how much should you put down?

Here are some other questions I get a lot, "How much should I put down? Do I get a better rate if I put down x, what about y?". There are a couple different downpayment levels that will improve your rate.

If you have 20% to put down, that'll take care of having to get mortgage insurance or a second loan. This savings can equal hundreds of dollars a month and depends on your loan amount. If you have the 20% and are comfortable putting it down, this is a great option to take. If you don't have 20%, or have it but just don't want to put it down, 5 or 10 percent would be other good options.

5% will get you a better rate than 0% down, so I'd recommend that as a minimum downpayment. If you put down 10%, the rate will be the same on the first loan but your rate on the second (or mortgage insurance amount depending on which one you have) will be less.

Those are the main downpayment levels that will result in lower rates and/or payments when buying a home. There are different levels for investment properties and cash out refinances. Feel free to email me with any questions on those billconover@america-lending.com.

Have a great week!

rates moved up today

Rates rose up about an eighth yesterday and another eighth today. They're right about 6.125%.

alternatives to mortgage insurance

I always get asked the question "Do I have to pay mortgage insurance?". It's a good question, why would you want to pay for insurance that only benefits the lender not yourself? If you're not putting down at least 20% to get your loan amount less than 80% of the sales price, conventional underwriting will require you to obtain and keep mortgage insurance with your loan.

However there are two exceptions though that I use quite often. The first is to obtain a first lien loan at 80% of the sales price and then use downpayment and a second loan to cover the other 20%. In a common scenario a buyer will put down 5%, get a second loan for 15% and get a first loan for 80%. As second loans don't require mortgage insurance they do charge a higher interest rate. In most cases though the total payments still work out to being less than one loan with mortgage insurance.

The second exception is to get a loan with Lender Paid Mortgage Insurance, or LPMI. In this case a buyer can put down less than 20% but instead of paying for mortgage insurance themselves the lender obtains and pays for a policy. To cover this extra cost, the lender will charge a slightly higher interest rate, typically 1/4 to 1/2 % higher. Again in most cases this will be a less expensive route than to get a loan with buyer paid mortgage insurance.

There are a number of other details to think about when deciding which route to take. I'd be happy to answer any questions you have. You can email me at billconover@america-lending.com.

Steady since Friday

Rates went up an eighth on Friday and remain the same today. If I was looking to lock a loan, I'd hold off and see how this week shapes up for rates.

rates are dropping

Rates have come down by a quarter of a point between yesterday and today. If you're in the loan process now, it's a great time to lock in!