My procrastinating sister tells me that she needs to make a mortgage decision this morning on her new 250,000 home. She can either get a fixed 30 year mortgage for 5.75% plus PMI or she can get a 6.37% mortgage that avoids PMI and somehow lowers her payment $200 per month. Does this make sense and if so, which option would be best? She probably won’t stay in the home more than 5-10 years.
there are better options for her considering she is only staying in the home 10 years max. there are programs that the lenders pay PMI her . tell your sister PMI is temporary once the home gains value that the loan amount is below 78% of the home value it goes away simply put after 2 years or so get an appraisal.
the rate seems slightly high only slightly high though. there are lender paid PMI programs available. tell her to shop a bit this morning and see what else is out there.
check the rates on the site below and a few others to compare the site below you can request a rate and they will tell you. good luck to your sister
there are better options for her considering she is only staying in the home 10 years max. there are programs that the lenders pay PMI her . tell your sister PMI is temporary once the home gains value that the loan amount is below 78% of the home value it goes away simply put after 2 years or so get an appraisal.
the rate seems slightly high only slightly high though. there are lender paid PMI programs available. tell her to shop a bit this morning and see what else is out there.
check the rates on the site below and a few others to compare the site below you can request a rate and they will tell you. good luck to your sister
References :
http://directlendingplanet.com/FirstTimeHomeBuyers.html
http://directlendingplanet.com/index.html
Let her get the 6.37% with no PMI. Make sure it’s an open end which means she can pay down the mortgage without being penalized. On the first 15 years of the mortgage, she’ll about 70% in interest. That’s how the banks make their money.
References :
Retired bill collector 35 years
Call her and tell her to sit down because this is what she needs to do.
Get the 30 year with PMI.
If she gets the 5.75 with PMI paid she will be signing away her life. Banks "hide" costs. AND, she may not be able to pay off the mortgage early or prepay any amounts unless she pays penalties.
With the standard loan, she can pay down the loan. When she reaches 20% equity, she can get a home appraisal for $400 and get her PMI insurance removed. TADA!
References :