FHA Vs.. Conventional

[Daguy]

I have been working with a mortgage broker and realtor for about a month. I have been pre qualified for 150,000.

Originally I wanted an FHA loan because I thought I would be cheaper. I have 15,000 dollars liquid and 10,000 in 401k mid score 685. The plan was to go FHA and and put down 3.5% and have seller pay closing cost.

I have been looking at houses for 130,000-150,000 range. After I got the good will estimate I realized how much and FHA cost to get started. My mortgage broker said that a conventional will be cheaper is true? I know that I will need 10% down, their goes my 15k savings.

Reason that I want conventional is that I was told that banks prefer convention and that if I make offers with conventional loan with 10% down and closing paid by seller my offers will be stronger that those offers using FHA. This will use up all my savings but the loan, closing cost and mortgage payment will be cheaper and I will have much better luck with my offers Vs. Those with FHA offers and only 3.5%.

To wrap this up, does this sound correct? Does conventional with 10% down have more clout than an FHA 3.5% down. One more thing is that I was told their is so many FHA loans being processed that it takes about 45 days to close Vs. 30 days with conventional (Broker said this 30 days is no problem) and their is so many FHA offers that a conventional will be much stronger offer in this market.

THANKS TO ALL IN THIS WONDERFULL FORUM.............

Message Edited by Daguy on 02-07-2009 09:10 AM

[Anonymous]

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@Daguy wrote:

I have been working with a mortgage broker and realtor for about a month. I have been pre qualified for 150,000.

Originally I wanted an FHA loan because I thought I would be cheaper. I have 15,000 dollars liquid and 10,000 in 401k mid score 685. The plan was to go FHA and and put down 3.5% and have seller pay closing cost.

I have been looking at houses for 130,000-150,000 range. After I got the good will estimate I realized how much and FHA cost to get started. My mortgage broker said that a conventional will be cheaper is true? I know that I will need 10% down, their goes my 15k savings.

Will it be cheaper in the long run for you to put 10% rather than 3.5% down? Well, yeah. Your payments will be oodles cheaper. Plus, remember, if you're plunking down less than 20%, you'll have to pay Private Mortgage Insurance -- and that's more expensive and has stricter FICO requirements than FHA.

Reason that I want conventional is that I was told that banks prefer convention and that if I make offers with conventional loan with 10% down and closing paid by seller my offers will be stronger that those offers using FHA. This will use up all my savings but the loan, closing cost and mortgage payment will be cheaper and I will have much better luck with my offers Vs. Those with FHA offers and only 3.5%.

*snort*

We just bought our house and we sure as heck didn't see that kind of bias. Not a single seller seemed to have given a purple-plated doodie about what kind of financing we used ('cept for VA -- sellers didn't seem to like that type so much).

Now, do sellers prefer to see you plunk down as much as possible of your own cash? Yup. Only because they believe it increases the chance that your loan will be approved. But if you have a strong file, it shouldn't make THAT much of a difference.

To wrap this up, does this sound correct? Does conventional with 10% down have more clout than an FHA 3.5% down. One more thing is that I was told their is so many FHA loans being processed that it takes about 45 days to close Vs. 30 days with conventional (Broker said this 30 days is no problem) and their is so many FHA offers that a conventional will be much stronger offer in this market.

Personally, and if I'm wrong, I hope the Mortgage Gurus will correct me, but I think you're being fed a pile of horse hockey. You need to figure out what fits YOUR situation and finances better. No one knows THAT better than YOU.

THANKS TO ALL IN THIS WONDERFULL FORUM.............

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[Anonymous]

Oh, and from what I've read, your mid-score of 685 won't qualify you for ANY PMI (Private Mortgage Insurance) if you live in a "declining market" state.

Most PMI companies want to see at least a 720 if LtV is less than 85%.

Message Edited by Wonderin on 02-06-2009 10:33 PM

[WannaHouse]

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@Anonymous wrote:

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@Daguy wrote:

I have been working with a mortgage broker and realtor for about a month. I have been pre qualified for 150,000.

Originally I wanted an FHA loan because I thought I would be cheaper. I have 15,000 dollars liquid and 10,000 in 401k mid score 685. The plan was to go FHA and and put down 3.5% and have seller pay closing cost.

I have been looking at houses for 130,000-150,000 range. After I got the good will estimate I realized how much and FHA cost to get started. My mortgage broker said that a conventional will be cheaper is true? I know that I will need 10% down, their goes my 15k savings.

Will it be cheaper in the long run for you to put 10% rather than 3.5% down? Well, yeah. Your payments will be oodles cheaper. Plus, remember, if you're plunking down less than 20%, you'll have to pay Private Mortgage Insurance -- and that's more expensive and has stricter FICO requirements than FHA.

Reason that I want conventional is that I was told that banks prefer convention and that if I make offers with conventional loan with 10% down and closing paid by seller my offers will be stronger that those offers using FHA. This will use up all my savings but the loan, closing cost and mortgage payment will be cheaper and I will have much better luck with my offers Vs. Those with FHA offers and only 3.5%.

*snort*

We just bought our house and we sure as heck didn't see that kind of bias. Not a single seller seemed to have given a purple-plated doodie about what kind of financing we used ('cept for VA -- sellers didn't seem to like that type so much).

Now, do sellers prefer to see you plunk down as much as possible of your own cash? Yup. Only because they believe it increases the chance that your loan will be approved. But if you have a strong file, it shouldn't make THAT much of a difference.

To wrap this up, does this sound correct? Does conventional with 10% down have more clout than an FHA 3.5% down. One more thing is that I was told their is so many FHA loans being processed that it takes about 45 days to close Vs. 30 days with conventional (Broker said this 30 days is no problem) and their is so many FHA offers that a conventional will be much stronger offer in this market.

Personally, and if I'm wrong, I hope the Mortgage Gurus will correct me, but I think you're being fed a pile of horse hockey. You need to figure out what fits YOUR situation and finances better. No one knows THAT better than YOU.

THANKS TO ALL IN THIS WONDERFULL FORUM.............

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Ditto...to what SHE said. 

[Anonymous]

Talked to my broker today...and she is very good...and explained things I already learned here...and shed some light etc..........

Based on your scores and DP amount conventional is NOT cheaper.  Whomever you are talking to is wrong......

It will be cheaper for you to do FHA at 3.5% down (you will get a better interest rate 620 and up gets you the best rates with FHA now).....10% Down vs 3.5% will save you LESS than $40 per month in a mortgage payment.

If the house is occupied, I say GOOD LUCK with closing in 30 days.......45 is more accurate if not 60....a vacant home however would probably want to close in 30 days or less.

I think you need to talk to someone else. 

[Daguy]

bump

[llecs]

Daguy, If you'd like to change your title above, click "Options" then "Edit Message". You can then edit the subject line, if you'd like.

[DallasLoanGuy]

FHA has an upfront mortgage insurance premium(you can pay it, but it is usually added to the loan). Consider it like a discount point buying down the PMI.

PMI is lower on FHA.

You need 2 GFEs side by side. The loan officer can supply.

[DallasLoanGuy]

Some short sighted people consider the FHA loan a weaker offer. A good buyer's agent and loan officer can overcome this for you.

Maybe include a preapproval letter for both options with the offer?

If they question, you can simply explain that you haven't decided on which loan to use...... as you have options.