Please help me decide between 2 mortgage loans.?
Both Rates are locked and I need to choose for sure in a few days.
I can either get an FHA loan with at 5.5% interest with a 5.79% APR including insurance and only 10% down or a 5.5% interest loan at 5.6% APR with 20% down.
They are both 15 year mortgages. I am wondering if the FHA loan would be better even though the interest rate is higher since I could probably make an average of 8-10% on the stock market and if rates drop I can refinance and get a refund for the mortgage insurance.
The buy price is 0,000. I am 24 and have 0,000 to my name. The nature of my business is not very secure but I expect to make appx 0,000 per year for the next few years but it could potentially drop off.
My credit is meh which is why I am not getting a 30 year loan. I expect my credit to be well over 700 within 6-24 months. I am considering refinancing in 2 years but I don’t know how much of a gamble it is on interest rates.
Thanks,
Nick
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Tags: few days, fha loan, FHA Secure Refinance, insurance, interest loan, interest rate, interest rates, meh, mortgage insurance, mortgages, nature of my business, refinancing, stock marketTags: few days, fha loan, insurance, interest loan, interest rate, interest rates, meh, mortgage insurance, mortgages, nature of my business, refinancing, stock market
If you can afford to place 20% down, the the 2nd loan is superior to the FHA. The APR is lower, the principle balance is lower, and the monthly payment would be significantly lower because at 80% LTV you won’t have to pay PMI. Given the nature of your income, etc, the lower payment keeps your overhead lower and reduces your risk of cash flow problems.
Anyone who recommends an FHA loan for someone with 700 FICO scores and the ability to place 20% down is giving you terrible advice. Don’t factor in the stock market stuff- you evaluate loans on their individual merit. FHA is for people who are cash poor and credit challenged. And no matter how much you pay it down, you’ll always have MIP/PMI on it. As for possibly refinancing, you want a loan that you can live with just in case you are unable to refi.
One piece of advice I’d offer is to get a 30-year loan and still make the same payments as if it were a 15-year loan. That way, if the creek runs high, you’ll have a lower minimum payment. If everything goes fine, you’ll still pay it off in 15 years.
Excellent luck