Closing Tuesday! Navy Federal 100% Homebuyers Choice Mortgage

[REALISTICLYSPEAKING2014]

Jess,

By the time you go to closing, you will be able to save more money for the down payment or you can go back to your LO and ask if there is any wiggle room to increase if needed. I asked about that as well and she said yes, but Im sure it depends on DTI and the underwriters.

[Jess21]

hmm what I mean is that I applied for 100% financing,  they pre approved me but only for 93k, and we want 100k (we are looking at a 99k home).  Will changing loan type maybe qualify us for more??  the interest rate on the 100% financing was 6%, highest ever

[Miscellamy]

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Yeah, I think there's a little confusion. Here's the terms of the 5-5 as I've signed: After five years, the rate will adjust to market but cannot increase more than 2%. It's fixed at that rate for another five years, then adjusts a second time, again no more than 2%. The lifetime cap on the loan is a 5% increase, so it could go up to a max of 9.25%. Also, there's no origination fee. That fee was for the fixed-rate. 

I think it's a mistake to paint ARMs as always good or always bad. Read the fine print and figure out what makes sense for you. In my case, going with a 5-5 ARM makes sense because a) I could afford the payment even at the highest possible rate under the loan, and b) if the rate increases the full 2% after the first adjustment, it'll be less than 0.5% higher than the fixed rate I qualified for, but in the meantime I'll have been paying at a much lower rate for five years, and c) it is extremely likely that I will be ready to sell or refinance in five years.

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@edcampbell613 wrote:

I would check your numbers with them on the 5/5

I am pretty sure the max it can increase is way off from what you are stating.

5/5 fixed for the 1st 5 years with a max of 2 every year after that with a lifetime cap. I dont know that program they have but most arms are built the same.

Check it out, 5 years later might ick you in the rear!

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I think what you're describing is a 5-1 ARM. Initial five year term, then the rate resets every year (up to the lifetime cap). Navy Federal offers that as well. The 5-5 ARM resets every five years. 

[Miscellamy]

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@Jess21 wrote:

hmm what I mean is that I applied for 100% financing,  they pre approved me but only for 93k, and we want 100k (we are looking at a 99k home).  Will changing loan type maybe qualify us for more??  the interest rate on the 100% financing was 6%, highest ever

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Hard for us to say. Possibly? If you change products and get a lower interest rate as a result, they may be willing to approve you for a little more. 

[edcampbell613]

Thanks for clearing that up, not bad product but with rates as low as they are I would stick to a fixed 30 yr IMO

[Miscellamy]

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@edcampbell613 wrote:

Thanks for clearing that up, not bad product but with rates as low as they are I would stick to a fixed 30 yr IMO

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I hear you. That's my preference as well, all else being equal. But in my case, it was more important to keep my upfront costs low and avoid PMI, which made the NFCU 100% financing option my best bet. And the rate I was approved for with that product was high enough to make the ARM a better bet. 

[jcrsmom]

The loan won't change that because it's what your DTI allows. 

[jcrsmom]

We closed in Sept with the 5/5 Arm. We weighed the pros and cons and that was best for us. Our original LO told us that 2% would cover closing costs so I didn't ask the sellers for more. In hindsight, I wish that I knew more about closing costs so we didn't have to pay the 2800. out of pocket that we did.

[jcrsmom]

We paid 2800. out of pocket. I didn't realize all of the costs we would incur at closing and wish I had known so I could have asked the sellers for more assistance. That included the 1500. assist from NF and also our 1000. Earnest money we put down with our offer. So I guess really 3800. out of pocket we paid.

[jcrsmom]

Yes, Navy Fed and it wasn't a VA loan, it's 100% financing loan.