@StartingOver10 wrote:If you put down 10% rather than 3.5% on an FHA loan, then the MIP only lasts for 11 years rather than the life of the loan. But you have to put at least 10% down and nothing less. Ask your LO about this option.
The refi at a later date assumes the market is rising and that when you refi, your new loan is 80% of less of the new value. This doesn't always happen or sometimes it takes longer to happen than you planned. Also, if the interest rate is higher, it may not be beneficial. There are lots of "ifs" in this scenario.
That's not necessarily true. Current MIP for FHA is life of the loan. You can eventually ask for it to be removed but you need to meet certain conditons and you may not meet them in 11 years. It all depends on the the value of the home and the area you live in. Plus they take the value of the purchase price, not current appraised value. I am in San Diego and my house went up close to $200k in value in the last 4 years. I would bet that a house in Indiana or Missouri (no disrespect to Indiana or Missouri) for example wouldn't do the same. But even so. paying MIP for 11 years. I personally would have end of paying an additional $44k. Like I mentioned, it is tax deductible, but that may change, It was exteded to included 2015 and 16, but not currenlty after that.
Check out this page: http://themortgagereports.com/7570/fha-mip-cancel
When I say refi out of an FHA loan, your house needs to appriase at a value much higher than you owe, meaning you have enough equity and and your LTV ration allows it.
@DallasLoanGuy wrote:
@sdchrgrboy wrote:
@StartingOver10 wrote:If you put down 10% rather than 3.5% on an FHA loan, then the MIP only lasts for 11 years rather than the life of the loan. But you have to put at least 10% down and nothing less. Ask your LO about this option.
The refi at a later date assumes the market is rising and that when you refi, your new loan is 80% of less of the new value. This doesn't always happen or sometimes it takes longer to happen than you planned. Also, if the interest rate is higher, it may not be beneficial. There are lots of "ifs" in this scenario.
That's not necessarily true. Current MIP for FHA is life of the loan. You can eventually ask for it to be removed but you need to meet certain conditons and you may not meet them in 11 years. It all depends on the the value of the home and the area you live in. Plus they take the value o the purchase price, not current appraised value. I am in San Diego and my house went up close to $200k in value in the last 4 years. I would bet that a house in Indiana or Missouri (no disrespect to Indiana or Missouri) for expample wouldn't do the same. But even so. paying MIP for 11 years. I personally would have end of paying an additional $44k. Like I mentioned, it is tax deductible, but that may change, It was exteded to included 2015 and 16, but not currenlty after that.
Check out this page: http://themortgagereports.com/7570/fha-mip-cancel
When I say refi out of an FHA loan, your house needs to appriase at a value much higher than you owe, meaning you have enough equity and and your LTV ration allows it.
@StartingOver10 wrote:
If you put down 10% rather than 3.5% on an FHA loan, then the MIP only lasts for 11 years rather than the life of the loan
StartingOver is correct
http://portal.hud.gov/hudportal/documents/huddoc?id=15-01mlatch.pdf
Even so, the OP needs to decide if it's more beneficial to pay more upfront, i.e. larger down paymen vs. paying upfront PMI/MIP and then paying it every month it for 11 years.
You have to Calc out the PMI to see if it's something you can live with. Make sure your loan has a no early payment or balloon payment clause. Also verify that you can remove the PMI once you have 20% in equity. If you put down 15% you should have a low PMI and once you save 5% more you can pay that into the house and remove PMI. With interest so low I would not recomment over paying once you have the 20% into your home. All intrerest is tax deductible so you will get a nice tax break the first 5 years.
Keep a large savings and invest, with the tax break you'll come out ahead.
Keep a large savings and invest, with the tax break you'll come out ahead.
