means is that your PMI will be a nice tax deduction.   

One other thing regarding buying a house that you should be prepared for are the unexpected "surprises".  When I had my house inspected, the inspector let the water run out back for hours on end and there was no water problem in the basement.  We had TORRENTIAL rains in our area during October and November, and yet the basement drainage system worked perfectly and everything was nice and dry.  Recently, we've had some really cold days and the ground froze solid.  On Wednesday, we had a massive snow and ice storm hit the area followed by a few inches of rain on the same day.  The ground, however, was still frozen underneath and all around my neighborhood there were HUGE lakes forming in the low lying areas as the water wasn't draining.

Well, the water has drained and it drained right into the middle of my basement.  It's seeping up through the concrete and into the low lying part of the basement.  Wherever there is a crack or chip in the floor, water is seeping up and there is about 1/2 to 1 inch of water in the center.  The drainage system is still working and the amount of water being pumped out is remarkable, but the insane amount of water in the ground is just overpowering it.  I just need to pray that the moisture problem will be covered in the Lifetime Guarantee of a completely dry basement that this drainage system has, and that the water won't rust the boiler which is right where the puddle is. 

The ONLY way this could have been detected during an inspection would be if they took a few thousand gallons of water and poured it all around the foundation.  I guess the water table has just risen slightly above the floor level of my basement and it's now forming puddles.   

[lordtodd75]

Moving in on friday!!!!! 

[myntik1]

congrats.  Now you realize that a good portion of your life will be spent doing home repairs.  But it's your home.

A few last bits of semi-wisdom - if someone wants to know what they can get you for a house warming gift say a gc to hd or lowe's.  You're always going to need that specialty tool to fix a problem.

And practice the "you crazy kids stay offa my lawn" voice until it rolls off the tongue.  Congrats.

[lordtodd75]

Thank you!

[Jdurg]

congrats.  Now you realize that a good portion of your life will be spent doing home repairs.  But it's your home.

A few last bits of semi-wisdom - if someone wants to know what they can get you for a house warming gift say a gc to hd or lowe's.  You're always going to need that specialty tool to fix a problem.

And practice the "you crazy kids stay offa my lawn" voice until it rolls off the tongue.  Congrats.

Here Here!!!!  My coworkers chipped in and got me a $125 gift card to Home Depot when I bought my house last year.  It was the best thing I could have ever gotten.