Ask me anything - Mortgages

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thejuice03
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Ask me anything - Mortgages

Post by thejuice03 »

Hi Everyone, recently new to bogleheads and loving it. I have noticed threads lately asking questions about mortgages and mortgage financing. I'm in charge of Fannie Mae (conventional loans) for a top 50 bank but have vast experience in FHA, VA, and Jumbo Financing.

I'm here to answer any questions you have , trying to add value to this forum.
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patriciamgr2
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Re: Ask me anything - Mortgages

Post by patriciamgr2 »

Thanks so much for offering your expertise. I'm sure many questions will be directed your way. Thanks!
Saving$
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Re: Ask me anything - Mortgages

Post by Saving$ »

Timely post - a friend trying to buy a condo just ran into a situation where the condos is not listed by Fannie Mae, and is being told the only option is to pay cash for the condo. This seems unreal to me. Friend has 20% to put down, but apparently if the condo building is not on this list, it's a no go.

I have heard of condo's being on an FHA list if they fall under a certain threshold of rentals, but even if a condo is not on the FHA list, and individual mortgage broker can do the work to qualify a particular unit for an FHA loan. Is there something similar for Fannie Mae? How do people ever buy condos that are not on the list? If qualifying a particular unit is possible, how difficult is it? Should the qualification legwork be done by the real estate agent or the mortgage broker?
Topic Author
thejuice03
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Re: Ask me anything - Mortgages

Post by thejuice03 »

Saving$ wrote:Timely post - a friend trying to buy a condo just ran into a situation where the condos is not listed by Fannie Mae, and is being told the only option is to pay cash for the condo. This seems unreal to me. Friend has 20% to put down, but apparently if the condo building is not on this list, it's a no go.

I have heard of condo's being on an FHA list if they fall under a certain threshold of rentals, but even if a condo is not on the FHA list, and individual mortgage broker can do the work to qualify a particular unit for an FHA loan. Is there something similar for Fannie Mae? How do people ever buy condos that are not on the list? If qualifying a particular unit is possible, how difficult is it? Should the qualification legwork be done by the real estate agent or the mortgage broker?
The thing with FNMA (Fannie Mae) is that they set the rules and most of the time the rules are subjective to the lender. For Condo's they are pretty clear but, each lender will input variables into FNMA software and if it comes back okay then the lender can add the condo project to the list. I'll assume your friends project has some characteristics that FNMA does not want to finance. That does not mean he/she has to pay cash. Your friend should start shopping around to lenders who will portfolio loans. I can't speak for everyone but major banks want to charge you fees and sell your loan to Fannie or Freddie. There are banks out there that want to portfolio condo loans with some good compensating factors (20% down isn't one). If I were your friend I'd try some credit unions, aslo if the realtor is good they will know who to contact about recent sales in the project and they could ask who the other buyers used for financing. If the condo project is so small that there are not recent sales then you would have to shop around to find a lender who will take the deal.

FHA has a defined list, I'll check with the FHA people tomorrow to see if there is any leniency but I doubt it. I'll respond to this post if so. Your friend does not want a FHA loan anyways.
Saving$
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Re: Ask me anything - Mortgages

Post by Saving$ »

Correct, my friend is not looking for an FHA loan.

Instead, they are looking at several condos in a certain area, and since none are not on the Fannie Mae list, my friend is being told they must pay cash. Does not seem right.

I looked up the Fannie Mae list and in my state, there is not a single condo project on the list. Yet people buy condos every day in my state and mortgage them, so surely there must be some way for either the realtor or the mortgage broker to qualify a condo that is not on the list. Is this unusual? Or is this standard OP? Or does it vary by state? Is it alot of work to qualify a condo?

I think my friend is getting poor service from the realtor or mortgage broker.
harikaried
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Re: Ask me anything - Mortgages

Post by harikaried »

thejuice03 wrote:I can't speak for everyone but major banks want to charge you fees and sell your loan to Fannie or Freddie.
Is this why one can get a significant rate buy up / negative points enough to put towards principal curtailment (even after fees/costs)? So banks get paid their fees in the process even though the borrower can switch away soon after from the rate buy up with a no-cost refinance?
Workinghard
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Re: Ask me anything - Mortgages

Post by Workinghard »

Will our buyers have problems getting a loan due to our roof aging out, even though it's been inspected and passed for insurance discounts?
OatmealAddict
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Re: Ask me anything - Mortgages

Post by OatmealAddict »

Thanks for the offer.

I currently have a 30 year FHA at 3.375% and am paying $275/month MIP. I'd love to get rid of the MIP without having to waiting another 3 years.

Would it be recommended to refi into a 15 year at about 3%? I'm waiting on elend to get back to me. I contacted them via Zillow yesterday after I noticed they were advertising a nearly free refi cost. I'm sure there's a catch though. Any tips for moving forward?
TexasMu
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Re: Ask me anything - Mortgages

Post by TexasMu »

What type of loans exist for putting down 5 % and getting a 15% + 80% loan ? <--- poor wording, just clueless on loans

I assume pay off the 15% loan and then PMI would go away ??

Excuse my ignorance , I'm trying to put 5% down and pay no PMI or as little PMI as possible. Options ?

TIA
bigred77
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Re: Ask me anything - Mortgages

Post by bigred77 »

TexasMu wrote:What type of loans exist for putting down 5 % and getting a 15% + 80% loan ? <--- poor wording, just clueless on loans

I assume pay off the 15% loan and then PMI would go away ??

Excuse my ignorance , I'm trying to put 5% down and pay no PMI or as little PMI as possible. Options ?

TIA
You can typically get a regular mortgage at 80% LTV, a second piggy back loan at 15% (for a higher interest rate and most that i saw we're amortized over 30 years but had a balloon payment after 15 years), and put 5% down with no PMI involved. Condos / Townhomes may be hard to get this kind of financing on though.

When I last looked into this you could get a 30 year fixed rate at 3.875%, 30 year (balloon payment in year 15) at 5.99% for the piggy back loan, and pay 1% origination (This was a little under 2 months ago when I looked with my brother).
TexasMu
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Re: Ask me anything - Mortgages

Post by TexasMu »

Much appreciated bigred. :beer
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DiscoBunny1979
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Re: Ask me anything - Mortgages

Post by DiscoBunny1979 »

bigred77 wrote:
TexasMu wrote:What type of loans exist for putting down 5 % and getting a 15% + 80% loan ? <--- poor wording, just clueless on loans

I assume pay off the 15% loan and then PMI would go away ??

Excuse my ignorance , I'm trying to put 5% down and pay no PMI or as little PMI as possible. Options ?

TIA
You can typically get a regular mortgage at 80% LTV, a second piggy back loan at 15% (for a higher interest rate and most that i saw we're amortized over 30 years but had a balloon payment after 15 years), and put 5% down with no PMI involved. Condos / Townhomes may be hard to get this kind of financing on though.

When I last looked into this you could get a 30 year fixed rate at 3.875%, 30 year (balloon payment in year 15) at 5.99% for the piggy back loan, and pay 1% origination (This was a little under 2 months ago when I looked with my brother).

Not to burst the bubble of the OP or the question, but even with 5% down, isn't this one of the problems we encountered with the real estate bubble that folks didn't have much if any skin in the game and getting a piggy back loan, while legal, was one of the ways folks got into trouble? To me, it doesn't matter if one can afford the piggy back loan. The reality is that if one doesn't have 20% down, then they probably don't have the money to afford the house. Houses require more than just money down. They require upkeep. They require replacing appliances when they go bad. They require replacing fencing or landscaping or pruning of bushes or taking a broom to something. I've must have spent thousands of dollars on tools over the years to be able to "lower my cost" by not hiring so I could fix things myself. My bottom line is to have 20%-30% down so that that payment is affordable on a 15 year mortgage. The amount of interest saved on a 15 year fixed rather than paying on a 30 year fixed is incredible.
bigred77
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Re: Ask me anything - Mortgages

Post by bigred77 »

DiscoBunny1979 wrote:
bigred77 wrote:
TexasMu wrote:What type of loans exist for putting down 5 % and getting a 15% + 80% loan ? <--- poor wording, just clueless on loans

I assume pay off the 15% loan and then PMI would go away ??

Excuse my ignorance , I'm trying to put 5% down and pay no PMI or as little PMI as possible. Options ?

TIA
You can typically get a regular mortgage at 80% LTV, a second piggy back loan at 15% (for a higher interest rate and most that i saw we're amortized over 30 years but had a balloon payment after 15 years), and put 5% down with no PMI involved. Condos / Townhomes may be hard to get this kind of financing on though.

When I last looked into this you could get a 30 year fixed rate at 3.875%, 30 year (balloon payment in year 15) at 5.99% for the piggy back loan, and pay 1% origination (This was a little under 2 months ago when I looked with my brother).

Not to burst the bubble of the OP or the question, but even with 5% down, isn't this one of the problems we encountered with the real estate bubble that folks didn't have much if any skin in the game and getting a piggy back loan, while legal, was one of the ways folks got into trouble? To me, it doesn't matter if one can afford the piggy back loan. The reality is that if one doesn't have 20% down, then they probably don't have the money to afford the house. Houses require more than just money down. They require upkeep. They require replacing appliances when they go bad. They require replacing fencing or landscaping or pruning of bushes or taking a broom to something. I've must have spent thousands of dollars on tools over the years to be able to "lower my cost" by not hiring so I could fix things myself. My bottom line is to have 20%-30% down so that that payment is affordable on a 15 year mortgage. The amount of interest saved on a 15 year fixed rather than paying on a 30 year fixed is incredible.
Mortgage programs like this probably did play a role in the real estate meltdown but I just wanted to let the poster know those programs ARE out there and available. Upkeep does require additional money and I would hope anyone considering the purchase of a property takes a realistic estimate of that when they make their purchase decision.

I was admittedly very unbogleheadish in my real estate decisions and would (and have) advised friends and family to "do as I say, not as I do". I put <5% down on an FHA loan on my first property in 2009 and then 10% (80 -10-10 piggy back loan program) on my current house in 2013. I've actually made more gains from real estate appreciation on these 2 properties over the past 6 years than I have in this bull market. I never expected it but I certainly welcome it. I was able to refinance my most recent property at 3.0% with PenFed for the next 15 years (amortized over 30 years) with their 15/15 ARM loan.

Most first time home buyers are not going to put down 20% and take out a 15 year fixed rate mortgage while still having even more of an Emergency fund left over. I mean it would be nice if everyone could/did do that, but it's going to be a very small minority.
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Steelersfan
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Re: Ask me anything - Mortgages

Post by Steelersfan »

Saving$ wrote:Correct, my friend is not looking for an FHA loan.

Instead, they are looking at several condos in a certain area, and since none are not on the Fannie Mae list, my friend is being told they must pay cash. Does not seem right.

I looked up the Fannie Mae list and in my state, there is not a single condo project on the list. Yet people buy condos every day in my state and mortgage them, so surely there must be some way for either the realtor or the mortgage broker to qualify a condo that is not on the list. Is this unusual? Or is this standard OP? Or does it vary by state? Is it alot of work to qualify a condo?

I think my friend is getting poor service from the realtor or mortgage broker.
I'm on a condo board in my community. I suspect availability of non-FHA mortgages depends a lot on the area, not so much by state. In my area maybe 25% of all the condos are FHA approved, so someone is making lots of mortgage loans to condos. Surely the realtor knows or can find out. They should check not just for the one your friend is looking at but any of the condos. The trail will lead somewhere, and probably several somewhere's.

We didn't bother getting FHA approval since buyers in our area have no difficulty getting mortgage loans. Plus we would have to do a "reserve study" every few years that costs $5,000. We were also flirting with the 50% limit of units owner occupied.

Here's a brief summary of the requirements for FHA approval since there are more:

http://fhareview.com/the-guidlines-fhaa ... guidlines/
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LadyGeek
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Re: Ask me anything - Mortgages

Post by LadyGeek »

This thread is now in the Personal Finance (Not Investing) forum (Mortgages).

thejuice03 - Thanks!

Do you see anything that needs updating in the wiki?

- Fannie Mae
- Freddie Mac

Post suggestions here or in the Suggestions for the Wiki thread. *

If it's appropriate, try to supply answers with links to "official" sources of information, e.g. Freddie Mac. It's a good learning opportunity and may provide insight not mentioned here.

* Members are also welcome to become an editor and fix the wiki yourself. If so, PM me with the request.
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Carefreeap
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Re: Ask me anything - Mortgages

Post by Carefreeap »

DiscoBunny1979 wrote:
bigred77 wrote:
TexasMu wrote:What type of loans exist for putting down 5 % and getting a 15% + 80% loan ? <--- poor wording, just clueless on loans

I assume pay off the 15% loan and then PMI would go away ??

Excuse my ignorance , I'm trying to put 5% down and pay no PMI or as little PMI as possible. Options ?

TIA
You can typically get a regular mortgage at 80% LTV, a second piggy back loan at 15% (for a higher interest rate and most that i saw we're amortized over 30 years but had a balloon payment after 15 years), and put 5% down with no PMI involved. Condos / Townhomes may be hard to get this kind of financing on though.

When I last looked into this you could get a 30 year fixed rate at 3.875%, 30 year (balloon payment in year 15) at 5.99% for the piggy back loan, and pay 1% origination (This was a little under 2 months ago when I looked with my brother).

Not to burst the bubble of the OP or the question, but even with 5% down, isn't this one of the problems we encountered with the real estate bubble that folks didn't have much if any skin in the game and getting a piggy back loan, while legal, was one of the ways folks got into trouble? To me, it doesn't matter if one can afford the piggy back loan. The reality is that if one doesn't have 20% down, then they probably don't have the money to afford the house. Houses require more than just money down. They require upkeep. They require replacing appliances when they go bad. They require replacing fencing or landscaping or pruning of bushes or taking a broom to something. I've must have spent thousands of dollars on tools over the years to be able to "lower my cost" by not hiring so I could fix things myself. My bottom line is to have 20%-30% down so that that payment is affordable on a 15 year mortgage. The amount of interest saved on a 15 year fixed rather than paying on a 30 year fixed is incredible.
[OT comments removed by admin LadyGeek]
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LadyGeek
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Re: Ask me anything - Mortgages

Post by LadyGeek »

I removed some off-topic comments related to mortgage meltdowns and the loan qualification process. As a reminder, general comments are off topic in the forums with "Personal" in the title.

See: A reminder that non-investing general comment threads are OT

- It must be personal. In other words, you must be asking about your own situation. You can also ask on behalf of someone specific, such as a family member.

- It must be actionable. You must be able to do something specific with the replies that will make a difference in your situation.
If you have a specific question, please ask directly and provide sufficient information for members to supply appropriate advice.

Alternatively, consider starting a new thread then posting a link to it here.
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absolutFinance
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Re: Ask me anything - Mortgages

Post by absolutFinance »

any suggestions for how to represent a cash offer but score the mortgage before closing? 45 day closing?

in hot markets, it seems like there is at least one cash offer for houses in demand. we are able to do that but i want to take advantage of the interest rate environment and finance at 3% or so.
itstoomuch
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Re: Ask me anything - Mortgages

Post by itstoomuch »

Do you/Government audit the applications?
What % is rejected or returned or declined?
What is the fee for service or does FNM make $ on the backend ?
Do you retain servicing? Do you sell servicing rights and at what fee?
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo
Carefreeap
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Re: Ask me anything - Mortgages

Post by Carefreeap »

Carefreeap wrote:
DiscoBunny1979 wrote:
bigred77 wrote:
TexasMu wrote:What type of loans exist for putting down 5 % and getting a 15% + 80% loan ? <--- poor wording, just clueless on loans

I assume pay off the 15% loan and then PMI would go away ??

Excuse my ignorance , I'm trying to put 5% down and pay no PMI or as little PMI as possible. Options ?

TIA
You can typically get a regular mortgage at 80% LTV, a second piggy back loan at 15% (for a higher interest rate and most that i saw we're amortized over 30 years but had a balloon payment after 15 years), and put 5% down with no PMI involved. Condos / Townhomes may be hard to get this kind of financing on though.

When I last looked into this you could get a 30 year fixed rate at 3.875%, 30 year (balloon payment in year 15) at 5.99% for the piggy back loan, and pay 1% origination (This was a little under 2 months ago when I looked with my brother).

Not to burst the bubble of the OP or the question, but even with 5% down, isn't this one of the problems we encountered with the real estate bubble that folks didn't have much if any skin in the game and getting a piggy back loan, while legal, was one of the ways folks got into trouble? To me, it doesn't matter if one can afford the piggy back loan. The reality is that if one doesn't have 20% down, then they probably don't have the money to afford the house. Houses require more than just money down. They require upkeep. They require replacing appliances when they go bad. They require replacing fencing or landscaping or pruning of bushes or taking a broom to something. I've must have spent thousands of dollars on tools over the years to be able to "lower my cost" by not hiring so I could fix things myself. My bottom line is to have 20%-30% down so that that payment is affordable on a 15 year mortgage. The amount of interest saved on a 15 year fixed rather than paying on a 30 year fixed is incredible.
[OT comments removed by admin LadyGeek]
Let me try this again. I am responding to the paragraph above.

FHA is a wonderful program that was created in the 1940s as part of getting the nation out of the Depression. Prior to FHA financing was basically seller carry backs or private loans for terms of less than 10 years typically with large balloon payments. When no one would loan there were massive foreclosures.

The mortgage melt down wasn't the result of a 60 year old program suddenly failing. It was a perfect storm of lenders having no skin in the game, borrowers not needing to qualify via NINJA loans so they had no skin in the game and the loosening government regulations so that more people could qualify. I like to say that since I started in the business in 1981 there have always been low down loans, low doc loans, adjustable loans and interest only loan. But never before had some genius put all of these elements in a single loan product. :oops: :oops: :oops:

FHA was not a popular product during the bubble because the underwriters required that borrowers qualified and provide documentation for what they put on their application. Much easier to go for the NINJA loan products. I have to say that personally I was shocked that so many people took that route thinking it would end well. Two of my own family members took out those kinds of loans and my father was a loan officer selling them. :shock:

Personally my husband and I have had two FHA loans. One in 1988 for our first home purchase; a 3/2 condo in the Washington DC area. The second was a Graduated Payment Program in 1990 back when interest rates were 12%. I think we refinanced that loan twice before selling the house six years later.

I'm grateful we had FHA to give us our start and I'm passionate that we keep a good program in place.
Every day I can hike is a good day.
robert88
Posts: 366
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Re: Ask me anything - Mortgages

Post by robert88 »

Some basic questions:
1. What credit score is needed to get the best rate on a non-jumbo loan?
2. Which version of the credit score do banks actually look at?
3. What size down-payment qualifies you for the best interest rates on a loan(not a jumbo)?
Topic Author
thejuice03
Posts: 17
Joined: Thu Jun 04, 2015 12:57 am

Re: Ask me anything - Mortgages

Post by thejuice03 »

Saving$ wrote:Correct, my friend is not looking for an FHA loan.

Instead, they are looking at several condos in a certain area, and since none are not on the Fannie Mae list, my friend is being told they must pay cash. Does not seem right.

I looked up the Fannie Mae list and in my state, there is not a single condo project on the list. Yet people buy condos every day in my state and mortgage them, so surely there must be some way for either the realtor or the mortgage broker to qualify a condo that is not on the list. Is this unusual? Or is this standard OP? Or does it vary by state? Is it alot of work to qualify a condo?

I think my friend is getting poor service from the realtor or mortgage broker.
Saving$ - I'm not aware of where the public can look up approved projects. I'm sure it's out there, I'll try looking something up and seeing if I can get back to you on that. The list I can see is called Condo Project Manager and I'm certain that I have to be registered as a lender to view it, It's through FNMA. Every lender runs the project through there. Like I said on the last post -- your friend should talk to the realtor to see if they can reach out to realtors of recent sales in the condo project to see where they got their financing and your friend can go there, that is usually how these things work. If not go to a credit union and see if they will put the loan on their books.

If you want to read up on why potentially the condo is not eligible you can check out the selling guide for fannie mae available to the public:
https://www.fanniemae.com/content/guide/sel052615.pdf page 683.
Topic Author
thejuice03
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Re: Ask me anything - Mortgages

Post by thejuice03 »

Workinghard wrote:Will our buyers have problems getting a loan due to our roof aging out, even though it's been inspected and passed for insurance discounts?
no it should not matter unless the appraiser notices something. Most appraisers won't go into issues wrong with the property because they are not qualified to evaluate those things. They may point out missing shingles, water damages, excessive wear of the roof etc.. and then the lender will require a roof inspection. If you have already had that and no repairs were recommended then you should be okay.
Topic Author
thejuice03
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Re: Ask me anything - Mortgages

Post by thejuice03 »

JimmyD wrote:Thanks for the offer.

I currently have a 30 year FHA at 3.375% and am paying $275/month MIP. I'd love to get rid of the MIP without having to waiting another 3 years.

Would it be recommended to refi into a 15 year at about 3%? I'm waiting on elend to get back to me. I contacted them via Zillow yesterday after I noticed they were advertising a nearly free refi cost. I'm sure there's a catch though. Any tips for moving forward?
JimmyD - hard to answer this one. I'm assuming you think you have enough equity to get rid of PMI through pay down or home appreciation. If that's the case I think you should look into getting rid of it, especially at 275/mo you could get return on your closing costs pretty quickly relative to the term of your loan. With FHA it's 5 years and 22% equity (going from memory i'd have to check with the FHA people) It's probably worth it to refi to a conventional if you have the equity.

You talked about going from a 30 year to a 15, I know you will save a lot in interest with that decision - it's an opportunity cost between the increase in your mortgage payment vs what you could return being a bogle head. I personally feel a 15 year is great because it reduces risk. I always use this calculator to play the numbers.

http://www.bankrate.com/calculators/mor ... lator.aspx
Topic Author
thejuice03
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Re: Ask me anything - Mortgages

Post by thejuice03 »

bigred77 wrote:
TexasMu wrote:What type of loans exist for putting down 5 % and getting a 15% + 80% loan ? <--- poor wording, just clueless on loans

I assume pay off the 15% loan and then PMI would go away ??

Excuse my ignorance , I'm trying to put 5% down and pay no PMI or as little PMI as possible. Options ?

TIA
You can typically get a regular mortgage at 80% LTV, a second piggy back loan at 15% (for a higher interest rate and most that i saw we're amortized over 30 years but had a balloon payment after 15 years), and put 5% down with no PMI involved. Condos / Townhomes may be hard to get this kind of financing on though.

When I last looked into this you could get a 30 year fixed rate at 3.875%, 30 year (balloon payment in year 15) at 5.99% for the piggy back loan, and pay 1% origination (This was a little under 2 months ago when I looked with my brother).
Yep exactly, you can get around PMI doing a 80% conventional loan/15% piggy back/ 5% down. I have done the math a few times and I don't think it works. It all depends how fast you pay down your 15% piggy back vs the cost of the PMI because the piggy back is usually interest only. I could be wrong on the math, but I looked into this option myself and didn't think it was worth it.
Topic Author
thejuice03
Posts: 17
Joined: Thu Jun 04, 2015 12:57 am

Re: Ask me anything - Mortgages

Post by thejuice03 »

DiscoBunny1979 wrote:
bigred77 wrote:
TexasMu wrote:What type of loans exist for putting down 5 % and getting a 15% + 80% loan ? <--- poor wording, just clueless on loans

I assume pay off the 15% loan and then PMI would go away ??

Excuse my ignorance , I'm trying to put 5% down and pay no PMI or as little PMI as possible. Options ?

TIA
You can typically get a regular mortgage at 80% LTV, a second piggy back loan at 15% (for a higher interest rate and most that i saw we're amortized over 30 years but had a balloon payment after 15 years), and put 5% down with no PMI involved. Condos / Townhomes may be hard to get this kind of financing on though.

When I last looked into this you could get a 30 year fixed rate at 3.875%, 30 year (balloon payment in year 15) at 5.99% for the piggy back loan, and pay 1% origination (This was a little under 2 months ago when I looked with my brother).

Not to burst the bubble of the OP or the question, but even with 5% down, isn't this one of the problems we encountered with the real estate bubble that folks didn't have much if any skin in the game and getting a piggy back loan, while legal, was one of the ways folks got into trouble? To me, it doesn't matter if one can afford the piggy back loan. The reality is that if one doesn't have 20% down, then they probably don't have the money to afford the house. Houses require more than just money down. They require upkeep. They require replacing appliances when they go bad. They require replacing fencing or landscaping or pruning of bushes or taking a broom to something. I've must have spent thousands of dollars on tools over the years to be able to "lower my cost" by not hiring so I could fix things myself. My bottom line is to have 20%-30% down so that that payment is affordable on a 15 year mortgage. The amount of interest saved on a 15 year fixed rather than paying on a 30 year fixed is incredible.

I agree with the skin in the game comment. Think of a FHA loan... borrower puts 3.5% down on a $150,000 house, things go south for them, they go into foreclosure. By the time they get kicked out of the house and strip appliances etc they make a profit off the transaction.
Topic Author
thejuice03
Posts: 17
Joined: Thu Jun 04, 2015 12:57 am

Re: Ask me anything - Mortgages

Post by thejuice03 »

robert88 wrote:Some basic questions:
1. What credit score is needed to get the best rate on a non-jumbo loan?
2. Which version of the credit score do banks actually look at?
3. What size down-payment qualifies you for the best interest rates on a loan(not a jumbo)?

answers in order:

1. 720+ is premium pricing at most places
2. It's all FICO score, we take the middle fico out of the three.
3. I don't deal with pricing much on loans, but for primary homes I don't believe the down payment matters for interest rates.
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Steelersfan
Posts: 4125
Joined: Thu Jun 19, 2008 8:47 pm

Re: Ask me anything - Mortgages

Post by Steelersfan »

This is where I look to see if a condo has been approved (or not) for FHA mortgages.

https://entp.hud.gov/idapp/html/condlook.cfm

When I just did a query it failed and noted it's only available during the work week. :oops:
OatmealAddict
Posts: 1193
Joined: Fri Sep 27, 2013 4:03 pm

Re: Ask me anything - Mortgages

Post by OatmealAddict »

thejuice03 wrote:
JimmyD wrote:Thanks for the offer.

I currently have a 30 year FHA at 3.375% and am paying $275/month MIP. I'd love to get rid of the MIP without having to waiting another 3 years.

Would it be recommended to refi into a 15 year at about 3%? I'm waiting on elend to get back to me. I contacted them via Zillow yesterday after I noticed they were advertising a nearly free refi cost. I'm sure there's a catch though. Any tips for moving forward?
JimmyD - hard to answer this one. I'm assuming you think you have enough equity to get rid of PMI through pay down or home appreciation. If that's the case I think you should look into getting rid of it, especially at 275/mo you could get return on your closing costs pretty quickly relative to the term of your loan. With FHA it's 5 years and 22% equity (going from memory i'd have to check with the FHA people) It's probably worth it to refi to a conventional if you have the equity.

You talked about going from a 30 year to a 15, I know you will save a lot in interest with that decision - it's an opportunity cost between the increase in your mortgage payment vs what you could return being a bogle head. I personally feel a 15 year is great because it reduces risk. I always use this calculator to play the numbers.

http://www.bankrate.com/calculators/mor ... lator.aspx
Appreciate it, thejuice! I think that's the route we're going as it should appraise high enough to get us over that 20% equity threshold.
Workinghard
Posts: 379
Joined: Fri Apr 04, 2014 4:56 am

Re: Ask me anything - Mortgages

Post by Workinghard »

thejuice03 wrote:
Workinghard wrote:Will our buyers have problems getting a loan due to our roof aging out, even though it's been inspected and passed for insurance discounts?
no it should not matter unless the appraiser notices something. Most appraisers won't go into issues wrong with the property because they are not qualified to evaluate those things. They may point out missing shingles, water damages, excessive wear of the roof etc.. and then the lender will require a roof inspection. If you have already had that and no repairs were recommended then you should be okay.
Thanks for replying and volunteering to answer our questions!
SteadyWins
Posts: 46
Joined: Sun Feb 22, 2015 9:24 am

Re: Ask me anything - Mortgages

Post by SteadyWins »

thejuice03 wrote:Hi Everyone, recently new to bogleheads and loving it. I have noticed threads lately asking questions about mortgages and mortgage financing. I'm in charge of Fannie Mae (conventional loans) for a top 50 bank but have vast experience in FHA, VA, and Jumbo Financing.

I'm here to answer any questions you have , trying to add value to this forum.
Thanks for reaching out!

I am seeking a Fannie Mae property and have submitted an offer. The offer was countered by fannie mae and then accepted by me. Before being ratified, Fannie rejected it apparently for 1) using full initials on initial signatures rather than simple 2 letter initials and 2) having a prequal letter without specific closing assistance and property address listed. I then obtained a preapproval but this large bank has a standard preapproval form which does not list the address and closing assistance. why would fannie mae not accept this? Is this typical practice by Fannie or am I being jerked around?
nanoanalyzer
Posts: 454
Joined: Sun Sep 28, 2014 4:14 pm

Re: Ask me anything - Mortgages

Post by nanoanalyzer »

Thanks for "adding value" as you say. Not all of us can do that in one thread, I have to try to help in a variety of threads where I find a problem relevant to my experience.
bigred77 wrote: Most first time home buyers are not going to put down 20% and take out a 15 year fixed rate mortgage while still having even more of an Emergency fund left over. I mean it would be nice if everyone could/did do that, but it's going to be a very small minority.
Actually, I'm headed straight down that path. As a middle-class, white male, it's strange to be a part of a "minority"... 20% 15yr just seems like the right way to do things. And simplest.

Questions for thejuice03:
1. Is 20% 15yr fixed likely the "best" option for first timers buying a primary home with intent to stay 10+ years? Clearly, interest-only or PMI loans are going to cost more in the long run, but are there other advantages of a more complex loan to consider?
2. Should such a buyer even bother looking into a 5/5 or 15/15?
3. Or points? In what types of scenarios are points purchases valuable to a buyer?

If these questions are "too simple", please feel free to link me to further reading. I have yet to find a good article or two that covers these three questions well enough to my liking.
"If you think stocks are like physics, you believe there must be smart people who can measure exactly where the Dow Jones Industrial Average will be in five months." -Morgan Housel
Gronnie
Posts: 339
Joined: Sun Oct 19, 2014 2:08 pm

Re: Ask me anything - Mortgages

Post by Gronnie »

thejuice03 wrote:
robert88 wrote:Some basic questions:
2. Which version of the credit score do banks actually look at?

answers in order:

2. It's all FICO score, we take the middle fico out of the three.
There are lots of versions of FICO. Which version do you use (http://www.myfico.com/crediteducation/f ... sions.aspx)? FICO scores can vary widely (ie 100+ points sometimes) based on the scoring model.
bsteiner
Posts: 9151
Joined: Sat Oct 20, 2012 9:39 pm
Location: NYC/NJ/FL

Re: Ask me anything - Mortgages

Post by bsteiner »

nanoanalyzer wrote:...
1. Is 20% 15yr fixed likely the "best" option for first timers buying a primary home with intent to stay 10+ years? Clearly, interest-only or PMI loans are going to cost more in the long run, but are there other advantages of a more complex loan to consider?
2. Should such a buyer even bother looking into a 5/5 or 15/15?
3. Or points? In what types of scenarios are points purchases valuable to a buyer? ...
The 15, the 30, and the 15/15 each have their advantages.

As of now, the 15 year is around 3% or a little over 3% at various lenders, the 30 year is in the high 3s at various lenders, and the 15/15 from Pentagon Federal (the only lender I know of that offers it) is around 3.2% to 3.3% APR but has at least a 1% upfront cost.

The 15 has the lowest interest rate. The other two have lower payments, which give you more available cash if you need it for something later on. They also give you a tax arbitrage since the interest you pay is deductible against your ordinary income, whereas your investment income may be more favorably taxed (qualified dividends, long-term capital gains, capital gains deferred until recognized, tax-exempt income). The 30 gives you a fixed rate for 30 years. The 15/15 gives you a lower interest rate than the 30 but it's only fixed for 15.
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