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I am considering purchasing a $200k house and have saved a total $28k in cash. I am a first time buyer, have an excellent credit score and being offered a mortgage rate of 5.25%. I have been told of a "single premium mortgage" loan in which I would pay a fee upfront to avoid monthly PMI, even if my downpayment is less than 20%. I am willing to put 5% down. What would be a typical premium fee that I can expect to pay during closing for this type of loan ? And would it better to pay this "fee" using cash or add it to the mortgage amount and get some sort of tax deduction?

I am under the impression that taking a 2nd mortgage (80-20 or 80-15-5) would be more expensive than the single premium mortgage loan.

I am also considering buying a used car ($12-15k). Should I pay for it using some of the cash I have saved (and reduce down payment on the house) or get it financed? Is there somehow a way to get the vehicle financed using the money from the mortgage since it is probably cheaper than the interest rate I will get on a used car?

jameshogg · Posted: Sun Dec 07, 2008 11:50 pm Post subject:

Hi PeteUtah,

I appreciate that you have a good credit score. Congratulations for that!

As far as I know, if someone pay's less than 20% down, he/she will have to go for a PMI. I don’t think the loan amount will matter in this case. If you are paying 20% down, then the lenders won't ask for a PMI. In order to avoid a PMI, its better to give the lender a 20% down-payment.

As far as the car is concerned, if you lower the down-payment for the home, your PMI may increase. And if you are taking a car loan, then your credit will be affected. The car would be used to calculate your debt to income ratio when applying for the loan, so in my opinion, you should think twice about it before buying.

According to the new rule, the PMI of the homeowners can now be treated as mortgage interest by itemizers when filing Schedule A of the federal tax return. This has come as a good news for a large number of tax payers.

Thanks

chrisburns · Posted: Mon Dec 15, 2008 3:51 pm Post subject:

FHA has an upfront mortgage insurance premium fee which helps to reduce the monthly mortgage insurance payment. Is this possibly what they are referreing to?

evolovik26 · Posted: Wed Dec 17, 2008 10:01 pm Post subject:

You are being offered a single payment upfront PMI??
Who even does that anymore? Who is your lender?
But even if it is true why would you pay lump sum upfront? What if you end up having to sell it a year down the line?
Make sure you know what your break even point is and make sure you stay in the house that long

Guest

ltv 77%, going 30 year fix fha loan at 5%. was told have to pay the upfront pmi fee required by fha, but will be no monthly pmi charges due to ltv below 80%. Is this true? Going fha vs. conventional due to high debt to income ratio.

sunnyca2009 · Joined: 04 Aug 2009 Posts: 1731 35.55 Dollars($)

If you are financing only 77% of the valaue of the property, you do tno need to pay any PMI. Not also the ufront PMI

Only PMI comes in to effect when you borrow more than 80% of the vavlue of the house

Guest

Interesting. Mortgage broker advised me under the new FHA guidelines,
all FHA loans are charged the upfront fee at the very least.
---
any mortgage people out there know the truth?

sunnyca2009 · Joined: 04 Aug 2009 Posts: 1731 35.55 Dollars($)

Not heard of any guidlens requiring you to pay a upfront MIP for a loan with in a FHA loan

Some of the changes were a requirement for 3.5% downpayment instead of 3% down

Guest

yes phil, thats is true, 1.5% of purchase price or refi amount. As others have said, its a ploy to reduce your monthly PMI by forcing you to pay it up front. Either way, your gonna pay it if you dont put down 20%. FHA just gets you on the front end with a lump sum, where as, Conventional makes you pay it over time.

Guest

you still have to pay PMI monthly with a FHA loan, its just not as much because you paid the premium at closing.

Guest

Atleast your broker told you about the upfront premium. My broker, who is a family friend, didn't tell me anything about it. He just said I had to pay the monthly PMI payment, however he rolled in an additional $9,010 upfront premium into my loan. What a crook!

Posted: Wed Apr 06, 2011 5:18 pm Post subject:

FHA requires a 1% upfront mi premium and a 0.9% monthly mip (raising to around 1.25 in april of 2011) no matter the LTV. The monthly mip will be charged for 5 years.

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Should I pay Single Mortgage Premium to avoid PMI?