PMI sucks. But how long do you plan to stay in the house? The PMI on this can't be much. It may not be worth borrowing $7k from someone else if you don't plan to stay long.Sonofanump;1343577 wrote:Any way to borrow the $7 from another source? That PMI is worthless.
From a credit rebuilding perspective, that is a good point.fan_from_texas;1343637 wrote:You may pay a few more bucks a month, but it will help rehabilitate her credit faster to have her making payments on a mortgage.
WebFire;1343642 wrote:From a credit rebuilding perspective, that is a good point.
Sonofanump;1343369 wrote:Do you have $7000 down payment to avoid the PMI? For a $35,000 house can you swing a 15 year loan to get a lower rate?
LJ;1343686 wrote:Spread isn't big enough right now to lock yourself into a higher payment. It's better to try to make it so you end up paying double every year/month when you can.
Might be the smartest thread I've seen yetO-Trap;1344167 wrote:Honestly, you guys have been a big help. We'll be talking to banks this coming week.
Much appreciated!
A recast on a loan that small is gonna just waste money. If you wait to recast every 5 years or so, your net return will be much greater.fan_from_texas;1343694 wrote:This.
Or, for liquidity purposes, rather than paying extra each month, put that extra in the bank, then make a lump payment at year end and ask them to recast the mortgage. Costs $50 or $100 at most banks, but actually reduces your payment going forward. And it gives you a cash buffer should something else come up.
LJ;1344319 wrote:A recast on a loan that small is gonna just waste money. If you wait to recast every 5 years or so, your net return will be much greater.
It may have used to work that way, but not anymore. A home these days is unlikely to appraise above what you pay, and even then banks will no longer credit that phantom equity on your loan. PMI will only be avoided here with $7k down toward the purchase price of $35k.slcoach;1345674 wrote:The asking price is $35,000 but is that the appraised value? If the house appraises for 40K and you buy it for $35,000, you would only have to put $3000 down to avoid the PMI. Just a thought.
Maybe so, but $200 a year is still a decent chunk of money ($1000 over 5 years!). Granted, they are going to be savings a ton vs. what they were paying for rent. Still, there are cheaper ways to rebuild her credit, and time is going to heal that by itself in some regards - over the next 5 years, some bad stuff will fall off while she can also boost her score by other means (paying off student loans, a few charge accounts with spotless history, financing and paying off an auto, etc...)slcoach;1345674 wrote:Also, for what may only be a couple of % points, I would put the wife on the loan to help rebuild her credit. It will make it easier when you want to upgrade in the future.
This. You only get equity on free and clear land value on construction loans anymore.gut;1345680 wrote:It may have used to work that way, but not anymore. A home these days is unlikely to appraise above what you pay, and even then banks will no longer credit that phantom equity on your loan. PMI will only be avoided here with $7k down toward the purchase price of $35k.
Then that has changed recently. When I refinanced after my divorce, my appraisal came in at $165,000 and my PMI was dropped. Maybe I misunderstood how that worked on my loan.gut;1345680 wrote:It may have used to work that way, but not anymore. A home these days is unlikely to appraise above what you pay, and even then banks will no longer credit that phantom equity on your loan. PMI will only be avoided here with $7k down toward the purchase price of $35k.
Maybe so, but $200 a year is still a decent chunk of money ($1000 over 5 years!). Granted, they are going to be savings a ton vs. what they were paying for rent. Still, there are cheaper ways to rebuild her credit, and time is going to heal that by itself in some regards - over the next 5 years, some bad stuff will fall off while she can also boost her score by other means (paying off student loans, a few charge accounts with spotless history, financing and paying off an auto, etc...)
Refi appraisals are different than purchase appraisals.slcoach;1345734 wrote:Then that has changed recently. When I refinanced after my divorce, my appraisal came in at $165,000 and my PMI was dropped. Maybe I misunderstood how that worked on my loan.
Got ya!LJ;1345742 wrote:Refi appraisals are different than purchase appraisals.
Time and a stable history is the best bet. Even a couple tenths could cost them $60 a year or more, x5 years you are talking $300+. It won't really cost them anything to rebuild her score thru other means. And I'm not sure her score would end-up significantly higher being a co-signor to a $30k mortgage, probably not enough to justify that $300 or whatever, anyway.slcoach;1345734 wrote: I guess I don't see cheaper ways of rebuilding her credit the way a mortgage would. I don't know all the numbers
as far as how much her score would raise the rate. How much would it increase the rate. 1%? .5%?
I think you'll do fine if you apply for a home loan. Just put a bit higher amount than the usual in terms of downpayment. Goodluck!O-Trap;1343249 wrote:Mine's in the 720-730 range.
Sounds reasonable, but banks are sticklers these days so it might not quite play out that way. You might consider that the bank balks and you need to pay your closing costs ($800?) in addition to your 20% down. So between that and the inspection it's instead written-up for $34k and you need $1k for closing and inspection.O-Trap;1348417 wrote:I got pre-approved today. Given the price, my wife and I are going to offer the asking price on the condition that the seller covers closing costs and the inspection fee. Does that sound reasonable?
O-Trap;1348417 wrote:I got pre-approved today. Given the price, my wife and I are going to offer the asking price on the condition that the seller covers closing costs and the inspection fee. Does that sound reasonable?