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5:15 pm
February 26, 2013
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20s Finances
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Hey Everyone,
Doing a quick survey to get everyone's experience. I had put off looking at buying a condo for a couple years because I was under the impression that I had to put 20% down in order to avoid paying mortgage insurance.
I was talking to my Dad, who said that for one of his rentals, he was able to get a loan with 5% down without paying PMI. He already owned a primary home, so I'm not sure if that influenced it.
Anyways, he told me to look into getting pre-approved. I'm wondering if there is any validity to this (before I get too serious about it). Anyone else able to get a 5 or 10% down mortgage without paying PMI?
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8:16 pm
February 26, 2013
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My Personal Finance Journey
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I've only heard of FHA loans not requiring PMI since they have an insurance from the federal govt
Article to read more
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11:23 pm
February 26, 2013
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The College Investor
| | San Diego, CA | |
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You need to put 20% down unless:
- You go FHA
- You go VA
- You go with a private lender that doesn't require it (good luck, because if they want to sell the loan later, they probably won't be able to)
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5:31 am
February 27, 2013
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MoneyBeagle
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Call me old fashioned, but I believe that putting 20% down on a property is the right thing to do regardless. The recent housing bubble notwithstanding, this amount normally protects you against most downturns so that you always have positive equity in the house.
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6:40 am
February 27, 2013
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Eric – PersonalProfitability.com
| | Portland, OR | |
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The College Investor said:
You need to put 20% down unless:
- You go FHA
- You go VA
- You go with a private lender that doesn't require it (good luck, because if they want to sell the loan later, they probably won't be able to)
Yep. (I know, I added a lot of value here)
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6:55 am
February 27, 2013
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My Personal Finance Journey
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haha! Nice Eric :)
________
Eric – NarrowBridge.net said:
The College Investor said:
You need to put 20% down unless:
- You go FHA
- You go VA
- You go with a private lender that doesn't require it (good luck, because if they want to sell the loan later, they probably won't be able to)
Yep. (I know, I added a lot of value here)
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7:38 am
February 27, 2013
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PK @ DQYDJ
| | The Intersection of Politics, Economics and Personal Finance. | |
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FHA and VA will require PMI too, and FHA has ratcheted up the PMI a few times over the last 2 years to try to paper over their deficit.
A lot of the "less than 20%" no PMI loans won't be available anymore, it was generally done with piggybacking… the senior loan would be for 80% of the purchase and you'd have a second loan for 10% or 15%. It'll be hard to find a bank that'll still do that, although I don't know if I'd assume it was completely done. Odds are the second loan will cost approximately the same amount as the PMI, however.
How about buy a fixer with FHA, fix and refinance to 20%? Haha, it's doable.
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9:06 am
February 27, 2013
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20s Finances
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Wow – another great reason to love this forum.
Thanks for the input everyone. I'm still not certain I will jump into a mortgage without 20% down, but I can't help but consider it if the loan is right (especially when I look at the rent prices in the same area for the same condo/apartment) and they are the same, if not more as a mortgage, even after adding in taxes and HOA fees. The PMI would change that though.
While I really hate the idea of paying high amount in rent, I also don't like the idea of jumping into a mortgage if we're not financially able to handle it. I guess that's why I need to boost my affiliate income on my blog. :) I'll let you know (in a year or so), what I end up doing. :)
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11:18 am
February 27, 2013
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ayoungpro
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Another alternative is to pay PMI in advance. This could be a good option if you can't get the 20% down, but you can get more than the minimum. This will save you on interest and also lower your monthly payment.
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7:53 am
February 28, 2013
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Financial Samurai
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I'd wait until you have 20% down and a 10% cash buffer. Although jake from ihearbudgets did less with an FHA loan. Ping him. That's 3% down I believe.
Just remember that once you look, you will think that the whole world is competing against u for the place u want. Stand strong and realize there are plenty of other ideal places.
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Regards,
Sam
Financial Samurai - Helping you achieve financial freedom sooner, rather than later.
Yakezie Network Founder
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2:50 pm
February 28, 2013
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First Million is the Hardest
| | Buffalo, NY | |
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I got an FHA loan when I bought my house a little over a year ago. I was told they had recently changed their requirements and you needed 3% minimum down, and 20% to avoid PMI. I don't know if it would be different on a 2nd property or with other factors, but my understanding was that was pretty set in stone.
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4:37 am
March 1, 2013
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MoneyBeagle
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Financial Samurai said:
I'd wait until you have 20% down and a 10% cash buffer. Although jake from ihearbudgets did less with an FHA loan. Ping him. That's 3% down I believe.
Just remember that once you look, you will think that the whole world is competing against u for the place u want. Stand strong and realize there are plenty of other ideal places.
Very good point. The emotional elements don't kick in until you are already charged up as it is, and you never think they'll hit you as hard as they do. That's why when people write posts about 'Is a realtor necessary?' I always advocate yes, because a good realtor will work with you to create a buffer between your emotion from the transaction at hand.
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7:43 am
March 1, 2013
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PK @ DQYDJ
| | The Intersection of Politics, Economics and Personal Finance. | |
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FHA comes in at 3.5%, plus an upfront payment of PMI in addition to all the other PMI payments (I believe you can roll it into the loan, not sure on that). One thing you can check on is if the town or county you are looking to buy a house in has a program, usually labeled 'DPA' or 'Downpayment Assistance'. Google is your savior here.
One of my colleagues bought a condo with DPA, and the DPA essentially acted as a second loan, allowing him to put only 10% down but avoid PMI. That loan is an interesting one – I believe the city claims a portion of profit when the condo is sold, but until then it has below market payments… but you'd have to check how any programs work before you applied.
Here's a list from San Mateo County.
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8:41 am
March 1, 2013
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Michelle (Making Sense of Cents)
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I will say that I have an FHA loan and currently pay PMI. UGH!
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2:47 pm
March 1, 2013
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First Million is the Hardest
| | Buffalo, NY | |
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Michelle (Making Sense of Cents) said:
I will say that I have an FHA loan and currently pay PMI. UGH!
My main motivation for paying more on my mortgage is to get rid of that PMI!
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