Author Topic: USDA Loans Mortage (Read 1536 times)

Änσnymσus · « **on:** March 05, 2015, 09:14:10 PM »

Is it a good deal?

vs FHA loans?

Would like to buy a house with zero / low downpayment. Thanks

Änσnymσus · « **Reply #1 on:** March 05, 2015, 09:27:53 PM »

USDA I think is zero down.
I do know this. With both FHA and USDA you better make the payments on time or they can take your home.

Änσnymσus · « **Reply #2 on:** March 05, 2015, 10:37:10 PM »

-Any lender can take your home for nonpayment.

-I've never heard of a USDA loan. I thought they inspected meat. However, I *have* heard of a FHA loan, and used to have one.

People always surprise me that they think a "only" 3% down loan is some sort of good thing.

If you can only put 3% down, consider you can't afford a house, or at least *that particular* house.

This 3% "deal if the century" just means:
A- less equity and thus a higher payment
B-mortgage insurance aka PMI

Mortgage insurance is stupid. I've paid it. It ain't cheap either. It's also throwing money down a hole. It's not principal. It's not even interest, which is at least deductible.

-Iuvenalis

MaterDominici · « **Reply #3 on:** March 05, 2015, 10:46:06 PM »

Quote from: Guest

B-mortgage insurance aka PMI

Mortgage insurance is stupid. I've paid it. It ain't cheap either. It's also throwing money down a hole. It's not principal. It's not even interest, which is at least deductible.

-Iuvenalis

That one caught us by surprise when we bought our first home. What a waste of money!! Thankfully, we had made a decent down payment and were then able to scrimp, save, and dig under couch cushions to get the PMI off our payment within 12 months.

I don't know if FHA / USDA require PMI, but I'd imagine they do.

Iuvenalis · « **Reply #4 on:** March 06, 2015, 09:01:50 AM »

Quote from: MaterDominici

Quote from: Guest

B-mortgage insurance aka PMI

Mortgage insurance is stupid. I've paid it. It ain't cheap either. It's also throwing money down a hole. It's not principal. It's not even interest, which is at least deductible.

-Iuvenalis

That one caught us by surprise when we bought our first home. What a waste of money!! Thankfully, we had made a decent down payment and were then able to scrimp, save, and dig under couch cushions to get the PMI off our payment within 12 months.

I don't know if FHA / USDA require PMI, but I'd imagine they do.

Anyone taking less than 20% requires it.

The only exception I'm aware of are VA loans.

Those are "interesting" in a different way, but that can often be a good deal for former military to buy a house. Not just everyone can get one obviously.

Änσnymσus · « **Reply #5 on:** March 06, 2015, 09:38:01 AM »

Quote from: Iuvenalis

Anyone taking less than 20% requires it.

The only exception I'm aware of are VA loans.

Those are "interesting" in a different way, but that can often be a good deal for former military to buy a house. Not just everyone can get one obviously.

Almost anyone. The reason why most require it is because in order to sell mortgages on the secondary market, federal regulations require mortgage insurance if more than 80% of the value of the home is loaned out.

However, it is sometimes possible to avoid mortgage insurance without putting 20% down. Shop around your local banks and credit unions to see what they are offering (avoid big banks). When we bought our first house, one of the local banks had a special deal for first time home buyers where you only needed to put 3% down and there was no mortgage insurance. The trade off, of course, was that you needed an excellent credit history, and had to meet a certain debt-to-income ratio.

Änσnymσus · « **Reply #6 on:** March 06, 2015, 02:39:03 PM »

We put 5% down and had our mortgage officer split the remainder into 80%-15% as Primary Mortgage-HELOC ... so that absolved us from paying PMI. And the HELOC interest rate was actually a fair bit lower than the main mortgage.

Änσnymσus · « **Reply #7 on:** March 06, 2015, 03:06:32 PM »

Would these loans affect the -reselling of the house, in case you need to move?

It really scares me to be "stuck" in one place with no way out and a 30 year loan. It seems like financial prison.

We rent right now and would not be considering buying if it was not because space constrains as we are expecting our 4th child.

Rents for a 4bd house seems more expensive than mortgage. Either way we would have to move to the country side. There is no way we can afford a 4db house to rent or buy in the city or close and "desirable" suburb. We are squeezed now in a 3bd duplex in one of the best parts of town.

Änσnymσus · « **Reply #8 on:** March 06, 2015, 06:30:02 PM »

Quote from: Guest

Would these loans affect the -reselling of the house, in case you need to move?

It really scares me to be "stuck" in one place with no way out and a 30 year loan. It seems like financial prison.

We rent right now and would not be considering buying if it was not because space constrains as we are expecting our 4th child.

Rents for a 4bd house seems more expensive than mortgage. Either way we would have to move to the country side. There is no way we can afford a 4db house to rent or buy in the city or close and "desirable" suburb. We are squeezed now in a 3bd duplex in one of the best parts of town.

You don't necessarily need a 4th bedroom if you can find something with just more space. Homes with high #s of bedrooms are rare, but you can probably get more square footage easily enough. We're up to 8 people in a 3-bedroom house and still have enough space for now thanks to a large living area and a "bonus" room.

That having been said, I favor buying over renting in most situations.

Änσnymσus · « **Reply #9 on:** March 06, 2015, 07:45:49 PM »

Quote from: Guest

Quote from: Guest
Would these loans affect the -reselling of the house, in case you need to move?

It really scares me to be "stuck" in one place with no way out and a 30 year loan. It seems like financial prison.

We rent right now and would not be considering buying if it was not because space constrains as we are expecting our 4th child.

Rents for a 4bd house seems more expensive than mortgage. Either way we would have to move to the country side. There is no way we can afford a 4db house to rent or buy in the city or close and "desirable" suburb. We are squeezed now in a 3bd duplex in one of the best parts of town.

You don't necessarily need a 4th bedroom if you can find something with just more space. Homes with high #s of bedrooms are rare, but you can probably get more square footage easily enough. We're up to 8 people in a 3-bedroom house and still have enough space for now thanks to a large living area and a "bonus" room.

That having been said, I favor buying over renting in most situations.

Well, grandma lives with us :)

But yes, I agree that maybe we can find a 3 BD house with enough space we can mage arrangements. Ideally, it would be one room for grandma, another for girls, another for boys and another for husband and I. We also need extra space because I manage a business from home and I have lots of merchandise.

Änσnymσus · « **Reply #10 on:** March 07, 2015, 08:22:41 AM »

Quote from: Guest

Would these loans affect the -reselling of the house, in case you need to move?

It really scares me to be "stuck" in one place with no way out and a 30 year loan. It seems like financial prison.

We rent right now and would not be considering buying if it was not because space constrains as we are expecting our 4th child.

Rents for a 4bd house seems more expensive than mortgage. Either way we would have to move to the country side. There is no way we can afford a 4db house to rent or buy in the city or close and "desirable" suburb. We are squeezed now in a 3bd duplex in one of the best parts of town.

You seem to have a serious misunderstanding of what a 30-year mortgage is. The "30-year" part does not mean that you are stuck with the loan for 30 years. What it means is that if you paid only the minimum monthly payment, it would be paid off in 30 years. You can always prepay (more than the monthly minimum) to reduce both the life of the loan and the amount of interest paid. Additionally, if you were to sell the house, the proceeds would go to pay off the principal balance of the mortgage, and you would get what's left. For example, if you sold the house for $200,000, and there was $125,000 principal left on the loan, you would get $75,000 (minus other closing costs, of course).

30 years is not a minimum period where mortgages are concerned; it's the maximum possible time you have to pay it off.

Änσnymσus · « **Reply #11 on:** March 07, 2015, 10:42:59 AM »

Quote from: Guest

Quote from: Guest
Would these loans affect the -reselling of the house, in case you need to move?

It really scares me to be "stuck" in one place with no way out and a 30 year loan. It seems like financial prison.

We rent right now and would not be considering buying if it was not because space constrains as we are expecting our 4th child.

Rents for a 4bd house seems more expensive than mortgage. Either way we would have to move to the country side. There is no way we can afford a 4db house to rent or buy in the city or close and "desirable" suburb. We are squeezed now in a 3bd duplex in one of the best parts of town.

You seem to have a serious misunderstanding of what a 30-year mortgage is. The "30-year" part does not mean that you are stuck with the loan for 30 years. What it means is that if you paid only the minimum monthly payment, it would be paid off in 30 years. You can always prepay (more than the monthly minimum) to reduce both the life of the loan and the amount of interest paid. Additionally, if you were to sell the house, the proceeds would go to pay off the principal balance of the mortgage, and you would get what's left. For example, if you sold the house for $200,000, and there was $125,000 principal left on the loan, you would get $75,000 (minus other closing costs, of course).

30 years is not a minimum period where mortgages are concerned; it's the maximum possible time you have to pay it off.

Thank you for the explanation. I am confused about the whole thing, yes and I keep hearing horror stories about foreclosures, people losing their homes, people regretting having bought their homes, falling "underwater: and then losing money on the home even if they sell, in case the house loses value. I am not seeing this house as an investment though, just as a necessary living expense.

Iuvenalis · « **Reply #12 on:** March 07, 2015, 10:56:26 PM »

Quote from: Guest

Rents for a 4bd house seems more expensive than mortgage. Either way we would have to move to the country side. There is no way we can afford a 4db house to rent or buy in the city or close and "desirable" suburb. We are squeezed now in a 3bd duplex in one of the best parts of town.

This is an easy one: if buying is cheaper than renting, you buy. Assuming you're comparing comparable homes, that's what's called a "slam dunk"

Often, especially in the last ten years, this is not the case-- people would seriously overextend themselves just to buy, as though they thought buying was always a good idea. It's not always. Sometimes it is.

Without knowing more, your situation sounds likely to be a good one to purchase.

Iuvenalis · « **Reply #13 on:** March 07, 2015, 10:57:53 PM »

Quote from: Guest

We put 5% down and had our mortgage officer split the remainder into 80%-15% as Primary Mortgage-HELOC ... so that absolved us from paying PMI. And the HELOC interest rate was actually a fair bit lower than the main mortgage.

They pretty much don't do this anymore. Ever.

Iuvenalis · « **Reply #14 on:** March 07, 2015, 11:01:15 PM »

Quote from: Guest

Quote from: Iuvenalis
Anyone taking less than 20% requires it.

The only exception I'm aware of are VA loans.

Those are "interesting" in a different way, but that can often be a good deal for former military to buy a house. Not just everyone can get one obviously.

Almost anyone. The reason why most require it is because in order to sell mortgages on the secondary market, federal regulations require mortgage insurance if more than 80% of the value of the home is loaned out.

However, it is sometimes possible to avoid mortgage insurance without putting 20% down. Shop around your local banks and credit unions to see what they are offering (avoid big banks). When we bought our first house, one of the local banks had a special deal for first time home buyers where you only needed to put 3% down and there was no mortgage insurance. The trade off, of course, was that you needed an excellent credit history, and had to meet a certain debt-to-income ratio.

In your desire to contradict, to show you think you know something someone else doesn't, you're just showing you're not that smart.

A)A singular exception (assuming this wasnt ten years ago by the way) doesn't not make your point, it makes *my* point.

B) Taking about a single stupid exception is not helping this person, and possibly confusing them.

Author Topic: USDA Loans Mortage (Read 1536 times)

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