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MaZz
* Lovin my baby girl!!! *
Member since 2/09 6243 total posts
Name:
Gina
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FHA or Conventional?
What type of loan did you go with and why? DH & I have to decide between the 2 asap... It looks like FHA would give us a lower rate and a lower monthly payment, but we'd have to put down extra in the beginning for MPI i believe which drives up the total amt of our loan... We hardly understand any of this stuff so any info/advice is greatly appreciated!
Let me know if you need specifics of the 2 loans to help me out and I'll FM you
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Posted 9/13/09 4:44 PM  |
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HotAir
LIF Toddler
Member since 8/09 391 total posts
Name:
Lisa
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Re: FHA or Conventional?
From what I understand the benefit of the FHA loan is that you only have to put 3.5% down. It stinks though because for the first five years you have to pay the MIP. With a conventional loan since you have put 20% down you dont' need the mortgage insurance.
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| Posted 9/13/09 4:47 PM |
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MaZz
* Lovin my baby girl!!! *
Member since 2/09 6243 total posts
Name:
Gina
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Re: FHA or Conventional?
Posted by HotAir
From what I understand the benefit of the FHA loan is that you only have to put 3.5% down. It stinks though because for the first five years you have to pay the MIP. With a conventional loan since you have put 20% down you dont' need the mortgage insurance.
We can actually get the conventional with less than 10% down which is nice since we have either option... just not sure what is better... either way we're paying PMI/MIP since we dont have 20% or more
As much as I read my little mortgage 101 book, i still dont get this crap hahaha
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| Posted 9/13/09 5:04 PM |
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Cpt2007
A new love!
Member since 1/08 5946 total posts
Name:
Liz
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Re: FHA or Conventional?
We were prepared to do an FHA b/c we didn't have 20% down, but our credit union approved us for a conventional with only 5% down. We went with the conventional b/c we aren't paying PMI and we didn't have to go through the ridiculous inspection processes that others have had to go through.
IMO, it is totally worth it to put down the extra 2% and get out of the FHA restrictions.
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| Posted 9/13/09 6:09 PM |
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Mill188
LIF Adult
Member since 3/09 3073 total posts
Name:
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Re: FHA or Conventional?
Posted by Cpt2007
We were prepared to do an FHA b/c we didn't have 20% down, but our credit union approved us for a conventional with only 5% down. We went with the conventional b/c we aren't paying PMI and we didn't have to go through the ridiculous inspection processes that others have had to go through.
IMO, it is totally worth it to put down the extra 2% and get out of the FHA restrictions.
Totally agree - if you can get a conventional mortgage do that. The paperwork, inspection process and delays in dealing with FHA is not worth it. My friend's brother almost lost the home he was buying because even though he had a mortgage commitment, they couldn't get the FHA to close in time.
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| Posted 9/13/09 7:37 PM |
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MaZz
* Lovin my baby girl!!! *
Member since 2/09 6243 total posts
Name:
Gina
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Re: FHA or Conventional?
Posted by Mill188
Totally agree - if you can get a conventional mortgage do that. The paperwork, inspection process and delays in dealing with FHA is not worth it. My friend's brother almost lost the home he was buying because even though he had a mortgage commitment, they couldn't get the FHA to close in time.
I did hear the paperwork is alot more than normal... and from reading things online, it seems like the inspection is a bit tougher and takes longer for whatever reason...
we are trying to get the 8k, but also want to get the MCC, but that hasnt been rolled out yet... in the long run, we'd make alot more from the MCC than 8k so maybe having to wait for a closing isnt such a bad idea...
but yea, you girls def have me a bit worried... but its sooo hard to look at numbers on paper and go with the higher figures... DH understand wayyyy less than I do so he's of no help... he sees the numbers and for him its a "no brainer" 
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| Posted 9/13/09 8:30 PM |
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Cpt2007
A new love!
Member since 1/08 5946 total posts
Name:
Liz
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Re: FHA or Conventional?
If you haven't already, you should really sit down with a mortgage rep and have them plot out on paper what your options are. You should see exactly what the payments would be, and what your total obligation will be over the life of the loan.
Unless you get lucky, chances are you won't be in the first home for good, so you should consider that too when looking at which of the tax credits you want more and also if a particular mortgage makes it worth it.
The other thing too is that unless you can find a house quickly and the seller is willing to do a quick timeline and your bank can get you to closing fast, you are running out of time to make the 11/30 deadline to get the Federal credit of $8k.
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| Posted 9/13/09 8:47 PM |
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MaZz
* Lovin my baby girl!!! *
Member since 2/09 6243 total posts
Name:
Gina
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Re: FHA or Conventional?
Posted by Cpt2007
If you haven't already, you should really sit down with a mortgage rep and have them plot out on paper what your options are. You should see exactly what the payments would be, and what your total obligation will be over the life of the loan.
Unless you get lucky, chances are you won't be in the first home for good, so you should consider that too when looking at which of the tax credits you want more and also if a particular mortgage makes it worth it.
The other thing too is that unless you can find a house quickly and the seller is willing to do a quick timeline and your bank can get you to closing fast, you are running out of time to make the 11/30 deadline to get the Federal credit of $8k.
We have gone over with a rep the options... we have seen many GFE's with diff figures... somehow the FHA comes out lower in every section but in the upfront MIP costs, but everyone says go conventional which is making me question it all... will def talk to rep again and hopefully come a to decision... you are right though, i highly doubt we are going to stay in this place for the next 30 yrs so i shouldnt base it on too much of the long term
We actually already have an accepted offer on a place, inspection on tues, so the process seems to be moving along quickly enough to make the 8k credit... but who knows if going the FHA route will make us miss out on that...
Ahhh... decisions decisions
Message edited 9/13/2009 9:49:59 PM.
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| Posted 9/13/09 9:49 PM |
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Re: FHA or Conventional?
the upfront MIP for FHA doesnt actually come out of your pocket. it goes back into the mortgage. did she explain that to you when she gave you the GFE?
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| Posted 9/13/09 10:43 PM |
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MaZz
* Lovin my baby girl!!! *
Member since 2/09 6243 total posts
Name:
Gina
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Re: FHA or Conventional?
Posted by waiting4ablessing
the upfront MIP for FHA doesnt actually come out of your pocket. it goes back into the mortgage. did she explain that to you when she gave you the GFE?
She def did... I just didnt understand it completely at the time... i saw it added into the mortgage amt, but didnt put 2 and 2 together This stuff will make you really feel like a dummy... blah!
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| Posted 9/13/09 11:03 PM |
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Sparkyandang
LIF Adolescent
Member since 5/08 766 total posts
Name:
Ang
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Re: FHA or Conventional?
You will pay the PMI/MIP with either a conventional or the FHA if you put down less than 20%, however, as a PP stated. the FHA, you pay the MIP for 5 years, where as a conventional, I believe, you only pay the PMI until you have 78% equity.
We went with FHA b/c we were afraid to use all our savings as a down payment. I'll admit it took me a while to get past the $160 a month for the MIP...it's like throwing money away, BUT I am so happy I did it now b/c we still have money in the bank and are we have already come across a few unexpected expenses in the house trying to get it ready to move in and we don't have to sweat it now.
Good luck Gina.
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| Posted 9/14/09 8:04 AM |
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rkoenke
my little piggys
Member since 3/08 4315 total posts
Name:
rachel
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Re: FHA or Conventional?
Posted by MaZz
Posted by Mill188
Totally agree - if you can get a conventional mortgage do that. The paperwork, inspection process and delays in dealing with FHA is not worth it. My friend's brother almost lost the home he was buying because even though he had a mortgage commitment, they couldn't get the FHA to close in time.
I did hear the paperwork is alot more than normal... and from reading things online, it seems like the inspection is a bit tougher and takes longer for whatever reason...
we are trying to get the 8k, but also want to get the MCC, but that hasnt been rolled out yet... in the long run, we'd make alot more from the MCC than 8k so maybe having to wait for a closing isnt such a bad idea...
but yea, you girls def have me a bit worried... but its sooo hard to look at numbers on paper and go with the higher figures... DH understand wayyyy less than I do so he's of no help... he sees the numbers and for him its a "no brainer"
what is the MCC??
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| Posted 9/14/09 8:25 AM |
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MaZz
* Lovin my baby girl!!! *
Member since 2/09 6243 total posts
Name:
Gina
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Re: FHA or Conventional?
Posted by rkoenke
what is the MCC??
mortgage credit certificate ... see here
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| Posted 9/14/09 8:34 AM |
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rkoenke
my little piggys
Member since 3/08 4315 total posts
Name:
rachel
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Re: FHA or Conventional?
RIGHT !!
Thank you. i actually posted about this a while back. but, because i am not a first time homebuyer, i suppose i forgot about it real fast!
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| Posted 9/14/09 9:05 AM |
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MaZz
* Lovin my baby girl!!! *
Member since 2/09 6243 total posts
Name:
Gina
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Re: FHA or Conventional?
Posted by rkoenke
RIGHT !!
Thank you. i actually posted about this a while back. but, because i am not a first time homebuyer, i suppose i forgot about it real fast!
aww... yea, i agree there should be more programs out there that cater to all buyers, but i'm going to try to benefit from this... if the banks ever get the apps in! grrrrr
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| Posted 9/14/09 9:29 AM |
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Nik211
my little monkey<3
Member since 5/08 3303 total posts
Name:
Nik
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Re: FHA or Conventional?
Well the more you put down the less your monthly payment will be....which for us was a big factor - we wanted the lowest monthly payment possible so that we'd have lots of money to play with every month....
If home values continue to decline and you put down 20% you will owe less to get rid of the house (if you needed to or wanted to)....
Went conventional so that our monthly payment would be lower and b/c the closing was less expensive upfront (FHA has lots of fees/MPI/etc.)....
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| Posted 9/14/09 9:29 AM |
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Megs4
LIF Adult
Member since 11/08 1619 total posts
Name:
Megan
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Re: FHA or Conventional?
We started with a conventional with just 5% down, and then our closing was delayed and the bank actually stopped offering the mortgage we had in the time it took to get to a new closing date, so we had to start over with FHA.
It was such a nightmare to do everything over again that I actually have no frame of reference as to what it would have been like to do just one or the other!
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| Posted 9/14/09 9:39 AM |
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