EDU Mortgage EDU

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saabguy

saabguy

Saab-free since 2013. Mortgage guru
OT Supporter
Aug 11, 2003
22,467
Loserville. Population: 1
hi @saabguy

I'm poor

do you always need full 20% down to avoid PMI? does credit score matter for that? I'm >800 but haven't had a mortgage before

thx <3
Hello poor.

You pay PMI but there are ways to pay it besides just monthly. You can pay a one time premium at closing. You can roll that premium into the loan. You can take a higher rate in lieu of a monthly premium. Or, pay monthly.

The good news is that with good credit, PMI is pretty affordable. Average down payment across the board is I think around 12% so 20% is not necessary or required.
 
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mysteryman

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Mar 20, 2006
2,476
Hello poor.

You pay PMI but there are ways to pay it besides just monthly. You can pay a one time premium at closing. You can roll that premium into the loan. You can take a higher rate in lieu of a monthly premium. Or, pay monthly.

The good news is that with good credit, PMI is pretty affordable. Average down payment across the board is I think around 12% so 20% is not necessary or required.

I dont know how its done but there are some programs where there is no PMI and its not rolled into the loan. For example, doctors can get loans with 0% down up to $1.5m, with zero pmi, and rate is even usually .5 lower than anywhere else. It might be based on the fact that doctors typically are low risk, pay their bills, and have roots / don't move due to patient/client lists. But for general public, yes there is usually PMI and yes there are usually different ways to pay it. Some PMI is cheap, if you work with the right bank and program. Some times you can deduct PMI/depreciate the house (if you have renters for example, or use for business space). Google MGIC rate card. I am NOT a lawyer or accountant etc.
 
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saabguy

saabguy

Saab-free since 2013. Mortgage guru
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Aug 11, 2003
22,467
Loserville. Population: 1
I dont know how its done but there are some programs where there is no PMI and its not rolled into the loan. For example, doctors can get loans with 0% down up to $1.5m, with zero pmi, and rate is even usually .5 lower than anywhere else. It might be based on the fact that doctors typically are low risk, pay their bills, and have roots / don't move due to patient/client lists. But for general public, yes there is usually PMI and yes there are usually different ways to pay it. Some PMI is cheap, if you work with the right bank and program. Some times you can deduct PMI/depreciate the house (if you have renters for example, or use for business space). Google MGIC rate card. I am NOT a lawyer or accountant etc.
Physician loans are offered because typically a doctor will finish residency, have a high paying job, but with potentially hundreds of thousands in student loans, and not much savings to speak of after earning not much while in residency. They don't have the necessary down-payment normally required to purchase a house that a physician starting out at $200k+ salary would be purchasing. These are not "conventional" loans. There are lenders who see it as a niche, and will offer a program to fill that void. It is not meant to be a long term solution. Usually they are 30-yr loans but only fixed rate for 5-7 years, which gives the buyer time to get in the house, build equity, and then refinance or sell later on if they choose to, once they have had the ability to accumulate savings during their career.

I'm doing a physician loan right now. There are 2 options...I can give him a rate with PMI, or a rate without PMI. The rate without is 0.25% higher. So the bank is essentially self-insuring. There are other loan programs that do this. Banks have community reinvestment act requirements where they have to show they are loaning out at least $XX to the low income and underserved in the community. So they may structure some loan program that is much more lenient, but only available to people making under 80% of area median income. These could also be advertised as "no PMI!" but that's just because they can't get PMI companies to insure the program. So the rate is higher than normal to accommodate for this. Someone doing 5% down on a conventional purchase might get a 4.75% rate with PMI. But if it goes through that community bank loan with "no PMI", their rate could be closer to 5.50%. So technically they might not have to pay "mortgage insurance", but it doesn't mean the loan is cheaper.
 
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saabguy

saabguy

Saab-free since 2013. Mortgage guru
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Aug 11, 2003
22,467
Loserville. Population: 1
Thoughts on buying points?
Case by case.

If you plan on being there for a long time, then it could make sense. Ask what the available rate is with 0 points, and then what the cost would be to buy it down by 0.125, 0.25, 0.375, and/or 0.50% so you get the full picture. Compare what the cost would be for the buy-down to the potential monthly interest savings. If you're looking at $6k in points, but it saves you $200/mo., well then after 30 months you've broke even, and are saving money every month thereafter. If you're looking at a scenario where that pay-back might not come for 6-7+ years...that's a little harder to justify. It's a long payback, and who knows if you'll even still be living there in 6-7 years.
 

monolith

Hey, Herbie! How's life? Taking forever.
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May 9, 2004
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Case by case.

If you plan on being there for a long time, then it could make sense. Ask what the available rate is with 0 points, and then what the cost would be to buy it down by 0.125, 0.25, 0.375, and/or 0.50% so you get the full picture. Compare what the cost would be for the buy-down to the potential monthly interest savings. If you're looking at $6k in points, but it saves you $200/mo., well then after 30 months you've broke even, and are saving money every month thereafter. If you're looking at a scenario where that pay-back might not come for 6-7+ years...that's a little harder to justify. It's a long payback, and who knows if you'll even still be living there in 6-7 years.
Awesome this is exactly what I did. Glad to know it was valid. Thank you
 
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saabguy

saabguy

Saab-free since 2013. Mortgage guru
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Aug 11, 2003
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Loserville. Population: 1
I just found something kind of cool that I didn't know existed...our pricing engine we use to price & lock rates is a platform that thousands of companies use. It aggregates all the available rates & programs that a particular lender provides and then you run your scenario through the engine, it spits out what the available rate/lock terms are, and we select the rate & lock it.

Going to places like bankrate or wherever to see what rates are doing is tricky because it's more of a marketing & lead generating tool. They post rates that usually aren't accurate, but there is usually some kind of "get info" option where you input your info, then they sell it to a dozen places who will solicit you, and may not even be able to offer you the deal you were inquiring about. For example, if you see a FB paid ad, an email, or a postcard mailer that advertises 2.25%...it's designed to get calls, but you will never get what they advertise because it's all BS.

I didn't know this until recently, but the pricing engine we use actually collects data for what rates are actually being locked from the tens (hundreds?) of thousands of users every day. The compile that info and give averages and can filter it depending on loan program, term, LTV, etc. So if anyone wants to see averages of what's really out there, just post here and I can show real data

1648653659442.png
 

fuct.

Pax sola in morte
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Nov 12, 2000
124,280
Howdy Arabia
I just found something kind of cool that I didn't know existed...our pricing engine we use to price & lock rates is a platform that thousands of companies use. It aggregates all the available rates & programs that a particular lender provides and then you run your scenario through the engine, it spits out what the available rate/lock terms are, and we select the rate & lock it.

Going to places like bankrate or wherever to see what rates are doing is tricky because it's more of a marketing & lead generating tool. They post rates that usually aren't accurate, but there is usually some kind of "get info" option where you input your info, then they sell it to a dozen places who will solicit you, and may not even be able to offer you the deal you were inquiring about. For example, if you see a FB paid ad, an email, or a postcard mailer that advertises 2.25%...it's designed to get calls, but you will never get what they advertise because it's all BS.

I didn't know this until recently, but the pricing engine we use actually collects data for what rates are actually being locked from the tens (hundreds?) of thousands of users every day. The compile that info and give averages and can filter it depending on loan program, term, LTV, etc. So if anyone wants to see averages of what's really out there, just post here and I can show real data

View attachment 208123
holy shit, those are current rates?
 
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saabguy

saabguy

Saab-free since 2013. Mortgage guru
OT Supporter
Aug 11, 2003
22,467
Loserville. Population: 1
holy shit, those are current rates?
2yr snapshot of actual locked rates for 30 & 15yr fixed.

This is just *average, so it includes people who locked with a 640 credit score and people with 820 scores. And this snapshot doesn't get into down-payments (although there is a button to look at below and above 80% LTV).

1648655503954.png
 

DasVWBabe

OT's Diamond and Gemstone Tutorial Creator
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Sep 25, 2002
61,958
Frisconia
2yr snapshot of actual locked rates for 30 & 15yr fixed.

This is just *average, so it includes people who locked with a 640 credit score and people with 820 scores. And this snapshot doesn't get into down-payments (although there is a button to look at below and above 80% LTV).

View attachment 208127

Nov 2020 refi crew here. Thank you so much for your persistence and professionalism. Feeling like we lucked out in ways we'll never fully appreciate. :eek:
 
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Integrate

Active Member
Feb 1, 2006
410
Florida
With the exception of new home sales and new mortgages, It seems like millions of people will never be refinancing again as rates rise. I wanted to refi my 4.25% thinking I had time to get my taxes done and then lock in a 3% + or -.

Sounds like that option is long past.
 
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saabguy

saabguy

Saab-free since 2013. Mortgage guru
OT Supporter
Aug 11, 2003
22,467
Loserville. Population: 1

lescivic

OT Supporter
Oct 13, 2003
2,178
Space Coast FL
With the exception of new home sales and new mortgages, It seems like millions of people will never be refinancing again as rates rise. I wanted to refi my 4.25% thinking I had time to get my taxes done and then lock in a 3% + or -.

Sounds like that option is long past.
Did a refi on a rental a few months ago. Rate was 3.87% had something come up and had to wait a few weeks and ended up with 4.25%.
 

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