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NFCU 100% finance home buyers choice question

Established Contributor

NFCU 100% finance home buyers choice question

Does anyone know what this means.

1.75% Funding fee can be waived for an increase of .375% to the interest rate

 

which is better?

 

http://imgur.com/EHxQiuR

EX 786
EQ 777
TU 779

All Chp7, Judgements , CO's now legally clean from scores low 600's just using this forum
Chase Amzn 8.5k , Citi BB 3k, Citi Gdyr 5K, Amzn Store 12k, SallieMae 12k Amex BCE 29k , PenFed Promise 40k@8+% +10k PLOC@10%, NFCU member
Message 1 of 8
7 REPLIES
Regular Contributor

Re: NFCU 100% finance home buyers choice question

I haven't done the math but I'd imagine it would be better to pay the funding fee. I think the fee is something you can negotiate for the sellers to pay.
Message 2 of 8
Established Contributor

Re: NFCU 100% finance home buyers choice question

The seller wont pay a dime.

I thought the interest would be better since you can deduct that?

EX 786
EQ 777
TU 779

All Chp7, Judgements , CO's now legally clean from scores low 600's just using this forum
Chase Amzn 8.5k , Citi BB 3k, Citi Gdyr 5K, Amzn Store 12k, SallieMae 12k Amex BCE 29k , PenFed Promise 40k@8+% +10k PLOC@10%, NFCU member
Message 3 of 8
Regular Contributor

Re: NFCU 100% finance home buyers choice question

I guess it's going to depend on how long you stay in the house.  If you plan on staying in the house several years, then it would make more sense to pay the funding fee since you'd recoup it over time with the lower payments over the life of the loan. 

Message 4 of 8
Valued Member

Re: NFCU 100% finance home buyers choice question

Since there's a tradeoff between paying the fee upfront now, or spreading out the cost over time with a higher interest rate, this is a calculation definitely worth considering for anyone looking for a HBC loan, or interested in purchasing points as well. I do a simple "break even" calculation that tells me how long I need to own a property before I realize the benefit of paying 1.75% upfront. For any of these programs where you trade upfront costs for lower interest rates, you will always always win in the long run by paying upfront. The question is when? In your case, the exact number of months you need to own the property for it to make sense to pay 1.75% now is dependent on the rate you are quoted, but it should be about 58 months, +/- a few months. If you plan on owning your home longer than that, by all means pay the fee now and take the lower interest rate. Good luck!

Message 5 of 8
Established Contributor

Re: NFCU 100% finance home buyers choice question

Actually I plan on moving south in 3+ years .. sooner if I can so I guess I will take the rate hike. TYVM!

EX 786
EQ 777
TU 779

All Chp7, Judgements , CO's now legally clean from scores low 600's just using this forum
Chase Amzn 8.5k , Citi BB 3k, Citi Gdyr 5K, Amzn Store 12k, SallieMae 12k Amex BCE 29k , PenFed Promise 40k@8+% +10k PLOC@10%, NFCU member
Message 6 of 8
New Member

Re: NFCU 100% finance home buyers choice question

 
Message 7 of 8
Frequent Contributor

Re: NFCU 100% finance home buyers choice question

I'm thinking about that option as well.  The zero down with no required PMI is pretty darn hard to not take advantage of it.  I just need to look at the long term and see which is better.  Also you can have the funding fee rolled into the loan as well.

12/27/16 - Eq683 TU666 Ex681 04/05/17 Eq742 TU763 Ex757
Message 8 of 8