Mortgage Basics!

Mortgage Memo

Today’s Topic: Big 3 Mortgage Program Refresher

It’s always a good idea to review the basics! 

Conventional (Fannie Mae and Freddie Mac)

1. 3% down for 1^st time home buyer.
2. 5% minimum down for everyone else.
3. PMI rate moves with % down and credit score.
4. PMI goes away once you have 20% equity.
5. Option to buy-out PMI with a 1-time payment
6. Gifts are allowed
7. Interest rates are slightly higher than FHA/VA, but comparable.

FHA (Federal Housing Administration – part of HUD)

1. 5% down.
2. UpFront funding fee of 1.75% and Annual PMI of .85% on the vast majority of FHA loans.
3. FHA will always have an annual MIP – usually lifetime but can be 11 years with a lot down and 15yr loan.
4. Can only use for primary residence.
5. Can’t have two FHA loans in the same area code – or so.

Based on a 200K purchase price with minimum down

Monthly PMI:

• Conventional monthly PMI = $66.50 (with good credit)
  • PMI paid after 5 years = $4,000
• FHA monthly PMI = $135.66
  • PMI paid after 5 years = $8,000

Equity after 5 years (when making normal monthly payments):

• Conventional = $29,200
• FHA = $25,000

Taylor Ortiz
Sr. Loan Officer

2575 Kelley Pointe Parkway, Suite 180
Edmond, OK 73013
NMLS ID 449866
Direct 405-421-0404
Mobile 405-509-1064
Fax 405-562-4272
tayloro@fairwaymc.com
www.TaylorOrtiz.net