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    Mortgage Question - Iowa Finance Authority/FHA/etc.

    Potential first time home buyer. I was looking into financing options and trying to figure it out on the internet. My wife also went to talk to a guy at US Bank about our options and it left me a bit more confused since it seemed to contradict domr of what I had been reading. So here is our situation.

    Looking to buy a $120K house with a 5% downpayment (maybe 10%). Credit score is excellent and we have no debt.
    Iowa Finance Authority (IFA) has 2 first time home buyer programs that's suppose to help keep interest rates lower and even maybe help out with up to a $2500 grant (thru FHA; rate is 3.75% with no grant or 4.25% if you do the grant).

    Guy at US Bank says IFA is a hassle and sucks. FHA does too since he says that we'll have to pay an extra $100 a month for PMI. Says if we do 5% down, he'll give us a conventional loan at a 4.6% rate and it'll save us money ($75/month I think).

    Does that sound right? From what I had gathered, FHA required an MIP which you could roll into the mortgage and maybe a monthly 0.55% PMI charge (or something similar; had been 1.1% until a year or so ago). On the whole, it seemed the FHA was a no brainer. But I can't quite figure it out. Any help?

    Thanks!



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    Re: Mortgage Question - Iowa Finance Authority/FHA/etc.

    Quote Originally Posted by shadow View Post
    Potential first time home buyer. I was looking into financing options and trying to figure it out on the internet. My wife also went to talk to a guy at US Bank about our options and it left me a bit more confused since it seemed to contradict domr of what I had been reading. So here is our situation.

    Looking to buy a $120K house with a 5% downpayment (maybe 10%). Credit score is excellent and we have no debt.
    Iowa Finance Authority (IFA) has 2 first time home buyer programs that's suppose to help keep interest rates lower and even maybe help out with up to a $2500 grant (thru FHA; rate is 3.75% with no grant or 4.25% if you do the grant).

    Guy at US Bank says IFA is a hassle and sucks. FHA does too since he says that we'll have to pay an extra $100 a month for PMI. Says if we do 5% down, he'll give us a conventional loan at a 4.6% rate and it'll save us money ($75/month I think).

    Does that sound right? From what I had gathered, FHA required an MIP which you could roll into the mortgage and maybe a monthly 0.55% PMI charge (or something similar; had been 1.1% until a year or so ago). On the whole, it seemed the FHA was a no brainer. But I can't quite figure it out. Any help?

    Thanks!
    If you can do a conventional, it's going to be the route to go.

    I'd talk to more than just u.s. bank about it, though, and look at other options outside of the 30 year depending on your situation



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    Re: Mortgage Question - Iowa Finance Authority/FHA/etc.

    Quote Originally Posted by JY07 View Post
    If you can do a conventional, it's going to be the route to go.

    I'd talk to more than just u.s. bank about it, though, and look at other options outside of the 30 year depending on your situation
    I agree. In this market anything more than 4% with good credit and a good down payment shouldn't be considered.
    I just did a 30/3.8 @ Community Choice and they in turn sell it to US Bank.



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    Re: Mortgage Question - Iowa Finance Authority/FHA/etc.

    Won't you have to pay PMI no matter what route you go?


    I'd agree with you, but then we'd both be wrong.

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    Re: Mortgage Question - Iowa Finance Authority/FHA/etc.

    Quote Originally Posted by Acylum View Post
    Won't you have to pay PMI no matter what route you go?
    Under 20% yes.



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    Re: Mortgage Question - Iowa Finance Authority/FHA/etc.

    Quote Originally Posted by Acylum View Post
    Won't you have to pay PMI no matter what route you go?
    Yep. Not enough down.

    Edit: Too slow.



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    Re: Mortgage Question - Iowa Finance Authority/FHA/etc.

    Quote Originally Posted by JY07 View Post
    If you can do a conventional, it's going to be the route to go.

    I'd talk to more than just u.s. bank about it, though, and look at other options outside of the 30 year depending on your situation
    I agree, although when we did our a year ago, we ended up going with US Bank. Everything I looked into seemed to be pretty similar, and ended up going with US Bank because they bought down a percentage of the loan for the first year, which in the end saved us just under $1,000 over this past year.



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    Re: Mortgage Question - Iowa Finance Authority/FHA/etc.

    I have found that paying an extra 1-2% at closing to pay for all of the PMI up front is better than paying PMI monthly until you hit 80% LTV. Although with a home worth $120,000 you might be able to do a 15 year and be at 80% LTV in no time at all.



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    Re: Mortgage Question - Iowa Finance Authority/FHA/etc.

    If you have any connection with a smaller community bank, talk to them. They will likely have more flexibility as far as what your options are.

    Edit: BTW, 4.6% sounds ridiculously high right now.


    Last edited by GoCubsGo; 03-29-2012 at 03:29 PM.

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    Re: Mortgage Question - Iowa Finance Authority/FHA/etc.

    FHA put the kabosh on selling my other house (one day before closing) because a fuel tank across the street was 280' instead of 300'. Not that I'm bitter.



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    Re: Mortgage Question - Iowa Finance Authority/FHA/etc.

    I bought my first house a end of 2009, I got 100% financing doing an 85% and a second mortgage at 15%, no PMI.



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    Re: Mortgage Question - Iowa Finance Authority/FHA/etc.

    Quote Originally Posted by vortec22 View Post
    I bought my first house a end of 2009, I got 100% financing doing an 85% and a second mortgage at 15%, no PMI.
    What was your rate(s) though?



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    Re: Mortgage Question - Iowa Finance Authority/FHA/etc.

    My fiancee and I are in the process of buying our first home right now. We used Tyler Osby at Fairway Independent Mortgage in Urbandale, and it has really been pretty painless. Personally, I would rather not use one of the bigger banks in town. We spoke with them at first, but I felt much more comfortable with a smaller, local mortgage company. I would definitely recommend Tyler for first time home buyers if you are looking to buy in central Iowa. We also used Mark Charter at Remax for our real estate agent and he was very helpful. I would definitely recommend both of them. They are both honest and straight forward guys and both grew up in central Iowa.

    Mark - www.markcharter.com
    Tyler - www.wealthwithmortgage.com

    If anyone wants more information, feel free to PM me.



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    Re: Mortgage Question - Iowa Finance Authority/FHA/etc.

    I just got finished underwriting an FHA loan.......

    anyways, from my perspective (not sure if you care) I'd stick with conventional if you have the means to do so - FHA is not a bad alternative, good rates, nice FTHB perks...

    Definitely shop around, if you have called 2 places, call 6 more - it will definitely be worth your time. If a rate seems too good to be true, you guessed it...

    Most lenders do offer 3/8-5/8% first time homebuyer discounts - or a couple points on closing costs - be sure you find all of these out up front!

    happy shopping, but remember, stay within your means (PMI isn't the end of the world)




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    Re: Mortgage Question - Iowa Finance Authority/FHA/etc.

    Conventional is the way to go. If you do a second mortgage instead of paying a down payment, you are an idiot. The guy I bought from did that and he had to pay $16,000 to the bank after closing. If you can't put at least 5% down, you shouldn't be buying a house.



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