A lot of people have started to complain about the many problems that they are having with their loan originators at big banks. Most of these people are new at buying a house, and so they don’t know of the many ways in which loan originators try to manipulate them. Often, because of the inexperience of these new buyers, loan originators are able to walk out with a deal which cost a lot more than it should have.
Here’s an example to further explain this: Fannie Mae says that 100% financing for VA loans aren’t suggested. Though they start at a 3% down payment, they must have stricter requirements for private mortgage insurance companies. The minimum FICO is 680 whereas the MI factor, which is used to calculate the private mortgage insurance, is quite high.
On the other hand, FHA has a 3.5% down payment and you will be giving HUD 1.75% upfront mortgage insurance premium, an amount you won’t be able the get back. Also, the MI factor is the highest of all loans, which is 1.35% of the total loan. If the total loan were to be $300k, the MI factor will be 300k X 1.35% which amounts to $337.50 a month. Now this is extremely expensive, but a lot of bankers will prefer going to FHA first as it helps them make the most money in the business.
Other points that you need to be careful about when buying a house are:
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