Monthly payment and PMI

[Anonymous]

So we are looking to buy our first house. It new construction and in order to get their current incentive we have to go through their lender.
Now the price with option etc is around $410k and their closing cost is also higher around 12k.
So when we priced out the house the monthly payment was over $2400, with $20,000 downpayment, so the Sales rep told us if we pay the PMI ($7500) up front our payment will go down about $200 a month.making the monthly payment around $2000 which is where we want to be.
But should I be putting upfront money towards the PMI or should I be putting that money toward the down payment. Our credit is pretty good.
Just want to make sure we are putting the money in the right place. It's a 30 year conventional loan.

Also, between now and the closing, should be try ot pay off our card balances? and I am planning to ask Amex for a CLI in April should I do it in the middle of teh mortgage process, will it impact anything? I have $6000 credit line i want to try to automated 3X CLI it will be 6 months sine the initial CLI request.

Any suggestions

[MovingForward_2012]

I had a auto CLI post during the mortgage process and it was not an issue. Paying down your cards will only increase your score and that increase in score will only help if your interest rate isn't locked in yet and they do another pull before they lock your rate.

I'm not sure about how PMI works with conventional loans so I will let someone else comment on that.

I just bought a house that cost $347,900 and my monthly payment is $2385, which includes PITI + PMI + homeowner's ins. I went FHA at 4.125%. PMI costs $346 per month.

$2000 per month on a $410K home is great! Even with the downpayment, you are financing more than me for less. My FHA loan was essentially zero down as I went through a program through our housing authority so you must just be getting a really low interest rate? What is included in the $2000 per month payment?

[JM-AM]

Paying PMI upfront is not a bad idea. But I think your math is a little wrong.

2400-200 = 2200

[Anonymous]

Sorry, that's a typo, I meant $2200.

[JM-AM]

One other thing to take into consideration which most do not.

New construction taxes can and usually do change. Since the house is not completed it does not have an assessed value which is what your taxes are based on.

Not saying will be a big difference but sometimes your taxes increase and sometimes they decrease (rare nowadays).

Just something people building need to consider.

[MovingForward_2012]

Definitely a great point. We did an upfront escrow of the taxes and chose the most conservative option to hopefully prevent us from having to make up the difference if the taxes end up being a little higher. I forgot what the options were specifically but there were two options and I spoke with my LO about it and he told me the possible consequence of choosing the option that requires less upfront and it was along the lines of what JM-AM said.

$2200 sounds like a more realistic reduction in PMI for a $410K home. Does that price include homeowner's insurance and HOA or is that just PITI?