Play

Mortgage Monday: Going Conventional with 3% Down

If you have good credit and your income does not exceed 100% of the annual Area Media Income (check here to see the limits for Virginia), you may be eligible for the Fannie Mae MyCommunity Conforming Loan.  This loan is a great alternative to an FHA loan for buyers short on a down payment because there is no upfront mortgage insurance and the monthly mortgage insurance is much less.  The mortgage insurance on this program is also half what is required on a standard conventional loan.  Below is a chart illustrating the savings with this program:

Loan Program

MyCommunity Conforming Loan

Traditional    Conforming Loan

FHA Loan

Purchase Price:

$200,000

$200,000

$200,000

Down Payment:

3%

3%

3.5%

Loan Amount:

$194,000

$194,000

$196,377 (includes upfront mortgage insurance)

Rate:

4.875%

4.875%

4.125%

APR:

4.929%

4.973%

4.306%

Discount Points:

0

0

0

Principal and Interest:

$1,027

$1,027

$935

Estimated Taxes:

$158

$158

$158

Estimated Hazard Insurance:

$60

$60

$60

Mortgage Insurance:

$97

$148

$220

Total Monthly Payment:

$1,342

$1,393

$1,373

The interest rate on the FHA loan keeps it competitive, but one important factor to consider is that you have the ability to eventually cancel mortgage insurance on both conventional loans whereas the FHA mortgage insurance is on the loan forever as of June 3, 2013, or until you refinance to a conventional loan.  Ask yourself the questions at the bottom of this post to help you decide whether going conventional or FHA is the best option for your circumstances, or feel free to contact me.

If you are considering purchasing or refinancing in Virginia please contact me for a mortgage consultation. To stay informed, follow me on Twitter and like me on Facebook.

If you are interested in purchasing or refinancing in one of the following states, I will be happy to connect you with a licensed loan officer in your state: Maryland, Delaware, Connecticut, Florida, Georgia, Maine, Massachusetts, New Hampshire, New Jersey, North Carolina, Pennsylvania, Rhode Island, South Carolina, Washington D.C., or West Virginia.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s