topic Re: First time homebuyer without PMI in Mortgage Loans

First time homebuyer. Need some guidance

Shadowfactor — Fri, 30 Mar 2018 04:47:47 GMT

Hello,

So my fiancé and I are thinking of buying our first house.
The house will go under her name because I work for an overseas company for the next 3 years and am overseas for 8 months a year so I don’t even think a mortgage company will let me get a mortgage.

We are looking to buy a condo. Max price of 130K.

Is there a way to get a mortgage without PMI and without 20% down ?
If it’s possible, any recommendations on a lender ?
We have about 10K saved up, but really only want to put down 6-7K so we still have plenty in savings.

Her credit scores FICO 8
EX - 767
EQ - 775
TU - 769

Age :25
Income : 70K

We really have no clue what to expect, costs, anything like that. We don’t even know what she will qualify for.
Thanks

Re: First time homebuyer without PMI

JVille — Fri, 30 Mar 2018 04:21:01 GMT

No not without much more down.

Re: First time homebuyer without PMI

Shadowfactor — Fri, 30 Mar 2018 04:34:08 GMT

What’s the best way to go about getting PMI lowered based on her credit and income.

Her and I are very clueless about mortgages. We both just graduated college 2-3 years ago.

Re: First time homebuyer without PMI

NC_Mtg_Loaner — Fri, 30 Mar 2018 11:42:31 GMT

Good News is that with her credit score > 740 she's going to qualify for the lowest rate of conventional MI and depending upon her income level and where that stacks up with median levels for your area--she might even qualify for reduced MI and the ability for reduced down payment with a 97% Conventional loan.

As you shop around, just be sure that you are comparing the APRs of any and every lender that you speak with about this. Many banks have gimmicks (Lender Paid MI or LPMI specifically) to advertise no PMI with < 20% down, but it's hidden in the rates or fees and will be exposed in the APR. There's nothing to be afraid of when obtaining a loan with PMI really so go for it.

In the long run or the bigger scheme of things, it's how you attack that mortgage debt after you've secured it that counts. Take a look at the 15, 20 or 25 year loan and compare those amortization schedules with that of a 30 to see which payment schedule fits in your budget best.

Re: First time homebuyer without PMI

Anonymous — Fri, 30 Mar 2018 12:57:28 GMT

Not sure on current laws or what have ya...

but 2011 when i took my mortgage I only put down 10% conventional.

I applied LOTS extra to the principal in extra payments and got down to 80% of loan,

to wipe out the PMI....it was just annoying.

At the time, I think law was you can request at 80% but at 78% it was a requirement to be waived/dropped.

Looks like you should be well under budget with the income to purchase price, (esp if you are contributing)

so could just pay extra for 6-12 months or so?? (without knowing full debt details, etc)

Just one way to look at options if you cannot find another way with no pmi.

Re: First time homebuyer without PMI

Shadowfactor — Fri, 30 Mar 2018 15:05:30 GMT

Thanks for the help so far!

Yes I will be helping with the payments, I just dont think I would qualify to actually be a cosigner on the mortgage since I have a 3 year contract working for an overseas company. My income is 65K a year right now but I'm paid by my company in a foreign bank account. I am paid in US dollars though. I basically get paid overseas and then wire the money to my US based bank account. I have dual citizenship. I had some US based income last year but it was only for about 13K, the rest was from my company overseas. I filed for the IRS foreign income tax credit on my taxes as well in 2017.

As far as she is concerned.

Her income is 69,900K a year pre tax plus a couple small bonuses. She just got a raise from 65K 2 months ago.

Debt :

Car Loan 445 a month

Credit cards: All zero balances except one.

Currently shes using 0% on Discover. Balance $975/ 8500 CL

Student Loans : $22,923 Owed, Several loans through the same company

total payment a month is $300

Re: First time homebuyer. Need some guidance

Anonymous — Fri, 30 Mar 2018 15:28:10 GMT

You can't eliminate PMI without 20% down. And if you get an FHA loan (which has far lower down payment requirements) then you are stuck with a PMI for the life of the loan. It won't even drop off when you've achieved 80% LTV. Now I was lucky, I got my FHA loan in 2006 before the crisis and the more stringent rules so my PMI did drop off.

Re: First time homebuyer. Need some guidance

Shadowfactor — Fri, 30 Mar 2018 15:54:22 GMT

What is the best kind of loan we should look at ?

We want to buy a condo of max value 130K, but in reality we are really looking for a 1 bedroom so it's probably going to be around 110K. Its just her and I so we dont need a big place and don't plan on keeping it past 10 years. Just tired of paying $900 a month for rent when we could be paying that as a mortgage and actually own something.

we can put down about 7K and still have a plenty in savings for unexpected events.

Re: First time homebuyer. Need some guidance

Anonymous — Fri, 30 Mar 2018 16:10:44 GMT

Conventional sounds right to me. That's a fairly small mortgage. Heck you could even scrounge up the 20% fairly easily if you are purposeful about it. Oh and for the low size of the mortgage, I would not get anything longer than a 15 year fixed. So I would say don't do a 30.

Re: First time homebuyer. Need some guidance

Anonymous — Fri, 30 Mar 2018 16:14:39 GMT

One thing that nobody mentioned yet is that FHA will only apply to condos that have already been approved for FHA funds. You will need to go to the FHA website and do a search to see which condo developments are registered in your area. In my area, the list is extremely small (only about 5%), but hopefully you'll have more options.

For that reason alone, I'm hoping to go with a 97 Conventional this summer, since it would open up my options to any type of property.

Re: First time homebuyer. Need some guidance

Shadowfactor — Fri, 30 Mar 2018 16:16:47 GMT

Say we end up with a place for 110K, there's no way we can save up another 15K in 2-4 months.

We have 7K right now that can go towards a downpayment, but getting to 22K would be impossible right now.

Our current lease ends in the last week of June, the apartment complex will let us stay until the first of August without signing another lease.

They don't do month to month for several months once the lease is up like most places.

Re: First time homebuyer. Need some guidance

Anonymous — Fri, 30 Mar 2018 16:39:36 GMT

Then just the pay the PMI, in your case it's only about $100 a month anyway. If you get a 15 year (and you should as I said), you should exceed your 80% threshhold pretty quickly and have the PMI drop off.

Re: First time homebuyer. Need some guidance

Anonymous — Fri, 30 Mar 2018 17:40:53 GMT

+1 to that.

I wasnt aware of the fha rules of forever pmi, so just dont go that route

make sure it is conventional with no lifetime pmi.

Then when you hit the 80% you will be done. So that could be a matter of months if you

apply a little extra towards principal when you can.

Re: First time homebuyer. Need some guidance

Anonymous — Fri, 30 Mar 2018 17:56:33 GMT

You could go FHA now and refinance into Conventional later. But you do run the risk of a higher rate then.

Re: First time homebuyer. Need some guidance

Shadowfactor — Sat, 31 Mar 2018 18:28:25 GMT

Thanks everyone for the help.

Going to go talk to a mortgage lender.

Made a couple phone calls to Third Federal, and my bank. Both stated I couldn’t get a mortgage for a condo without 15% down.

So going to start looking for single family homes or PUD’s.

Not sure why I couldn’t get a condo for 110 with 7-8K down, but that’s what I was told

Re: First time homebuyer. Need some guidance

NC_Mtg_Loaner — Sun, 01 Apr 2018 15:51:58 GMT

Keep checking with other lenders....it sounds like the ones you have talked with have specific overlays restricting your loan in order to require you to put down more than 5% which you should be able to do.

FHA approval for condos is difficult, but it can be accomplished. The main thing to understand is that any lender (as long as they are a Delegated Endorsement Lender) can get a condo complex approved for HUD. However, when compared to conventional guidelines, the level of insurance that's required to be provided by the HOA might be more than they are currently paying which needs to be increased and generally approved by the HOA--not always a quick process. Even then, HUD approval will only last for 2 years if not renewed within that period.

In addition to this, budgets must meet minimum reserve requirements, the HOA or it's management company must have sufficient levels of a fidelity bond and the majority of the complex must be Owner occupied and no one owner can own > 10% of the units--guidelines that may even prohibit some complexes from being approved by FNMA or FHLMC which could be another factor going on here that you aren't aware of---just saying.

Keep digging and searching though....