UPDATE February 21, 2014: Conventional financing currently has increased the minimum down payment to 5% from 3% unless you are considering the Home Advantage Mortgage Program. Mortgage programs and guidelines change constantly so please check with your local mortgage professional regarding what is currently available for you.
I’m pricing out a scenario for a first time home buyer who’s looking at buying a home priced at $250,000 and they have roughly 3% set aside for down payment plus closing cost. Since they have excellent credit, they are leaning towards conventional financing instead of FHA, which has much more expensive mortgage insurance (upfront and monthly).
The three scenarios quoted on this post are based on rates as of April 18, 2013 at 4:30 pm. Mortgage rates change constantly so if you would like me to provide you with a rate quote for your home located anywhere in Washington, click here.
Conventional mortgage “standard” (no special program) 30 year fixed with a loan amount of $242,500.
3.625% (apr 4.467%)… say, why is the apr so high? That’s because the pmi payments is factored into the apr. We also factor the appraisal cost, which most lenders do not. Net closing cost with rebate pricing is $2360 plus prepaids and reserves (taxes/insurance) leaves funds for closing estimated at $12,400.
Principal and interest payment is $1,105.92 plus mortgage insurance of $232.40 = $1338.32 (also referred to as the “PIMI” payment). Total payment with estimated taxes and insurance is $1643.74 (also referred to as PITI).
Home Advantage program with down payment assistance (second mortgage with zero interest and payments deferred for 30 years). This program does require home buyers to attend a WSHFC approved class. 30 year fixed with a loan amount of $240,500.
4.250% (apr 4.604%). Closing cost are estimated at $6218 (not including prepaids and reserves). With estimated taxes and insurance and credit for the second mortgage of $9,620 (4% of the loan amount) for down payment assistance, the total estimated funds for closing are $8,414.
The P&I is $1,191.00 plus monthly mortgage insurance at $24.23 = $1,215.23 (PIMI). Total payment (PITI). with estimated taxes and insurance is $1521.64
Fannie Mae HomePath program is only available to designated properties owned by Fannie Mae. No appraisal is required and there is no borrower paid mortgage insurance with credit scores over 660 and a loan amount of $242,500.
4.375% (apr 4.456%). Closing cost are estimated at $2323 after rebate pricing plus prepaids and reserves with funds due at closing estimated at $12,451.
The P&I is $1210.77 and there is no mortgage insurance. Total monthly mortgage payment (PITI) is estimated at $1516.19.
The programs listed above are not limited to first time home buyers. Which program is right for you depends on your personal financial situation and goals. It’s important to review your options and to make an educated decision. All loans above are using 30 year fixed rate mortgages with 360 payments.
If I can help you with your home purchase or refinance on your home located in Washington state, I’m happy to help you!