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Hello.
My and my wife are planning to buy a home or apartment in Florida. We dont know what kind of property would be the best choice so we wont regret it in the future. Our monthly income is around $4000, probably going to be around $5000 in the near future, of course it may be more but this is what are the facts at the moment. Right now we are paying $1450 in NY rent each month and we are doing fine from month to month but we are able to save any money. We have around $15k in savings. I think we would be good with paying around $1200 monthly mortgage fees (with all other property fees included like tax etc.) and there will still be some left to save with the perspective of making at least $5000. I cannot be sure that we would stay in the house for 30 years, probably not, I hope we would be making enough money in few years to afford a much better home so I want to get something with the perspective of paying it off, selling it or renting it in 10 years at most. Just to add we are under 30 years old. So my question to you is,

- Should I look for a home or an apartment? House would be around $200k, apartment would be under $140k, a small house with pool that I would be very satisfied with would be around $250k. Apartment would very likely have some HOA fees so it might be better to just get a home but apartment is easier to rent or sell in the future.

- What mortgage term should I get 10, 15, 20 or 30 years? I would be willing to pay weekly or bi-weekly to save some money on interest. 

- What to do with the $15k that I have? I was thinking about putting a down payment but it might be better to leave it on a savings account 

- Is it worth making principal payments if I wont plan to stay in the property for a long a long time? I would probably do better with putting that money to the savings account. If I would get a more expensive home I dont think its a good idea to make any principal payments as I would probably loose them when I would want to sell the house and pay off the mortgage. What do you think?

I have a lot going on in my mind, that is all I could think of at the moment. Answers from someone experienced with that would help me really a lot. Thank you.

Member Summary
Most Recent Posts
Avoid FHA. If that's all you can qualify for, you shouldn't be buying. Simple as that.

rascott (Jun. 19, 2017 @ 10:28a) |

I happen to live in Pasco County and let me tell you, the homes you can get for under $150K are no where I'd want to liv... (more)

lovethedeal (Jun. 27, 2017 @ 12:18p) |

I don't think anyone caught this part yet.  You mentioned "our" income was $4-$5k.  If you plan to use joint income, the... (more)

civ2k1 (Jun. 27, 2017 @ 1:45p) |

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m4gnumek said:   My and my wife are planning to buy a home or apartment in Florida. 
  What do mean, buy a home or apartment? You don't buy an apartment you rent it. If you mean a multi-unit apartment that you live in one and rent the others, that is a good plan for living cheap if the rents cover the mortgage but unless you hire an agency to manage the tenants, it can be a headache dealing with landlord issues.

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By buying an apartment I mean buying a condominium.

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m4gnumek said:   
- What mortgage term should I get 10, 15, 20 or 30 years? I would be willing to pay weekly or bi-weekly to save some money on interest. 

 

  30 years. you can always pay more towards the principle when you flush, and only the p&i in lean times.

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atikovi said:   
m4gnumek said:   My and my wife are planning to buy a home or apartment in Florida. 
  What do mean, buy a home or apartment? You don't buy an apartment you rent it. If you mean a multi-unit apartment that you live in one and rent the others, that is a good plan for living cheap if the rents cover the mortgage but unless you hire an agency to manage the tenants, it can be a headache dealing with landlord issues.

It's a regional thing.  It is common in NY to "buy an apartment," which usually means a co-op.  In almost every other part of the country, it's a condo for all practical purposes.  Don't get caught up in semantics.

OP - There are condo people and there are house people.  Buy what suits your lifestyle first, and think about investment value second.  The condo might be cheaper, but will have higher association fees.  A house on the other hand might have higher maintenance costs, landscaping, utility bills, etc.  Compare the all-in monthly expenses, and don't leave anything out.

Mortgage term?  No brainer.  Go out as long as possible, and you'll get the best terms.  Money is cheap today.  Forget about paying biweekly or in any other accelerated fashion.  Don't make extra payments.  Use the extra cash flow to build up an emergency fund/savings.

Down payment - Yes, put down 20% to get the best terms.  You aren't there yet, so consider that you also might not actually be ready to buy.  Rent a cheap place below your standard of living for a year, get to know the area, and get your savings up to the point that you can afford a 20% down payment.
 

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With only $15k in savings, you're not ready to buy a house. A 200k mortgage (assuming you can get anyone to even finance 100% of the purchase price) has PI payment of $1000 (approximately) for a 30 year mortgage. Add taxes and insurance and PMI, and you're likely near $1400. You have no down payment, and no emergency fund for home repairs.

My recommendation is to rent in Florida for a few years and save up some money for a down payment.

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A home would be better if you are going to have kids.  Your income of 48k a year is not a lot to live on.  Do you both work?  It might be best to rent for a year or so to be sure you want to relocate for good.

Get a 30 year mortgage, you can always pay more if you want to.

You would need that 15k for a downpayment, but honestly you should keep that money in a bank min for emergency

How would you lose principle  payments when selling?  That is equity you have.

I don't think you are ready to be a homeowner yet.  You need some more savings and to have the better job before you spend like you do.  Rent to be sure its the right place for you for at least a year then save about 10% so you don't waste your money on PMI.

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vnuts21 said:   With only $15k in savings, you're not ready to buy a house. 
  There are plenty of nice places under $100K in FL if you go further out from a population center. There are only 3 phases in life for the average person to buy a condo. 1) Young and single and don't want to throw money away on rent. 2) Old and last step before a nursing home. 3) 2nd home in a vacation area.

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Well for house in the 200k range lots of people still do FHA which allows you to do 3.5% for a down payment. You might get slightly better terms with a 5% down payment on a mortgage program that's not FHA. 3.5% on 200k is about 7k and 5% would make that 10k. You basically wouldn't have much left afterwards as there's still closing costs, pre-paids, appraisals, home insections and moving costs. There's no more no money down loans, minimum is basically 3.5% unless you're a Veteran, but even those loans have funding fees and end up costing more.

The only mortgage you can consider is a 30 year, you basically don't make enough to even qualify for a 15. First step is to talk to a lender and see how much you qualify for on a loan.

I don't think you really understand principle payments. If you made them, it reduced the loan amount and the interest that you pay. When you sell the property if you made an additional 10k in principle payments, you'd get that 10k back. The only real difference in making principle payments is whether you can get a better return somewhere else. If you're at a 4.5% interest rate, then maybe if you stick it in the S&P 500 that has averaged around 7% for the last 10 years and is doing close to 10% just this year, then it's better to invest it. But if you think the market is in a bubble and will drop like 2008 then you may be better of paying down the loan and locking in a 4.5% return.

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I would get an ARM....not a fixed rate.

You can get a 10/1 for 3.25% from AIM Loan.
Or a 5/1 for 2.75%

Too many people default into 30 yr fixed, even though they move every 7 years, on average. Huge waste of money.

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m4gnumek said:   
- Should I look for a home or an apartment? House would be around $200k, apartment would be under $140k, a small house with pool that I would be very satisfied with would be around $250k. Apartment would very likely have some HOA fees so it might be better to just get a home but apartment is easier to rent or sell in the future.


That depends not only on your income but on how old the home youre looking at is, how much you want to spend time doing maintenance, and how Handy you are and what neighborhood its in (because some houses are part of hoas).

In other words, if youre cool with taking time out of your life to mow your lawn, clean the pool, powerwash and paint the exterior of your home, and a bunch of other new things that you dont normally do living in an apt then go for the house and you might save a little money over the hoa fees, otherwise youre probably gonna have to pay anyway for someone to do that for you.

The age of the home matters as well, I think roofs last about 30 years. You dont wanna buy an older house today only to find out it needs a new roof ($$$$$) or ac unit ($$$) like 5 years from now.


m4gnumek said:   
- What mortgage term should I get 10, 15, 20 or 30 years? I would be willing to pay weekly or bi-weekly to save some money on interest. 


30 years, only because interest rates are low

m4gnumek said:   
- What to do with the $15k that I have? I was thinking about putting a down payment but it might be better to leave it on a savings account 


you need to research pmi/mip

Most banks want at least 20% downpayment to avoid PMI.

Some banks will allow 10-15% but will charge PMI

FHA loans will allow 3.5% but will charge MIP for the entire loan term.

conventional wisdom says you should save 20% to avoid pmi/mip, however, that depends on the timing and real estate market youre in. In other words, if you are absolutely sure the rent and housing market in a particular area is going to keep going up each year then it might be worth it to pay extra pmi short term. Its kind of a gamble tho because if the market goes up then you win because your mortgage payment + pmi is less than what it would cost to rent the equivalent home but if it doesnt then you lose because youll spend more money on payong for the home than you would if you kept renting and putting in savings.


m4gnumek said:   
- Is it worth making principal payments if I wont plan to stay in the property for a long a long time? I would probably do better with putting that money to the savings account. If I would get a more expensive home I dont think its a good idea to make any principal payments as I would probably loose them when I would want to sell the house and pay off the mortgage. What do you think?


principal is how much you owe on the mortgage. The more principal paid, the less you owe and the more money you get in your bank account from the sale.


m4gnumek said:   
I have a lot going on in my mind, that is all I could think of at the moment. Answers from someone experienced with that would help me really a lot. Thank you.


Over time as you research more it will become less complex.

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I will reply partly.

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m4gnumek said:   I tried to rent and save for 2 years now and this is not an option, in Florida the rent to mortgage ratio is very high, I would pay $1300 rent for a condo vs paying $900 mortgage (15yr with high interest, no down payment) and I pay off my own property. If I did not save too much money for the last 2 years paying $1400, I wont save any money now and I will lose one year in which I could pay off some of my mortgage.
The ability to pay my own mortgage instead of paying rent is the main reason of moving to Florida.
DamnoIT, yes its not a lot, its our household income. We are working remotely from home and we are self employed, we are paying big taxes so mortgage would save us some money on that too.



At your income and price range, mortgage interest deduction is unlikely to save you much of anything on taxes.

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I know 20% down is ideal but IMO there's absolutely nothing wrong with going FHA if it makes sense for your personal situation. I bought my first home at 3.5% down and my PITI was over $400/month cheaper than the going rental rate of homes that weren't nearly as nice. Even if I wasn't able to sell at the large profit I made about 4 years later I would not have had any regrets.

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I tried to rent and save for 2 years now and this is not an option, in Florida the rent to mortgage ratio is very high, I would pay $1300 rent for a condo vs paying $900 mortgage (15yr with high interest, no down payment) and I pay off my own property. If I did not save too much money for the last 2 years paying $1400, I wont save any money now and I will lose one year in which I could pay off some of my mortgage.
The ability to pay my own mortgage instead of paying rent is the main reason of moving to Florida.
DamnoIT, yes its not a lot, its our household income. We are working remotely from home and we are self employed, we are paying big taxes so mortgage would save us some money on that too.
henry33 said:   Well for house in the 200k range lots of people still do FHA which allows you to do 3.5% for a down payment. You might get slightly better terms with a 5% down payment on a mortgage program that's not FHA. 3.5% on 200k is about 7k and 5% would make that 10k. You basically wouldn't have much left afterwards as there's still closing costs, pre-paids, appraisals, home insections and moving costs. There's no more no money down loans, minimum is basically 3.5% unless you're a Veteran, but even those loans have funding fees and end up costing more. 
As far as I know Wells Fargo bank allows minimum 3% down payment. The mortgage would be on my wifes name as she has a better and longer credit history. I however have balance free credit cards with pretty high limits so I planned to pay the closing costs etc using my cards, for the first years I would pay off the cards with money we saved.
henry33 said:   I don't think you really understand principle payments. If you made them, it reduced the loan amount and the interest that you pay. When you sell the property if you made an additional 10k in principle payments, you'd get that 10k back. The only real difference in making principle payments is whether you can get a better return somewhere else. 
As I know the first few years of mortgage is mostly interest rate, knowing that I wouldnt want to make principal payments when I do not plan to stay in that home too long. When I would sell the house lets say in 4 years I would end up losing the principal money that went mostly to interest rate. Isnt that right?
frankm said:   That depends not only on your income but on how old the home youre looking at is, how much you want to spend time doing maintenance, and how Handy you are and what neighborhood its in (because some houses are part of hoas). 
I am planning to do most of the maintenance myself. I would be more interested in a lower price house that needs some updates. Only the roof and the a/c is definitely something that I want to have updated already as its too much effort and money. 
rascott said:   At your income and price range, mortgage interest deduction is unlikely to save you much of anything on taxes.
 

I done a quick math and a $200k house would have around $8k in interest the first year which would save me around $2000 on tax.

Other thing that came up to my mind is that if I would get a home that needs some renovation and put the lowest down payment, I could make some updates which would add some value to the property. If the value would increase by around 20%, would I be able to get rid of the PMI? 

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You're comparing apples to oranges--Rent in NY vs Buy in FL. You need to compare Rent in NY to Rent in FL You rent right now for $1400 in NY. Why not rent in FL for $800? Put the savings away and learn more about where you want to live while you research everything.

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Stubtify said:   You're comparing apples to oranges--Rent in NY vs Buy in FL. You need to compare Rent in NY to Rent in FL You rent right now for $1400 in NY. Why not rent in FL for $800? Put the savings away and learn more about where you want to live while you research everything.
There isnt really much difference in rent between FL and NY, I wont be able to find anything for $800. Besides it doesnt really change my situation if I would rent one more year.
I am comparing rent in NY and buy in FL because the ratio in Florida is much better, just as an example I can buy a home in FL and pay $1000 with tax but if I would buy a home in NY I wouldnt get below $2000 monthly. While - as I said before - rent is comparable in FL and NY.

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$15,000 cash saved up to buy a $200k house isn't that much. Plus, you don't have jobs lined up where you are planning on moving yet, so your salary is just speculation. Can you do it? Yeah probably. Should you do it right now in your circumstances? Probably not.

If you are dead set on moving to Florida, then find a job, move there, get a 6 month lease for an apartment. After you do that, come back here with more exact numbers and we can give you better advice.

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m4gnumek said:   
rascott said:   At your income and price range, mortgage interest deduction is unlikely to save you much of anything on taxes.
I done a quick math and a $200k house would have around $8k in interest the first year which would save me around $2000 on tax.


 

  You're assuming the $8k of interest is more than the standard deduction you take from taxes. Realistically, your itemized deductions would be very slightly above the standard deduction, and you would save a few hundred on tax. 

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rascott said:   I would get an ARM....not a fixed rate.

You can get a 10/1 for 3.25% from AIM Loan.
Or a 5/1 for 2.75%

Too many people default into 30 yr fixed, even though they move every 7 years, on average. Huge waste of money.

  I wouldn't get a 10/1 or 5/1 ARM.

I would strongly consider a 5/5 ARM if you can be a member of a CU that offers one, i.e. PenFed, NFCU, Associated CU.
I'm closing on a house today on a 5/5 ARM, 2.875%. For the next 5 years, my mortgage payments will be less than my current mortgage with a conventional 30 year fixed.

Also, if you're going to FL, and especially if you're considering condos, you'll likely also have an additional HOA fee (a few hundred dollars a month, could be more). I agree with others - rent until you increase savings and/or income.
 

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imbatman said:   Also, if you're going to FL, and especially if you're considering condos, you'll likely also have an additional HOA fee (a few hundred dollars a month, could be more). I agree with others - rent until you increase savings and/or income.
  The thing is that the rent will exceed mortgage payments, I would not be paying less for an apartment than what I am paying now. Even if I would save another $10k next year I wouldnt change my situation, after a year I would still end up looking for the same valued house, so I dont see the point of renting. And Florida property value is increasing very quickly now so I would have the risk that the house would cost $215k instead of $200k so I would still be in the same spot even with saved money.
meade18 said:   Plus, you don't have jobs lined up where you are planning on moving yet, so your salary is just speculation. Can you do it? Yeah probably. Should you do it right now in your circumstances? Probably not.
 

  I would keep my current job as I am working remotely.

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Just an FYI

When you do those '3%' down mortgages you get a little thing called PMI attached. Basically this adds 1% to your interest rate. (Or more). So you pay more interest.

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forbin4040 said:   
When you do those '3%' down mortgages you get a little thing called PMI attached. Basically this adds 1% to your interest rate. (Or more). So you pay more interest.

  both interest and pmi are deductible

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rufflesinc said:   
forbin4040 said:   
When you do those '3%' down mortgages you get a little thing called PMI attached. Basically this adds 1% to your interest rate. (Or more). So you pay more interest.

  both interest and pmi are deductible

Little to no value for the OP, given his income and the size of the mortgage.  He probably won't even reach the standard deduction.  

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I dont have the exact number at the moment but I have some itemized deductions which are already better than standard deductions. So I am pretty sure it would save me more money.

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m4gnumek said:   I dont have the exact number at the moment but I have some itemized deductions which are already better than standard deductions. So I am pretty sure it would save me more money.
Remember - no state income tax in Florida.  You were likely including your NY state income tax in your itemized deductions.  

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m4gnumek said:   
meade18 said:   Plus, you don't have jobs lined up where you are planning on moving yet, so your salary is just speculation. Can you do it? Yeah probably. Should you do it right now in your circumstances? Probably not.
  I would keep my current job as I am working remotely.

  
Even better! It should be easy for you to live in the boonies in a place with much lower rent for a couple years while you save up some more cash so you can eventually move to where you want to buy a place. I suggest this route.

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m4gnumek said:   I dont have the exact number at the moment but I have some itemized deductions which are already better than standard deductions. So I am pretty sure it would save me more money.
  At your tax bracket you are going to be saving maybe a few hundred if even and thats not all that much.  You should have 3-6 months of reserves at all time and you probably wont even get a loan approved with a new job in a new state.  Better make sure the move is right and settle for a year then consider a home if it makes sense.  I don't think you understand all the expenses that go into a home. In a bad year you could have 20k or more you have to put into things and a home warranty is a laughable item, way to many exclusions for wear and tear ect...  Good luck if you go for it but its not financially smart to up and buy a house with your savings and income.  Do you have any retirement if you have been skipping a employer match to save this 15k for a home you are making a big error.

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atikovi said:   
vnuts21 said:   With only $15k in savings, you're not ready to buy a house. 
  There are plenty of nice places under $100K in FL if you go further out from a population center. There are only 3 phases in life for the average person to buy a condo. 1) Young and single and don't want to throw money away on rent. 2) Old and last step before a nursing home. 3) 2nd home in a vacation area.

  Also, 4) Couple with no kids who want a no-hassle place to live

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BostonOne said:   
atikovi said:   
vnuts21 said:   With only $15k in savings, you're not ready to buy a house. 
  There are plenty of nice places under $100K in FL if you go further out from a population center. There are only 3 phases in life for the average person to buy a condo. 1) Young and single and don't want to throw money away on rent. 2) Old and last step before a nursing home. 3) 2nd home in a vacation area.

  Also, 4) Couple with no kids who want a no-hassle place to live

  5) When the price of single family houses is so far out of line with the median income that your only choices are buying a condo, enduring a 1-1/2 hour commute (each direction) or living in a high crime area.

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imbatman said:   rascott said:   I would get an ARM....not a fixed rate.

You can get a 10/1 for 3.25% from AIM Loan.
Or a 5/1 for 2.75%

Too many people default into 30 yr fixed, even though they move every 7 years, on average. Huge waste of money.

  I wouldn't get a 10/1 or 5/1 ARM.

I would strongly consider a 5/5 ARM if you can be a member of a CU that offers one, i.e. PenFed, NFCU, Associated CU.
I'm closing on a house today on a 5/5 ARM, 2.875%. For the next 5 years, my mortgage payments will be less than my current mortgage with a conventional 30 year fixed.

Also, if you're going to FL, and especially if you're considering condos, you'll likely also have an additional HOA fee (a few hundred dollars a month, could be more). I agree with others - rent until you increase savings and/or income.
 


Yeah, I have a 5/5 myself.

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OP sounds like he has made up his mind, and doesn't actually want advice since he's arguing with everyone, he just wants someone to validate what he's going to do anyway.

OP, dcwilbur (and others) gave you some excellent advice early in the thread.

I know buying can sound like a way better deal when you just consider rent vs. mortgage payment. But there are a lot of other costs involved in buying (maintenance, yard, etc.), and like you said you're mainly paying interest (not principal) the first several years, so the amount you're "throwing away" to live can be as high or higher in a house vs. renting. Bottom line, if you can't save 20% down, you probably can't afford the house. And if you don't plan to stay at least 7 years, it will probably cost you more in transaction costs & moving than you will gain. There are exceptions, but these rules of thumb exist for a reason.

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m4gnumek said:   I dont have the exact number at the moment but I have some itemized deductions which are already better than standard deductions. So I am pretty sure it would save me more money.
  
At the current interest rates, you don't start to see savings until you borrow around $300k if doing joint taxes.  This is a generalized statement as you might have many other deductions.  

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m4gnumek said:   ...Right now we are paying $1450 in NY rent each month and we are doing fine from month to month but we are able to save any money. We have around $15k in savings. I think we would be good with paying around $1200 monthly mortgage fees (with all other property fees included like tax etc.) and there will still be some left to save with the perspective of making at least $5000.Is that $4000-$5000 after or before tax?

What you'd be good with is not up to you alone -- there are lending standards that limit your monthly payment. So your income and loan amount will likely limit your choices as far as the loan term goes (for example, you may not even qualify for 15-yr fixed mortgage if the initial loan amount is too high).

The other thing nobody mentioned yet is maybe your savings problem isn't caused by low income or high rent, but maybe poor budgeting? Just a thought.

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I spoke with my friend who is a broker, my best bet is to look for a house in the $150k price rage. I am probably going to apply for a 30yr FHA loan.

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Fha's are super expensive. If you can qualify for a conventional, that's usually the way to go. If you can't... Well that's why fha are so expensive (comparatively), because you're a very high risk borrower.

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There are homes under $150k in Pasco county. The crime rate in that area is very low and its under 1 hour drive to the city. I think its my best way to go.
The MIP payments would be under $100 so its not bad. Besides Im not sure if I would get the conventional approval.
Wouldnt FHA be better than conventional with low downpayment?

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FHA is the that contains the Extra PMI Interest rate (You pay more)

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m4gnumek said:   There are homes under $150k in Pasco county. The crime rate in that area is very low and its under 1 hour drive to the city. I think its my best way to go.
The MIP payments would be under $100 so its not bad. Besides Im not sure if I would get the conventional approval.
Wouldnt FHA be better than conventional with low downpayment?

  Example quote, for equal upfront costs (~$4k, $1800) at 5% down conventional vs FHA, the APR is > 0.3% higher.  Alternately, for the same APR, the costs are ~$2k more on that tiny $142k loan.  When initially financing, it makes most sense to compare APR (if you plan to hold the mortgage all 30 years) or compare Interest Rate at as close to zero up front costs as possible (if you plan to only hold it for <10years).

 On top of that, with conventional you can almost always get the PMI removed early with a re-appraisal or even by paying down to 80LTV, but with MIP (FHA) you cannot.  You can remove MIP by refinancing but that only makes it obvious how large the up-front costs are (which you don't get back when you refinance).  When refinancing, you compare the current mortgage's interest rate (not APR), which is artificially low on FHA with the new mortgage's APR.  The sunk costs are irrelevant for existing loan when you refinance, because you don't get them back.  So, it's unlikely you'll ever want to refinance to get rid of ongoing MIP because you won't find a new APR lower than the Interest Rate on the FHA loan. 

This is all not even addressing that you also need to pay more to buy the house than if you used conventional, because the seller knows you're a bigger risk of backing out (because your financing falls through) or of causing postponement of the closing.  So, the seller will not weight your offer equally to the same $$ offer from someone with conventional
forbin4040 said:   FHA is the that contains the Extra MIP Interest payment (You pay more)
  FHA also has an up-front MIP payment, along with the yearly MIP payments.  *also an unimportant correction is that it's MIP for FHA, not PMI.  PMI is on conventionals with <20% down. "Private" Mortage Insurance.  But of course, they're somewhat similar...  There's no up-front portion to PMI though and the lender can delete it early if you reach 80LTV early.

What confuses many people is that the "interest rate" is lower on the FHA loans.  But, the APR is higher because the up front and ongoing MIP payments are higher.
The up-front mortgage insurance payment is not even included in the up-front cost comparisons above (but it IS included in the APR, which assumes someone keeps the loan to term, for all 30 years.).  Add in the up-front payment of $2500 and OP is at $4500 extra up-front costs for FHA vs conventional.  It's kind of funny a 5% down FHA is only really ~3% down because an extra 2% (the upfront mortgage insurance payment) is rolled into and increases the loan amount.

Edit: I only pulled example quotes at 5% down because that's the least down the lender I pulled the quotes from allows.  If you have $15k already, you'd be much better off putting 10% down if possible (if you're looking at ~$150k property).  The rate on the incremental 5LTV loan is usually ~10% or higher, which is pretty steep.  Example numbers here (not from an actual loan but to demonstrate the incremental loan rate) is if APR on the entire loan is 4% at 90LTV and 4.3% at 95LTV, the rate on that incremental 5LTV is 19*0.3+4% = 9.7%.  This is because you're paying an extra 0.3% on 19*5 = 95% of house value.  So,for this example the 4.3% at 95LTV is equivalent to taking two loans out -- a 90LTV at 4% and a 5LTV at 9.7%.  What's nice about conventional is if you have to only put 5% down, you have the option pay down the other 15% to 80LTV quicker and get them to remove the PMI, which you cannot do with FHA

Skipping 6 Messages...
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m4gnumek said:   The mortgage would be on my wifes name as she has a better and longer credit history. I however have balance free credit cards with pretty high limits so I planned to pay the closing costs etc using my cards, for the first years I would pay off the cards with money we saved.
  
I don't think anyone caught this part yet.  You mentioned "our" income was $4-$5k.  If you plan to use joint income, then you both need to be on the mortgage.  If just HER income is $4-$5k then you're fine with just her on the mortgage.

Also - how do you expect to pay closing costs with credit cards?  I'd think maybe the only costs that could be charged would be appraisal, inspection, and insurance.  If you aren't on the mortgage, then any costs you pay would probably be considered a gift - there's all sorts of fun mortgage paperwork when funds are gifted to a home buyer.  If the card you are using also shows up on your wife's credit report as a joint or AU, then it creates additional wrinkles.  If you are on the mortgage, I'd think that a large last minute charge to your card could make qualification a little messy.

If you're planning to get funky or creative with how fees are paid, or who's credit/income is used for the mortgage qualification, be sure to loop in a mortgage broker ASAP and fully disclose your plans.  They can either help you get through the process or tell you that your plan just won't work.

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