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Valued Contributor
MovingForward_2012
Posts: 3,406
Registered: ‎12-19-2012
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Re: How much of a house should I buy.....?

Okay well if you go conventional, you will most likely get a better interest rate than going FHA. So I would do that. If you can comfortably put down 22% to avoid the PMI on a $379K house, I would do that as well.

Tooleman mentioned another option through conventional regarding the ability to pay up front PMI and be done with it. I don't know what the downpayment requirements are for this.
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Valued Contributor
MovingForward_2012
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Registered: ‎12-19-2012
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Re: How much of a house should I buy.....?

Never mind. I just saw tooleman said it requires 5% down. But what is LPMI?
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Valued Contributor
tooleman694
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Registered: ‎08-25-2011
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Re: How much of a house should I buy.....?

LPMI is lender paid mortgage insurance.

 

You can either pay an upfront fee or no fee but you take a hit on your interest rate.

 

This is one of the cool things about doing a conventional mortgage, you just pay the fee upfront and its done.

 

I think the fee is somewhere around 2 percent of the loan. So a 350k mortgage it would be a 7000 upfront fee. It is a good deal.

Valued Contributor
MovingForward_2012
Posts: 3,406
Registered: ‎12-19-2012
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Re: How much of a house should I buy.....?

Interesting. So the LPMI is paid by the lender on your behalf until 78% LTV if you just pay the upfront fee and put 5% down?
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Valued Contributor
tooleman694
Posts: 2,297
Registered: ‎08-25-2011
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Re: How much of a house should I buy.....?

You could do 3 percent down as well. Yes the lender pays the MI for you.

Valued Member
rubu
Posts: 47
Registered: ‎01-05-2013
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Re: How much of a house should I buy.....?

Thats great information...I should for sure do...10% down and buy PMI directly. I will find out the information....

Valued Member
rubu
Posts: 47
Registered: ‎01-05-2013
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Re: How much of a house should I buy.....?

Valued Contributor
tooleman694
Posts: 2,297
Registered: ‎08-25-2011
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Re: How much of a house should I buy.....?

Kind of, you can take a higher rate if you want. But I think the better way is to pay the fee and keep the rate low.
Valued Member
rubu
Posts: 47
Registered: ‎01-05-2013
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Re: How much of a house should I buy.....?

So essentially I am paying a fee and more on interest because the borrowed amount becomes bigger?

 

Thanks.

 

Valued Contributor
tooleman694
Posts: 2,297
Registered: ‎08-25-2011
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Re: How much of a house should I buy.....?

A fee or higher rate.

You pick which way you want to go.

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