As I Live and Learn

Wednesday, March 11, 2009


So, looking at the other side of this thing - the buying of a new house - I'm definitely going to need a mortgage. My biggest concern after recent news was that I'd need 20% down to get anything. Thankfully that doesn't seem to be true. Some research has shown options. Here's info I found important, this time all from

The 7 biggest mortgage mistakes
Mistake 1. Getting a mortgage at all if you don't plan to stay put.
Not a problem, I'm expecting this next place I'll be in for like 20 years.

Mistake 2. Not checking -- and fixing -- your credit.
Done -- not needed, thankfully.

Mistake 3. Getting anything other than a fixed-rate mortgage.
No problem, not intending to.

Mistake 4. Passing up an FHA loan.
Okay, let's look at this one. According to their own guide: FHA loans great for buying, refinancing
The big disadvantage to FHA loans is that all borrowers must buy mortgage insurance, no matter how much equity they have or the size of their down payment. That's the price borrowers pay for having the government stand behind their loan.

Every borrower is charged an up-front premium at closing of 1.75% of the amount borrowed. While that can be added to your loan amount, it's still an extra charge.

If you don't have substantial equity in your home or a lot of money for a down payment, you'll also be charged monthly insurance premiums. You won't be able to drop that insurance until you reach 22% paid equity and have made at least five years' worth of payments.
So once you get past the 5 good points, you find out you have to have PMI the whole loan, there's an extra 1.75% charge for an FHA loan, AND there's an interest premium for the first 22%. I'll just take the normal PMI that disappears after 20%. Thank you.

Mistake 5. Borrowing too much money.
Okay. So stay within the budget. And recalculate what you can afford every so often. I should be able to do that.

Mistake 6. Getting just one quote.
WOw, are they right! Looking at Mortgages and Mortgage Loan Rates in Livonia, MI some lenders are charging over $2000 in fees for a mortgage, with one charging $4728 where another is charging $1250 for the same amount with 0 points at a lower rate! Amazing how different banks are doing.

The only point that I haven't looked into yet is credit unions, as suggested by How to Land the Best Loan. I remember reading somewhere that you should be able to get a 30/year fixed at competitive rates for $1000 in fees or less. Here's hoping!



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