Author Topic: $100 Down or Standard 20%?  (Read 1851 times)

IamDavin

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$100 Down or Standard 20%?
« on: April 20, 2015, 05:02:37 PM »
I am looking at a HUD townhome and it is pre approved for $100 down FHA loan.  Assuming no PMI.

I don't have a problem putting down 20% if it makes more sense? 

Purchase price would be around $75,000.  My plans are to live in the place for a couple years.. and working on paying off the loan.  Then once allowed by HUD I would like to keep it for rental.

It doesnt need any major repairs and is pretty much move in ready.

Should I put in a offer with the $100 down, or offer more.. such as 20% down for a stronger offer and lower loan amount?

ender

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Re: $100 Down or Standard 20%?
« Reply #1 on: April 20, 2015, 05:11:18 PM »
What's your income?

What's your cash stache?

How quickly could you come by $10-20k?

The biggest risk of a 0% down mortgage comes if you need to sell and are underwater.

IamDavin

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Re: $100 Down or Standard 20%?
« Reply #2 on: April 20, 2015, 05:18:01 PM »
My income ranges from 50-80k.  Cash available is around 40-50k. 

Just read that I need to live in the home for 12 months before renting.

CaveDweller

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Re: $100 Down or Standard 20%?
« Reply #3 on: April 20, 2015, 05:39:49 PM »
Another advantage is that you'd probably get a slightly better interest rate by putting money down. Plus at such a low price, you could probably easily handle a 15-year instead of 30, which would lower your rate a skosh more.

What else would you be doing with that money if you don't put it down? So many people seem to think that stocks are overpriced now. I'm not sure if they're right, but investing in equity might be a good hedge.

On the flip side, if you plan to purchase again in a year or 2 when you move, then keeping money out would give you more flexibility for that, but it sounds like you'll have enough for another down payment by then regardless.

Good luck with the purchase!

Jesus Christ

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Re: $100 Down or Standard 20%?
« Reply #4 on: April 20, 2015, 07:18:50 PM »
Double check if it is for sure no PMI, if you are only putting a $100 dollars down I am sure you will be locked into PMI for a while. A benefit of paying cash would be you can forgo the home owners insurance.

IamDavin

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Re: $100 Down or Standard 20%?
« Reply #5 on: April 20, 2015, 08:07:24 PM »
Also does anyone know how strict HUD is on asking prices?  If asking is $75k and I came in at 65k would they even consider it?

I searched around and saw a thread where someone put in a lower bid and the bank countered with full asking price.

Drifterrider

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Re: $100 Down or Standard 20%?
« Reply #6 on: April 21, 2015, 06:58:26 AM »
Is this HUD owned or Fannie Mae Home Path?  How long has it been on the market?  Are you asking for closing help or will you pay your own closing cost?  (Paying your own puts you in a better bargaining position usually)

What amount of down payment gives you the best interest rate?

NEVER NEVER forego home owner's insurance unless you are willing to take a total loss (think of a fire, tornado, etc).

Are you willing to live in the house for one year before turning it into a rental?

I bought a VA foreclosed house.  Ask was $45,500.  I offered $36,000.  They countered at $45,000.  I re-countered at $40,000.  The came back at $44,500 with no closing help.  I bought it (it was still a pretty good deal).  They said "cash only" and I had my bank write a letter that I had enough on deposit.  I paid by check.  I could have paid with a mortgage note (seller's can't force the method of payment).

So, it depends.