Based on a recent lender pull (May 1, 2012), my scores are as follows:
EQ Beacon 5.0 Facta - 794
EX Fair Issac V2 - 781
TU Fico Risk Score Classic 04 - 788
When I started this process, I intended to go FHA (knowing about the PMI, etc) and put my 3.5% down. My realtor then suggested the BB&T CHIP (no mortgage insurance required) program which would let me put 0% down.
My initial thought was "0% down? seems too good to be true." And that is still my thought today as the program considers my purchase area of interest "declining". Purchasing in such an area would require a 5% downpayment. The area in question is Montgomery County (MD) yet the nearby DC area is considered more stable. Something about this doesn't sit well with me. Why be required to put more down while still paying a higher rate? Would the lack of the mortgage insurance still make this a sensible option versus an area where I put no money down?
My digging has uncovered that one would possibly have to carry mortgage escrow for the entire term of the loan in addition to an approximate 4.3% interest rate.
Am I not understanding these figures correctly? Would it make sense to go FHA or CHIP on a property? My loan officer seems to already be swamped, so my inability to drag responses out of him in a timely manner doesn't help.
If this background is helpful to have, I am a first-time home buyer with an income of 54K that is looking for a property no more than 250k. I plan to keep this property and will not look to resell anytime soon so I'm aiming for fixer upper types.
I currently pay $1395 for rent but other than that, my additional household expenses (except groceries) top out at $150 a month. Apparently for CHIP, I would qualify for a maximum mortgage payment of $1600 a month, but I prefer not to go that high. I'm actually seeking to pay less out of pocket for housing expenses.
I'm not opposed to waiting 6 months for a few inquiries to hit the 1 year mark as an alternative.
Any general input would be appreciated. I aim to speak with another lender or two before my 14 day inquiry window closes.
I used the CHIP program to finance my house and for me it was a much more attractive loan than FHA. Where I live, the DTI ratios for FHA were more stringent because it had to pass an additional program through NC Housing, plus the interest rate would have been higher because I didn't want to use my cash for downpayment so I would have gone through my State's downpayment assistance program.
I can't speak to the issue of your purchase area listed as "declining" as mine was considered Stable. I would still be cautious of the location of your home as you don't want to end up in a situation where you're upside down on your mortage; meaning you owe more than your house is worth. If you intend to keep the house indefinitely, it may not pose much of a problem for you, but from an investment standpoint I would be cautious. Just my 2 cents!