Marketplace Home Mortgage: Brian Quigley

It is no question that FHA is getting worse and worse to deal with. On April 1st, what used to be a 5 year requirement for already expensive mortgage insurance, will be changing to a 30 year requirement. Forget the 78% LTV requirement, or having 20% equity in your home. It simply does not matter. What does matter is that YOU, the home buyer are educated about your options, as you prepare to navigate the increasingly complex mortgage maze. The following example is of a real client who would like to put an offer on a home him and his wife found this week.

fha-mortgage-insurance-premiums-proposed

Purchase Price is $335,000

Down Payment FHA 3.5% minimum – $11,725

Rate – 3.75% Principal and Interest – $1523.34

Monthly Mortgage Insurance Premium – $336.74——————-Starting April 1st, 2013, will be on there for 30 years. Only way to eliminate is another refinance to conventional loan at 80% LTV or better

Payment – $1860.08

Mortgage-Insurance-Increase-2013-266x300

Regardless of this borrowers down payment and wanting to get into this property, clearly the Mortgage Insurance Premium with FHA is a major Red Flag. This is money you are throwing out the window. Now granted, if you are a low FICO score borrower, have a spotty credit history, and are in a period of getting your life back on track, this might be the only option you have for a couple of years. Conventionally, however if you have great credit, and no prior bankruptcies in the last couple of years, or foreclosures in the last couple of years, you should really look at the alternative. The following is an alternative option to an FHA mortgage with even less of a down payment.

Purchase Price is $335,000

Down Payment Conventional 3% minimum- $10,050

Rate – 4.75% Principal and Interest – $1724.75

Payment – $1724.25

FHA used to be an amazing way to get home-buyers into properties at low rates, and low down payments, and it still is, however it is by no way, the end all, be all. Mortgage Insurance rates on FHA loans have gone up at least 7 times in the last 5 years, and will be going up AGAIN on April 1st. This example is to just show you that there ARE options out there other then FHA loans.

So here are the benefits of this conventional alternative.

1. Save $135.83 a month

2. Avoid MI payment which is not tax deductible

3. Keep $1675 in your bank, avoid the additional .5% down payment, going with FHA

The only caveat here to pay attention to here, is that these loans want high credit score borrowers for these programs. Less down payment, no mortgage insurance, but of course more risk. You will need to be a credit worthy borrower to participate for this loan, however it is not something that you cannot achieve. Time cures all with everything, and I would rather spend a month helping a home buyer fix their credit, then throw them into an FHA loan, when they could have gotten something better.
Cheers.
Brian

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He was very professional and knowledgeable

we have closed several loans with Brian. He was very professional and knowledgeable on each. One of our loans had a few problems arise and he was very creative in finding solutions so that w…Read More

Closed purchase loan. Littleton, CO

Thanks for all of your hard work and patience

Brian, Thanks for all of your hard work and patience with me throughout the entire home buying process. You exhibited extreme understanding with my specific situation and helped me improve m…Read More

Jen, Security-Widefield, CO

Thanks a million, Brian!

A true pleasure to work with. Very friendly, polite and knowledgeable. I will do business with him in the future and will gladly refer people his way; Thank a million, Brian!…Read More

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