PMI on FHA Loan (and other questions) - Shane I would really like your opinion if you have a minute

[Anonymous]

So you have to pay this up front if you don't meet the 80% LTV - for all the time it will be required? Or just for one year?

My husband and I have midscores of 650 and 673 respectively - he earns about $80,000 per year and I earn about $40,000 per year. Monthly outgoings for Credit Cards, Car Loans are $1100 meaning we should be able to have about $2500 per month for paying the mortgage, taxes ($480 per month) and any PMI that we need to pay, as well as all the usual hazard insurance etc.

We currently have $16000 in savings (for deposit and closing costs)

We are meant to be doing a new build and the house should be completed in November of this year. The total price of the house is $218,000.

As far as our credit history - hubby has one Closed CA (paid in full) which is due to come off his CR in September of this year (I have sent a GW to see if it can be removed early as it is a medical related issue too) then he has 3 30 day lates and 1 120 day late and 1 60 day late. The 30s and 60 i have also sent GW letters for to see if I can get them removed (waiting for replies or to send again) Everything has been paid on time for a year or more at either minimum required or greater. My credit history is only about a year old (I moved here 3 years ago but only got my first credit card then) everything has always been paid on time and I have had 3 CLI since I got that card. I also have a store card, car loan and a secured credit card in my name as well as the unsecured card. Hopefully my score should go up soon.

So my questions -

Credit wise - which score do they use. The lower mid score?

is FHA the only way to go? If we go that way then will we have to pay all of the PMI up front? (or can it be rolled in to the mortgage) If we went conventional (can we even with those scores) then what would be the position on that - I have been told to expect closing costs of about 5% of the purchase price. DH and I will be saving desperately from now til November and think we can probably put away about another $10,000 or so as well as paying off a couple more credit cards; hopefully pulling the credit rating up to 660 or better.

When should we apply for the mortgage? Do we wait until september/october if we are building or should I try and get preapproved now? I can't see that I will be able to lock in a rate for 6 months without paying horrendously high rates.

Help!

(I feel dumb, in the UK I used to advise on mortgages over there but here I am completely lost with the different mortgage types and the qualifying status)

Message Edited by Susyquk on 03-29-2009 12:10 AM

Message Edited by Susyquk on 03-29-2009 12:11 AM

[Anonymous]

Not an expert but I will share what I think I know.

There is an upfront PMI which is rolled into the loan. 1.75% strikes me but I could be wrong. And there is a monthly PMI which is included in your payment. You have to pay it until you get 80% LTV but I also think there is a minimum time you must have it.

120,000 income lets you have 4300 debt payment with a 4300 back end ration. Take out your 1100 CC and Carloan payment and that allows you 3200 for mortgage, interest, taxes and insurance.

Having closing and deposit is a good thing. FHA requires 3.5%, USDA and VA none. You could also negioate seller closing with the seller like I did.

220,000 at 5.5% is about 1450 without taxes and insurance and PMI 220000 would require 7,7000 for downpayment for FHA

They are going to require last 12 months of credit be clean and it looks like that is good. Most wont require you to pay old stuff that is minor in nature They might be concerneda about stuff that could put a lien on a house.

Don't dispute stuff on your credit report, can't get a mortgage with disputes and unless you can get something takeen off, ignore it, it might reage and that might effect your credit scores.

Min credit scores are 620, industry standard and if you are married they will take the lower of your two mid scores. 

I was offered conventional with 5% down but I have credit scores of 770. Not sure if you could do that with your scores, I doubt it though.

My FHS closing came out ot be about 4% and we have a high transfer tax here. I was told 4-6% when I first started this process. 5% of your 220,000 is about 11,000, don't forget you can get seller assist closing.

I would make an appt with a LO and let them tell you what you need to do. It should be free.

[Anonymous]

---

@Anonymous wrote:

Not an expert but I will share what I think I know.

There is an upfront PMI which is rolled into the loan. 1.75% strikes me but I could be wrong. And there is a monthly PMI which is included in your payment. You have to pay it until you get 80% LTV but I also think there is a minimum time you must have it.

120,000 income lets you have 4300 debt payment with a 4300 back end ration. Take out your 1100 CC and Carloan payment and that allows you 3200 for mortgage, interest, taxes and insurance.

Having closing and deposit is a good thing. FHA requires 3.5%, USDA and VA none. You could also negioate seller closing with the seller like I did.

220,000 at 5.5% is about 1450 without taxes and insurance and PMI 220000 would require 7,7000 for downpayment for FHA

They are going to require last 12 months of credit be clean and it looks like that is good. Most wont require you to pay old stuff that is minor in nature They might be concerneda about stuff that could put a lien on a house.

Don't dispute stuff on your credit report, can't get a mortgage with disputes and unless you can get something takeen off, ignore it, it might reage and that might effect your credit scores.

Min credit scores are 620, industry standard and if you are married they will take the lower of your two mid scores. 

I was offered conventional with 5% down but I have credit scores of 770. Not sure if you could do that with your scores, I doubt it though.

My FHS closing came out ot be about 4% and we have a high transfer tax here. I was told 4-6% when I first started this process. 5% of your 220,000 is about 11,000, don't forget you can get seller assist closing.

I would make an appt with a LO and let them tell you what you need to do. It should be free.

---

Hmm yeah, if it was rolled in to the loan that would be ok I think I am just worried that I would have to pay up front and that it's too early to be doing any of this with the build completion date not being until November

Thanks for your input 

[ShanetheMortgageMan]

I think teacherhere did a great job answering your questions.

[teton]

---

@Anonymous wrote:

Don't dispute stuff on your credit report, can't get a mortgage with disputes 

---

I had never heard this before. Why do disputes affect your mortgage approval? How can you get them removed? 

[Anonymous]

I think Fannie and Freddie (not sure about FHA) have recently decided that any and all disputes must be settled on your credit report.  My guess is that is just more fallout from the loose lending practices that were in place before all the meltdown.  They now want to see an fully accurate picture of your credit and a report filled with disputes is not an accurate report.  Also, too many people were just filing tons of disputes hoping to catch companies who didn't respond quick enough and get the items dropped.