Reply to "Down Payment on a House"

There are always two sides to a coin.

FHA loans have served the first time Buyers well for years. these loans offer low down payment as the main lure, however they are not cheap and where they start at 97% loan, once one adds up the total costs of getting one it usually ends up as over 5% of the total price with only 3% going towards the actual equity.

A Conventional loan appears at the outset to not  be as appealing because it usually requires a minimum of 5% down plus costs. However I prefer to see the money going to equity and then maybe asking the Seller to contribute x amount of dollars towards non-recurring costs. It can be a win-win for everyone and the actual equity in the home is 5% from the outset.

Note! I am not saying that FHA is not a good loan on the contrary the extra cost in getting one can be outweighed by the easier qualifying involved.

Message to all, do your homework and study the costs before making a decision which way to go.

Quick note on MI. (mortgage insurance) was made a requirement by lenders to insure lenders against high risk loans(Low down payment loan losses due to non payment) They used to be removable once the equity in the home exceeded 20% but today things are much different it is very difficult to get lenders to remove them so be aware that it is not a slam dunk!

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