partnersincrime_IHB
New member
I am not planning to buy a house at this moment, but lets say that theoretically, I found a great house for a great price, but I lack the 20% downpayment. What is my best option generally to avoid PMI?
Not having the 20% downpayment
- Thread starter partnersincrime_IHB
- Start date
NEW -> Contingent Buyer Assistance Program
read the detail in the bofa no fee mortgage. all they do is raise the interest rate to cover for the PMI and all the fee cost. so it all works out the same.
right now on their website it is showing 6.875 with a .86 of a point buy down for loan less then 417K. that is super high if you ask me. plus they don't pay for all closing cost. they only pay for some. maybe 2/3. a half point over 30 years is some serious money. with the rate going up more everyday.... just wait. because the price has not drop enough to justify the buy yet. IMHO.....
bottom line is the bank make their money either up front or in the long run. this was told to me by my loan officer. all banks. however bofa rates is not great at all and we both agree on this. so why not tell the seller to pay closing cost and go with someone with a lower rate?
Stepping up- what are you thoughts of buying a house earlier this year? do you have any regrets? how is the value holding up in your neighborhood? i was close to buying a 2 bedroom condo too but i backed out at the last minutes. Lennar let me off the hook cause they had another person and they end up selling that same unit to someone else for 512k. i was in contract with them for only 435k. i sure do fell sorry for that guy cause there is another unit for sell for that is in foreclosure for 426k .
no_vaseline_IHB
New member
I don't think you'll be able to, not for a long long long time.
partnersincrime_IHB
New member
I mean I know that there are several options here including a FHA loan and a 2nd mortgage. But I do not know if there are any other options and which is the best option generally. I know that the choices depend on various conditions, but if all things hold equal for a moderate income person, which is the bets option.
usctrojanman29_IHB
New member
Bank of America offers a No Fee Mortgage Program where they pay for the appraisal, closing costs, and the PMI payment (max LTV for this loan is 90%).partnersincrime said:
Trooper_IHB
New member
I wonder if second mortgages are even going to be available. I mean, after all these loses where 2nd's are being wiped out....who the heck would lend ? Maybe at 15% or something ridiculous like that.
MODM, LM...you think there will still be a 2nd mtg market?
MODM, LM...you think there will still be a 2nd mtg market?
PadreBrian_IHB
New member
Yeah, the 2nd market is non-existent without a large down.
Bubblegum_IHB
New member
Just thank the mortgage lenders for not lending your 90+%. Why put 20% down (if you had 20%) when the probability of losing some or all of it is pretty good. Keep saving and soon the 20% you thought you needed will end up more like 30% after prices fall even further.
idrnkurmlkshk_IHB
New member
I don't even think you should consider buying ANYTHING if you can't AFFORD a 20% of it.
jbatzmaru_IHB
New member
usctrojanman29 said:
read the detail in the bofa no fee mortgage. all they do is raise the interest rate to cover for the PMI and all the fee cost. so it all works out the same.
stepping_up_IHB
New member
We got an excellent rate with the B of A loan. The rate wouldn't have differed with them if we put 10% or 20% down. You definitely have more options with 20% down, but if you are only going to do 10%, the B of A loan isn't a bad deal. Plus they pick up the closing costs. If your loan amount is over $417K they will break it into a 1st and 2nd.
usctrojanman29_IHB
New member
The rate is the same if the loan is 50% LTV or 90% LTV, but I do agree their rates are higher probably by about 1/2%. However, when you take into account that they pick up all of the closing costs and the appraisal (which are fixed costs), the effective rate becomes more and more competite as the loan amount is lower.jbatzmaru said:
partnersincrime_IHB
New member
Yeah, I heard BoA is the way to go these days for a home loan.
jbatzmaru_IHB
New member
usctrojanman29 said:
right now on their website it is showing 6.875 with a .86 of a point buy down for loan less then 417K. that is super high if you ask me. plus they don't pay for all closing cost. they only pay for some. maybe 2/3. a half point over 30 years is some serious money. with the rate going up more everyday.... just wait. because the price has not drop enough to justify the buy yet. IMHO.....
usctrojanman29_IHB
New member
I never said they have the lowest rates, their rates are definately higher and most. However, when you take into account that they don't charge you any garbage fees (origination, underwriting, application, credit check, etc) and the fact that they pay for the appraisal and for the escrow, title, notary, flood cert, overnight shipping, and recording costs (the only thing they don't pay for is the prorations of property tax, prepaid interest, and any HOA fees) plus the PMI payment which is more like almost all of the closing costs to me. How do I know? Because I got their mortgage when I closed on my investment condo back in March and I can send you my HUD1 closing statement so you can see for yourself. Their loan becomes more and more attractive as the loan amount decreases because many of the costs they pay for are fixed and I'd probably go with another lender if the loan was over let's say $350k+. Why don't you go onto Wachovia's or Well's website and check out the stupid garbage fees those banks charge...you have to look at the entire package and not just the rate. Also, the smart thing to do with these REO properties is to ask the banks to kick you back money for closing costs which you can use to buydown the interest rate as you won't have any other costs to close.jbatzmaru said:
jbatzmaru_IHB
New member
usctrojanman29 said:
bottom line is the bank make their money either up front or in the long run. this was told to me by my loan officer. all banks. however bofa rates is not great at all and we both agree on this. so why not tell the seller to pay closing cost and go with someone with a lower rate?
idrnkurmlkshk_IHB
New member
Wow.
Some people never learn. :roll:
Some people never learn. :roll:
stepping_up_IHB
New member
We closed our B of A loan on May 9th and got 5.875 fixed and they paid everything outside of the pre-paid interest, insurance and property tax. We locked it back in late March. Since then rates have been slowly creeping up. Everyone else wanted more than 10% down unless we went FHA. FHA loans were higher than B of A and required PMI of about $200/mo. The closing costs on the FHA loan were close to $14,000. Countrywide would do 15% down, but still wanted PMI and their rate would have been exactly the same as B of A.
I'm not sure if B of A is still doing this, but back in Nov when we bought our other house, they had something of a guarantee that they would be the best value loan out there. If you applied and were approved for their mortgage, but went with another lender, they gave you $200. We had a better offer from Citi back then and B of A came back and matched it. We ended up with 5.75 then, which was competitive.
Another benefit of B of A is that they do an AVM for the appraisal, so it comes in much higher than the purchase price if you are getting a good deal. They don't require you to wait a year before opening a HELOC, so right after closing you can open a no fee HELOC line. Our line on the Nov house with an 80:20 LTV ratio was $26K MORE than we put down. They just opened one on this house for $50K, which is more than we put down. It's nice to know that you have this line available.
If you have other debt that is not tax deductible and are comfortable putting your house up as collateral, you can move it to the HELOC. The variable rate is really low on these right now.
I'm not sure if B of A is still doing this, but back in Nov when we bought our other house, they had something of a guarantee that they would be the best value loan out there. If you applied and were approved for their mortgage, but went with another lender, they gave you $200. We had a better offer from Citi back then and B of A came back and matched it. We ended up with 5.75 then, which was competitive.
Another benefit of B of A is that they do an AVM for the appraisal, so it comes in much higher than the purchase price if you are getting a good deal. They don't require you to wait a year before opening a HELOC, so right after closing you can open a no fee HELOC line. Our line on the Nov house with an 80:20 LTV ratio was $26K MORE than we put down. They just opened one on this house for $50K, which is more than we put down. It's nice to know that you have this line available.
If you have other debt that is not tax deductible and are comfortable putting your house up as collateral, you can move it to the HELOC. The variable rate is really low on these right now.
jbatzmaru_IHB
New member
stepping_up said:
Stepping up- what are you thoughts of buying a house earlier this year? do you have any regrets? how is the value holding up in your neighborhood? i was close to buying a 2 bedroom condo too but i backed out at the last minutes. Lennar let me off the hook cause they had another person and they end up selling that same unit to someone else for 512k. i was in contract with them for only 435k. i sure do fell sorry for that guy cause there is another unit for sell for that is in foreclosure for 426k .
idrnkurmlkshk_IHB
New member
jbatz,
Have you not been following this blog?
If you want to buy anything in CA in the coming year(s) prepare to lose equity as soon as you close.
Have you not been following this blog?
If you want to buy anything in CA in the coming year(s) prepare to lose equity as soon as you close.
stepping_up_IHB
New member
Stepping up- what are you thoughts of buying a house earlier this year? do you have any regrets? how is the value holding up in your neighborhood? i was close to buying a 2 bedroom condo too but i backed out at the last minutes. Lennar let me off the hook cause they had another person and they end up selling that same unit to someone else for 512k. i was in contract with them for only 435k. i sure do fell sorry for that guy cause there is another unit for sell for that is in foreclosure for 426k .
To be honest, I have mixed feelings. As you can imagine, following this blog can make you worry sick over a home purchase right now. Zillow shows this home peaked at a value of $826K, which is just unfathomable to me. It was mortgaged to the tune of $726K back in Sept 2005. We paid $430K, so there are times when I think the price we paid is in line with the bear consensus of where bottom will be. After the bank accepted our offer, a back up came in for $450K, which is what the house next door sold for in Feb. Next door is less square footage.
While I do have concerns that it could end up being worth $375K, we bought this with the intention of holding it for a VERY long time.... 15-25 years. However, we are so very much enjoying living in our own home. My husband hasn't had a second of regret. I had thought it was more me that WANTED a house, but seeing my husband's pride of ownership come out is really nice. It's also affordable for us. When you factor in the tax break, it's not much more for us to own this than if we were to rent it. Interest rates were also lower when we bought, which made it more affordable for us, but the higher rates now will certainly weigh on values.
As far as how prices are holding up.... there is an REO one street over that was completely remodeled and the last price drop brought it to $475K and it went into escrow the next day, but I'm not sure what the final sales price is. There is a short sale around the corner with less permitted square footage that has multiple offers, the highest of which is $400K. What that one sells for will be a good barometer. Overall, prices are still steadily sliding downward.
To be honest, I have mixed feelings. As you can imagine, following this blog can make you worry sick over a home purchase right now. Zillow shows this home peaked at a value of $826K, which is just unfathomable to me. It was mortgaged to the tune of $726K back in Sept 2005. We paid $430K, so there are times when I think the price we paid is in line with the bear consensus of where bottom will be. After the bank accepted our offer, a back up came in for $450K, which is what the house next door sold for in Feb. Next door is less square footage.
While I do have concerns that it could end up being worth $375K, we bought this with the intention of holding it for a VERY long time.... 15-25 years. However, we are so very much enjoying living in our own home. My husband hasn't had a second of regret. I had thought it was more me that WANTED a house, but seeing my husband's pride of ownership come out is really nice. It's also affordable for us. When you factor in the tax break, it's not much more for us to own this than if we were to rent it. Interest rates were also lower when we bought, which made it more affordable for us, but the higher rates now will certainly weigh on values.
As far as how prices are holding up.... there is an REO one street over that was completely remodeled and the last price drop brought it to $475K and it went into escrow the next day, but I'm not sure what the final sales price is. There is a short sale around the corner with less permitted square footage that has multiple offers, the highest of which is $400K. What that one sells for will be a good barometer. Overall, prices are still steadily sliding downward.