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Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76395  
Subject: Re: Here's my financial plan... advice? Date: 8/14/2003 12:05 PM
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luke5579 wrote, We are currently renting a house at 850 dollars a month, we are in the process of buying a 107,000 dollar house that appraises for 110,000. We are doing a 15 year FHA loan at 5.65 percent, our payments after tax and insurance will be 1050 dollars per month.

TTRoberts responded, BTW: The purchase of the house looks like a GOOD decision. The numbers look like you'll net about the same expense for housing as you're currently paying.

I agree that the purchase of the house looks like a good decision. My only question would be why are using an FHA loan versus a conventional loan? I do not mean to discredit the FHA loan, my DW and I had one when we bought our first house a few years ago, but often times you can get more favorable terms on a conventional.

If it is because you will not have a downpayment for the house, you can get an something like an 80/20 loan. By doing that, you will avoid paying the PMI every month. In addition, with an FHA loan, you will be required to pay an upfront mortgage insurance premium. However, if you refinance out of the FHA loan you may receive a partial refund of that amount. We refinanced a few months ago and received a refund of roughly $2500 from the MIP.

I would urge you to visit the Buying/Selling a Home board to discuss your options with regard to the mortgage. There may be options out there that will save you money but you are just not aware of them.

dt
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