Posted on: 23rd Apr, 2008 06:33 pm
I think the answer is obvious but I just want to be sure. We will be first time home owners. I am finishing a residency so we do not have much saved, enough for closing costs but not down payment. The loan amount puts us in jumbo territory. I have two options of financing right now:
Bank of America Doctor Loan: 100% financing, no PMI, I think for the jumbo it's around 7.125% right now. We would get hit with a 1% (5k) origination fee.
Another Larger Bank: 80:20 loan. 80% at 6.125% fixed 30 year, 20% home equity line at prime - 1% for the life of it. We will pay off the home equity line within 2 years max. I'm surprised we were offered this due to the conditions post subprime crisis. This is the bank the practice does all of it's financing through so I think that's why we were offered this. No costs associated with the home equity line. 0.5% origination fee on the 80% loan...much better than the BOA hit ("saves" us about 3k). We are getting a good faith estimate tomorrow to see if there are any other add-ons.
Even as a first time buyer it seems pretty obvious...the 2nd is a much better option, correct?
Bank of America Doctor Loan: 100% financing, no PMI, I think for the jumbo it's around 7.125% right now. We would get hit with a 1% (5k) origination fee.
Another Larger Bank: 80:20 loan. 80% at 6.125% fixed 30 year, 20% home equity line at prime - 1% for the life of it. We will pay off the home equity line within 2 years max. I'm surprised we were offered this due to the conditions post subprime crisis. This is the bank the practice does all of it's financing through so I think that's why we were offered this. No costs associated with the home equity line. 0.5% origination fee on the 80% loan...much better than the BOA hit ("saves" us about 3k). We are getting a good faith estimate tomorrow to see if there are any other add-ons.
Even as a first time buyer it seems pretty obvious...the 2nd is a much better option, correct?
Hi Dslaw,
The 80/20 is a better option, in my opinion, especially if you can pay the 2nd off in 2 years! Excellent!
The 80/20 is a better option, in my opinion, especially if you can pay the 2nd off in 2 years! Excellent!
Oops, forgot to sign in ...
i would have to agree...the 80/20 loan seems like a much more favorable situation for you, particularly if, as you say, you'll be able to repay it within the first 2 years.
move on!
move on!
