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are closing costs different fannie versus fha?

i qualify for both thankfully but trying to figure out which will save me more, now based on closing cost. the LO is pushing for fannie but ill be honest im having a hard time just taking her word for it. by jbrawlins79462684 from San Diego, California. Oct 15th 2014 Reply


William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,788 contributions

FHA charges 1.75% as an upfront fee in addition to all other closing costs (which is usually financed).. this should be the only difference in closing costs.. But there are also monthly costs which is a HUGE difference when compared to conventional financing. Conventional is by far a better loan.. With FHA, the monthly mortgage insurance premium is 1.35% annually, which is about $113 for every $100K financed, and it's there for the life of the loan.. the only way to get rid of it would be to refinance or pay it off. With Conventional, if you have a good credit score, the premium is $53 for every $100K financed, and once you have paid for 24 months, and you obtain 20% equity or more, then you can request the MI be dropped, and you wont have to refinance to do it.. Your loan officer is telling you the truth.. conventional is a better way to go. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Oct 15th 2014
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Hello More often than not going conventional will be the least cost in comparison to FHA. FHA not only has an automatic monthly mortgage insurance but also an upfront insurance cost of 1.75% of the loan amount. If your credit scores are not the greatest, then FHA might be the better route

Oct 15th 2014
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,224 contributions

Great information provided previously, if you have very good to excellent credit, Fannie will be a better option. FHA loans are also assumable but because of the upfront MIP it is usually the least desireable of available options. Good luck!

Oct 15th 2014
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,224 contributions

PS. listen to your loan officer, normally they are working for your benefit!

Oct 15th 2014
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can't thank you enough. now i feel bad for doubting the LO but i just don't know a lot about this process.

Oct 15th 2014
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Sean Young (SeanYoung)
#2 ranked lender in Colorado - 1,106 contributions

If you qualify for both and have the option, I would choose conventional all day. FHA charges 1.75% Up Front Mortgage Insurance that is applied to your loan balance, Conventional does not. FHA has a higher monthly mortgage insurance premium than conventional. You may also have the option of buying out of your mortgage insurance as a one time fee at closing. The fee to buyout of the mortgage insurance will depend on your current down payment, credit score and debt to income ratio. Have your LO let you know what your options are with and without MI for a conventional loan.

Oct 15th 2014
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Antonio Magtoto (amagtotojr)
#858 ranked lender in California - 36 contributions

there's another perspective you might not be considering with regard to FHA or conventional. My question to you is are you trying to maximize leverage with the bank on your purchase or are you ok putting 20% or more down on your deal? All the loan officers are correct about fees but what is your actual plan? Taking the monthly mi and the upfront mi is not a bad deal if you having to come in with only 3.5% down versus any amount above that. My thought... keep your down payment money for now use the maximum leverage with bank... ask you loan officer about getting you a rebate back from the YSP as a credit toward your closing costs...ride the market for the next few years and refinance into a conventional loan down the line. If you know for fact this is your last house and you are going to live in this property for the next 10 to 15 years then drop down the standard down payment and take the conventional loan and don't refinance again unless the 30 year terms hits 3% or less.

Oct 16th 2014
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