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588 FICO, which FHA??

Hello all.. with my current credit situation, i can only be approved for an FHA loan, however i am able to provide 20% down on the property i wish to purchase. obviously, id like to go conventional to avoid the mortgage insurance, but this isn't an option. So i was thinking to go with either an FHA 30 fixed, or FHA 5/1 ARM with hopes to refinance in 5 years to a conventional fixed rate. I understand all the costs upfront and monthly for FHA, but have no choice. My question is, do I go the FHA 30 fixed or 5/1 ARM, and how much should I put down? Do i go the full 20% i can afford, or just go the minimum 3.5%? Thanks for all your help in advance! by e_sther from Savannah, Georgia. Jun 15th 2011 Reply


Gianni Cerretani (mortgagegodfather)
#34 ranked lender in Georgia - 238 contributions

FHA only requires 3.5% down but with your scores you may be obligated to put down more. I would take the stability of a 30 year fixed as there is not much difference in a 5 year arm and a 30 year term. The other reason is that there is no surity that rates will be this low in 5 years or that you will have 20% equity in the property to refinance out of the PMI and avoid any large rate adjustments over the remaining 25 years. Mike Covin has a product you should look at-see below!

Jun 16th 2011
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Chris Gummerson (cgummerson11)
#338 ranked lender in California - 648 contributions

If it were me, I would take the stability of the 30 year fixed. You never know what will happen to values and the mortgage industry. If you benefit from a lower payment by putting 20% down, then do that. If the payment difference is minimal and you can put that other 15% to use somewhere else, then you should do that. I believe with that credit score, most lenders will require a 10% down on the FHA program. Good luck

Jun 15th 2011
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Kelly Balzli (office)
#19 ranked lender in Georgia - 9 contributions

You will be better off going with a rate that can never go up. No one knows what the rates will be in 5 years but most believe they will be higher. I would leave good enough alone and go with a low fixed rate in the 4's.[URL=http://www.fernbankmortgage.com]Georgia Mortgage[/URL]

Jun 15th 2011
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MIKE CONVIN (mconvin)
#7 ranked lender in Delaware - 202 contributions

hi there: If you are interested, I have private investors I work with that lend their own money and no upfront MIP nor monthly..What is the loan amt etc? Credit is not really a factor with these private investors but just proving income and exit strategy...Mike (703 505 5300)

Jun 15th 2011
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