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FHA Loan (3yrs to go) or wait for Conventional?

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Bonaccan
Established Member

FHA Loan (3yrs to go) or wait for Conventional?

Currently, I am 3 years (foreclosure finalized 6/2016) away from being able to go the conventional loan route. For the past 4 years I've been working to get my financial situation back to a positive situation.

 

  • Credits scores across the 3 bureaus are averaging around 750 as of this past week
    • I assume will increase as I continue to pay off credit balance below
  • My current credit card balance % is at 24%
    • Remaining balance (all on 0% promo rates until June 2021) and plan to have at least half of it paid off by then, if not more

My question is: Should I find a home now with PMI and then refinance in 2023 when I won't need PMI any longer (with 20% down) or should I wait until 2023 but throw money away on rent?

 

Message 1 of 4
3 REPLIES 3
Mortgage-Specialist
Established Contributor

Re: FHA Loan (3yrs to go) or wait for Conventional?

Youre gonna have to do the math on this one. If you were to go FHA now, youre monthle M.I. would only be $170 per month on a 250k purchase. So in 3 youre you will have paid roughly $6,100 toward mtg insurance.

 

Or you can rent for estimated $1,800 per month which means you would have wasted away $65,000 in rent payments over 3 years. 

Message 2 of 4
NC_Mtg_Loaner
Valued Contributor

Re: FHA Loan (3yrs to go) or wait for Conventional?

It's really up to you when you want to buy a home. 

 

most folks don't realize the Time Value of Money theory or even the Opportunity Cost which Mortgage Specialist has spelled out for you and for some reason they only focus on rate which might be a bit different than the APR which measures your long term cost of ownership. 

 

By the time you compare APRs on FHA and conventional loans, they are usually less than 1.0% difference and since the APRs will typically be under 5%, it really ought to be irrelavent when considering which loan program to select. 

__________________________________________________

Licensed NC Mortgage Loan Originator
Message 3 of 4
Bonaccan
Established Member

Re: FHA Loan (3yrs to go) or wait for Conventional?

Thanks

Message 4 of 4
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