Posted on: 28th Mar, 2009 02:06 pm
We currently have a home, with about 80K in equity, and want to trade up to a larger home taking advantage of the housing market. We qualified for the new home even if we do not sell the current one. The new home will be built and will take about 6 months. If we do not sell the old home ( we can rent it out), and we will be able to put in only about 5% down on the new home. Which means, we will get hit with the PMI which will be about $300 a month.
In an ideal situation, we will sell our current home, at which point, PMI is not an issue. However IF we don't, then I am thinking of taking a 80/20 out which will help me save on PMI. What are your thoughts on it? Is there any other alternative?
Thanks,
D
In an ideal situation, we will sell our current home, at which point, PMI is not an issue. However IF we don't, then I am thinking of taking a 80/20 out which will help me save on PMI. What are your thoughts on it? Is there any other alternative?
Thanks,
D
Hi des1rees,
If you cannot give at least 20% down, the lender would ask you to go for a PMI. However, if you want to avoid the PMI, you can check out FHA loans. The FHA loans are available at a minimum credit score of 620. Moreover, FHA requires a downpayment of 3.5%.
If you cannot give at least 20% down, the lender would ask you to go for a PMI. However, if you want to avoid the PMI, you can check out FHA loans. The FHA loans are available at a minimum credit score of 620. Moreover, FHA requires a downpayment of 3.5%.
Thanks for your reply.
How hard is it in today's climate to get a 80/20 or a 80/15/5 ?
How hard is it in today's climate to get a 80/20 or a 80/15/5 ?
Hi Guest,
I don't think it would be difficult for you to get a 80/20 loan. You need to speak to the lenders and check out the rates and terms that you can expect to get. You can also speak to the lenders of this community and seek a no obligation free mortgage consultation from them. This will help you in knowing the rates and terms you can receive.
I don't think it would be difficult for you to get a 80/20 loan. You need to speak to the lenders and check out the rates and terms that you can expect to get. You can also speak to the lenders of this community and seek a no obligation free mortgage consultation from them. This will help you in knowing the rates and terms you can receive.
i disagree with you adonis. this is not the kind of marketplace that is friendly towards 100% financing, which is precisely what an 80/20 is. furthermore, to obtain an 80/15, and put 5% down will be particularly difficult as well. you may find these available somewhere, but i suspect you'll pay dearly for the privilege.
In addition, I have a feeling that the ratios will not work.
eric1, can you elaborate?
Thanks,
D
Thanks,
D
D,
You have a current mortgage on your home right now. You do not have a lease to rent yet. The new mortgage will be 95-100LTV as you point out. That is a lot of debt in your back end ratio. All of those payments including all of your other monthly obligations which appear on your credit report (divided into your gross monthly household income) = your back end ratio. Your back end ratio should not be more than 38%-44% depending upon the bank and loan program.
You have a current mortgage on your home right now. You do not have a lease to rent yet. The new mortgage will be 95-100LTV as you point out. That is a lot of debt in your back end ratio. All of those payments including all of your other monthly obligations which appear on your credit report (divided into your gross monthly household income) = your back end ratio. Your back end ratio should not be more than 38%-44% depending upon the bank and loan program.
Thanks, Eric, for elaborating...