Loans Options–Advice Needed

[ninaprincess]

Hi Scarlett,

After reading your post I called the loan agent and she didn’t exactly know about the lenght of time for paying PMI for option 2. She will check and call me back but she thinks it is either 2 or 3 years. If the appraisal after 2 or 3 years indicate that I have 20% equity then the PMI stops.

We plan to pay $1500 extra each month to reach that 20% equity. If we are able to do this, which option is better assuming PMI ends in 2 or 3 years?

[quote=Scarlett]I think FHA is out. Option 2:
How many years will you have PMI at this rate?
N
N x $169 x 12 = X dollars
But after N years, your monthly payment goes back to 2159 for the rest (30 – N) years. While the option 3, it stays $2190 for the 30 years. $30 is not that much of a difference, but it can add up over years…. See after how many years you’d have spent the same amount on both option 2 and 3, Y > N.[/quote]

[ninaprincess]

Hi Yellow,

We are planning to stay 5 to 10 years. We might move to a better area if we can but it is hard to say now.

I am weak in math and statistics so I can’t make the calculations you mentioned. If possible, could you make a calculation based on 7 years that I will stay there?

Thanks,

Nina

[ninaprincess]

Hi Yellow,

We are planning to stay 5 to 10 years. We might move to a better area if we can but it is hard to say now.

I am weak in math and statistics so I can’t make the calculations you mentioned. If possible, could you make a calculation based on 7 years that I will stay there?

Thanks,

Nina

[ninaprincess]

Hi Yellow,

We are planning to stay 5 to 10 years. We might move to a better area if we can but it is hard to say now.

I am weak in math and statistics so I can’t make the calculations you mentioned. If possible, could you make a calculation based on 7 years that I will stay there?

Thanks,

Nina

[ninaprincess]

Hi Yellow,

We are planning to stay 5 to 10 years. We might move to a better area if we can but it is hard to say now.

I am weak in math and statistics so I can’t make the calculations you mentioned. If possible, could you make a calculation based on 7 years that I will stay there?

Thanks,

Nina

[ninaprincess]

Hi Yellow,

We are planning to stay 5 to 10 years. We might move to a better area if we can but it is hard to say now.

I am weak in math and statistics so I can’t make the calculations you mentioned. If possible, could you make a calculation based on 7 years that I will stay there?

Thanks,

Nina

[ljinvestor]

I like option 3 because I’ve heard it isn’t as easy to get PMI dropped as one might think. Even if you get PMI taken off in 3-4yrs the payment in option 2 is only $31mo cheaper then option 3.

I would also not personally pay $1500 extra per month to mortgage unless your purchase is way below current market values.

Might be better to put that in savings or emergency fund in case market took another big hit.

[ljinvestor]

I like option 3 because I’ve heard it isn’t as easy to get PMI dropped as one might think. Even if you get PMI taken off in 3-4yrs the payment in option 2 is only $31mo cheaper then option 3.

I would also not personally pay $1500 extra per month to mortgage unless your purchase is way below current market values.

Might be better to put that in savings or emergency fund in case market took another big hit.

[ljinvestor]

I like option 3 because I’ve heard it isn’t as easy to get PMI dropped as one might think. Even if you get PMI taken off in 3-4yrs the payment in option 2 is only $31mo cheaper then option 3.

I would also not personally pay $1500 extra per month to mortgage unless your purchase is way below current market values.

Might be better to put that in savings or emergency fund in case market took another big hit.

[ljinvestor]

I like option 3 because I’ve heard it isn’t as easy to get PMI dropped as one might think. Even if you get PMI taken off in 3-4yrs the payment in option 2 is only $31mo cheaper then option 3.

I would also not personally pay $1500 extra per month to mortgage unless your purchase is way below current market values.

Might be better to put that in savings or emergency fund in case market took another big hit.

[ljinvestor]

I like option 3 because I’ve heard it isn’t as easy to get PMI dropped as one might think. Even if you get PMI taken off in 3-4yrs the payment in option 2 is only $31mo cheaper then option 3.

I would also not personally pay $1500 extra per month to mortgage unless your purchase is way below current market values.

Might be better to put that in savings or emergency fund in case market took another big hit.

[Scarlett]

For 3 years with option 2 you paid for PMI 36 x 169 = $6084 and with option 3 you paid extra 36 x $31 = $1116. So after 3 years you are ahead with option 3 by almost $5000.

For the NEXT 3 years with option 2 you pay monthly no PMI and $2159/month, while with option 3 you pay MORE by $31 x 36 = $1116 (over 3 years). Over the remaining 27 years that’s ~30K that you pay more with option 3. So 30-5 = 25K more over the life of the loan with option 3. It’s not a whole lot. If you don’t plan to stay that long, but only 6-7 years, then I also would go with option 3, since it’s a pain to remove PMI.
(Presuming all fees/costs are the same; insurance and taxes are the same in both cases so I ignored those)

[Scarlett]

For 3 years with option 2 you paid for PMI 36 x 169 = $6084 and with option 3 you paid extra 36 x $31 = $1116. So after 3 years you are ahead with option 3 by almost $5000.

For the NEXT 3 years with option 2 you pay monthly no PMI and $2159/month, while with option 3 you pay MORE by $31 x 36 = $1116 (over 3 years). Over the remaining 27 years that’s ~30K that you pay more with option 3. So 30-5 = 25K more over the life of the loan with option 3. It’s not a whole lot. If you don’t plan to stay that long, but only 6-7 years, then I also would go with option 3, since it’s a pain to remove PMI.
(Presuming all fees/costs are the same; insurance and taxes are the same in both cases so I ignored those)

[Scarlett]

For 3 years with option 2 you paid for PMI 36 x 169 = $6084 and with option 3 you paid extra 36 x $31 = $1116. So after 3 years you are ahead with option 3 by almost $5000.

For the NEXT 3 years with option 2 you pay monthly no PMI and $2159/month, while with option 3 you pay MORE by $31 x 36 = $1116 (over 3 years). Over the remaining 27 years that’s ~30K that you pay more with option 3. So 30-5 = 25K more over the life of the loan with option 3. It’s not a whole lot. If you don’t plan to stay that long, but only 6-7 years, then I also would go with option 3, since it’s a pain to remove PMI.
(Presuming all fees/costs are the same; insurance and taxes are the same in both cases so I ignored those)

[Scarlett]

For 3 years with option 2 you paid for PMI 36 x 169 = $6084 and with option 3 you paid extra 36 x $31 = $1116. So after 3 years you are ahead with option 3 by almost $5000.

For the NEXT 3 years with option 2 you pay monthly no PMI and $2159/month, while with option 3 you pay MORE by $31 x 36 = $1116 (over 3 years). Over the remaining 27 years that’s ~30K that you pay more with option 3. So 30-5 = 25K more over the life of the loan with option 3. It’s not a whole lot. If you don’t plan to stay that long, but only 6-7 years, then I also would go with option 3, since it’s a pain to remove PMI.
(Presuming all fees/costs are the same; insurance and taxes are the same in both cases so I ignored those)

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