Home Buyer Alert: Conventional 97 Mortgage Loans are ending Nov. 15th, 2013

Conventional 97 Mortgage Loans with 3% down payment are ending Nov. 15th, 2013

When it comes to your Durham mortgage, this means files must be run through Desktop Underwriter by this date.
Buyers with minimum down payment should get all the details before waiting longer to purchase a home.

FHA 3.5% down VS Conventional 97 with 3% down.                            

Durham Mortgage

FNMA Conventional 97 with 3% Down Payment Loans Soon to Be Extinct.

The FHA good

– The mortgage interest rate will be significantly lower. This can allow for more of your closing costs and escrows
to be paid with a lender credit.

The Bad –
– Monthly mortgage insurance is higher than conventional loans.
– Monthly Mortgage Insurance Premiums are for the LIFE OF THE LOAN.
They NEVER drop off.
– An additional .005% down payment.

Conventional 97 with 3% down  

The Good –
– Less down payment – 3% vs 3.5%.
– Lower monthly mortgage insurance premiums.
– Mortgage insurance will drop off when loan amortizes down.

The Bad
–  Higher mortgage rate than FHA.
–  More stringent qualification guidelines.
– This program ends Nov. 15th, 2013

Comparing FHA 3.5% down VS Conventional 97 with 3% down

On a $300,000.00 Sales Price using 3.75% FHA and 4.5%  conventional interest rate for payment comparisons only:

Monthly payment LOWER with FHA by $66.19 per month.
Down payment HIGHER with FHA by $1,500.00.
Conventionl Mortgage Insurance will stop in 9 years.
FHA mortgage insurance will never stop.

After year 9 when conventional mortgage insurance has dropped off, FHA borrowers will continue to pay $322.96 per month and $3,875.52 per year.

Trade off’s: FHA 3.5% down VS Conventional 97 with 3% down

FHA can allow you to get into your home sooner than with a conventional loan if you have certain circumstances.

With FHA, once you have “cleared” those circumstances you will want to refinance to a conventional loan to
take advantage of mortgage insurance dropping off.

If you qualify for a conventional now, you will be saved the time and cost of refinancing to a conventional loan at a later date at future mortgage interest rates.

 Which is best for you? Are there other loans with low down payment?
Contact Jim here.

Watch a Durham mortgage review by a long time client.

 

 

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