PMI is kind of just the reality for most people, the average person isnt going to have 20%. I put 5% down on a conventional loan and had a credit score above 800, and my PMI is around $60. Very satisfied with that.
My wife and I are the definition of average and we're putting 20% down on a $397K. I am a RN now but I was a security guard at Marriott and my wife was a CNA while we saved over 100K in 6 years. Save ALL tax refund; put aside all remaining funds after paying rent light and water. LIVE WAYYY, way beyond your means, we've shared 1 car. Point is it's very doable, takes sacrifice and patience. Just envision the goal and seeing those funds increasing over time is satisfying.
I got a 30 year conventional at 3.25%… Payment is $1,074/month Principal, interest, taxes, and insurance. I feel like that’s a decent deal in the market. House is valued at $240k, mortgage is $186k. Planning on being here for 5 years at minimum. Hopefully it pays off, will follow up on this comment in 5 years.
Not good unless you purchase cash (not lease). If its a leased system and you are still making payments, it gets really tricky if you ever want to sell the home.
@@nueagedesign994 yes I walked away from making an offer after I heard the house still had a lease contract with a solar company. Because I didn't want to take the burden of paying another bill on top the mortgage. I never asked for those panels to be put up there.
This usually is an issue at buying and selling. I would personally only have the panels on my FOREVER home aka the house I live in without kids around my late 40s.
In my opinion, a housing market crash is imminent due to the high number of individuals who purchased homes above the asking price despite the low interest rates. These buyers find themselves in precarious situations as housing prices decline, leaving them without any equity. If they become unable to afford their homes, foreclosure becomes a likely outcome. Even attempting to sell would not yield any profits. This scenario is expected to impact a significant number of people, particularly in light of the anticipated surge in layoffs and the rapid increase in the cost of living.
I suggest you offset your real estate and get into stocks, A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!
@@fresnaygermain8180 You are right! I’ve diversified my 450K portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above $830k in net profit across high dividend yield stocks, ETF and bonds.
@@alexsteven.m6414 “Julia Ann Finnicum” is the coach that guides me, She has years of financial market experience, you can use something else but for me her strategy works hence my result. She provides entry and exit point for the securities I focus on.
I disagree. Still a sizable chunk of people who have loads of money otherwise. Lot of Silicon Valley tech folks having free cash flow who can afford to over bid
This was an awesome video. I just closed my loan a week and a half ago with a conventional loan. I initially started with FHA but backed out and went with conventional for the long term.
I was blessed with a USDA loan that got me 30 years fixed 2.5%, zero down in the Austin area. Bought last September, before the housing market really exploded. With interest rates higher, even with MIP of .35%, I’m still likely getting a better rate than what conventional is offering now. Plus my house has grown in value by 100K.
@@rastafire1219 yeah, but the cost is low. I would have to get an interest rate of 2.35% to make refinancing worth it, after closing costs. PMI makes my loan effectively 2.85%. Nothing to get upset about in the long run. And if rates drop in the future, I could refinance. But I got my housing costs locked down for the next 24 years.
I was wondering why he suggested the conventional over the VA home loan. I’m very green in the home buying process & educating myself years before I actually buy a home, but at my current knowledge, I’m not sure how the conventional beats a VA loan. Any insight?
@@Butyistherumgon conventional loans are more generally accepted by sellers because they are far less stringent in the requirements of the home. The VA home loan can be sticklers with some of the requirements to consider a habitable home. This could discourage a seller trying to close fast. Aside from that the VA home loan is a powerful product.
@@Butyistherumgon there are a variety of VA loans calvet VA one issue is that you may not acquire the equity in your home with one of the government loans you might not be able to sell or rent calvet as an example owns your home and finances you directly as opposed to a private lender with a private lender a conventional loan you have more rights over your home and property and what you do with it
Man dude, I was just house shopping. This information, is incredibly vital to me. Very grateful, conventional is the way to go for sure for my particular situation.
This Housing market collapse might end up being a part of us for a very long time. With inflation currently at about 9%, my primary concern is how to maximize my savings/retirement fund of about $300k which has been sitting duck since forever with zero to no gains.
The stock market is a way to hedge against inflation. Most notably amidst recession, investors need to understand where and how to allocate funds to hedge against inflation and still make profits.
I paid up all my mortgages in 2yrs while working with an asset manager. I’m 50 and my husband 54 we are both retired with over $3 million in net worth and no debts. We got to realize that the secret to financial freedom is making better investments.
That is so amazing, I’m trying to get onto the ladder at 40. I wish at 55 I will be testifying to similar success. How can I reach this manager of yours? because I'm seeking for a more effective approach on my savings
The best loan is the one you can comfortably afford that offers the best pricing. Never over-extend or put yourself in a short-term crunch...theres always the principle reduction option.
i’m new to this channel and have only watched a few videos but i love this community, we’re all here trying to learn and succeed. i love how so many people also share their own experiences to further provide useful information.
Can you please do a video on what out of pocket costs are related with closing a sale as a home buyer vs what is or could be covered by a loan? Trying to figure out, myself, what I need to pay and what the loan will cover with closing costs. I know I can easily go to a loan officer and ask, but you're so much better at answering these kind of questions haha 😄 Thanks Javier!
Anyone coming to the comment section now end of 2022-23 you may want to reconsider some of Javi's advice particularly if you are a single or 2 lower income families.. with interest rates where they are right now the way to go is USDA Direct (if u qualify) there are income limitations based on the # of household members and what county you are looking to buy in BUT the interest rate right now is Fixed at 3.75!!. you aren't going to get that with a 97% conventional mortgage and you can use down payment assistance grants to offset your down payment/closing costs. Now if u make more than the guide lines for USDA direct.. u will qualify for USDA Guaranteed..that is NOT a fixed rate and you cannot use downpayment assistance..
Wow! This is the first time I've heard that PMI is based on credit score. Good to know. And you helped bring to the front that PMI is basically setting your money on fire every month. It doesn't help pay off the mortgage. So adding that fee up for the years was eye opening. Thanks!!
We didn’t get our offer accepted even with much higher offer because we had FHA loan. Then when we got accepted for conventional loan, BOOM it got accepted.
Love the honesty in your video and actually giving good advice. I see you’re not looking out for your own gain and looking out for the real good for people. Good for you sir. Thanks.
Amazing! If you live in Texas and if you need information on first time home buyer mortgage then you can contact advisors for your need. Texas homes by Z is amazing if you live in Texas!
So glad I found your channel. Interested in buying a home within the next 5 years and I’m getting started with doing research, having zero knowledge to start with.
Just recently purchased a condo in Vancouver Washington under a VA loan, 3.0% rate. Waiting for the appraisal now. Condo price 224k, I make 61k a year and it's barely affordable, I have a wife and three kids and I am the only one working.
Congrats on the purchase! From what I’ve seen, Washington/Oregon state housing market is going to continue to grow. Also, congrats on making it in life on one income with a family of 5!! That’s crazy man!!! I’m guessing you know how to budget really well lol
One thing I would like to hear is when javier said if the same offer on a house one conventional and one FHA why would it matter which one they choose if they the same offer?
My realtor explained to me that there are certain things that FHA requires and can tie up the process. Such as being pickier with fixing small issues at the house, vs a conventional where you could say "We'll fix the toilet flushing issue, if you could take $300 off the purchase price." FHA would require those fixed, and it can be a hassle for the sellers, making them less likely to choose it over a conventional. He said cash is king, conventional second, and then government below that. That's what I've found online as well.
On the MLS listing some sellers will have in the notes ( No FHA offers being accepted ) us the public cannot see that but your buyers agent will . Other listing wont have it in the notes but still hope for a non FHA offer but may take the FHA if it has been on market for a longer time
The VA Home Loan I would consider as the most powerful product out of all the products out there. - No PMI - 0% down - favorable rates Only thing that sucks is sellers will often snub their nose on this product.
THIS! We bought using VA but we submitted offers on 7 homes before we were finally accepted, but we had to pay ALL closing and all repairs. Had no negotiation power!
@@ganthc yep I served 2008-2012 US Army. My wife and I are waiting to refinance from our VA home loan onto a conventional loan since our home has gained 25% in equity in the past year. Once we refinance on a conventional loan we will be around 3% rate, no pmi, and no escrow. This will free up our va home loan to purchase a new property when we are ready to buy again. Use, wash, rinse and repeat. 😉
@@ganthc it is for that reason all my kids will join the military straight out of high school. Navy and Air Force preferably. The benefits offered can generate a lot of wealth when exercised correctly.
You are correct Javier about sellers snubbing their noses at govt backed loans. Buy new construction to avoid these a holes. I used VA loan. Good income and 800+ credit. Sellers wouldn’t consider my offer 😂. My VA rate I ended up with was 2.25%. Conventional and FHA couldn’t come close. Funding fee exempt too. Keep on keeping on fellow vets.
I landed the same interest rate also on a VA loan! Twinzies! Lol I had a problem getting my offers accepted too, but I finally landed a 60 year old property that I plan on doing a live-in rehab on.
I had the same problem. My offers were all ignored especially on houses that we really love. Just because we are using VA loan, but I guess it’s a good thing because you know they are hiding something or if not the house os overpriced and they know it. My rate is 2.75%, it’s a 60 yr old house.
what if I intend to buy a house, live in it for a year then put it up for rent? what would your point of view be on that scenario regarding loans? would it still be looking at the amortization? and overall balance after a couple of years
I feel caught in the MIDDLE. Today my "Mortgage credit" average is 656. Should I go Conventional or FHA. Or wait for the 700+ and do straight Conventional. My regular Fico average is 686? I'm looking at new construction and I have some time. Lease is not up until Aug 22
FHA downpayment is 3.5% which is not lower than a conventional first time home buyer of 3%. FHA is only beneficial if you don’t qualify for a conventional, you can use it as a starter loan and then refinance into a conventional loan later when your credit score improves
You can do that??! I don't think I qualify for a conventional because of the 2 year rule unfortunately. But If I can get fha (they require 6 months in the new employment from what I was told) i can get it.
Be careful I have talked to a couple of lenders and the PMI dropping off is based on the LTV ratio of the loan or the appraised value of the house your are buying, WHICHEVER is less. So just because your home goes up in value and now the loan is 80% or less than the appraised value of the home, doesn't mean the PMI will drop off because it was based on your original loan amount, not current appraised ammount.
Mine dropped off ,yes they go by the purchase price for a while but my lender required me to wait two years to show a new appraisal that i had a purchase, check with lender might get lucky or have to wait
My husband & I have 700+ credit scores. We do NOT have the 20% down payment. We are looking at 3-5% down. We will have PMI regardless if we choose FHA or Conventional correct? However, If we choose conventional we would get a better interest rate compared to FHA right ?
Which loan would be better for someone with a high credit score but a low down payment? I'll have mortgage insurance with either loan. Would conventional still give me a better interest rate even with a low down payment and high DTI?
Hey Javier, I’ve purchased a new build. I’m thinking about going for KB home Loan but they won’t lock an interest rate until the home is built. Bc inflation is super high right now, it’s unsettling to just “hope” that the interest rate won’t also go up once our home is done being built in Nov/Dec. Any advice or suggestions for what kind of loan that could lock a interest rate? Ty!!
It's just until the day you pay off the loan. After that the lender has no need for PMI because their interest in the property is gone when the loan is paid in full.
Thank you for your videos. I’ve been watching them for a while and are very helpful. I had a question so you saying that with an FHA loan you cannot get the mortgage insurance removed when you read the 20/80 value of the loan? Removing PMI can only be removed with a conventional loan?
Mothe.F. ... banks. I've been believing the PMI was only for those who do not have 20% downpayment. Completely new to me that even with 20% down,,banks may impose PMI!
Great video Javier! I wondered is there any data about what percentage of americans or american borrowers fall within a specific credit score range? Is it possible that these loan types are getting less usage because fewer people need that accomodation? Even though we bought as first timers and with significant student loan debt we both had excellent credit so we went conventional. I feel like while millenials have many unique financial struggles that education about optimal credit usage is more common that it was for older generations. I would love your thoughts on the topic.
I feel that if you can go conventional you should put down as much as possible. Ya putting even dollar you have is the best you can do. Why because your monthly payment drops. It’s your payment for the life of the loan . Unless you refinance then it’s gonna cost you money again the rate can change or your credit could go to shit. We’re it was great when you first purchased.
Thanks man, such a good video, I've been hunting for this information to decide on what loan to go for. I have money saved up and a 740 credit score. Definitely going for a conventional loan with Schools FIrst, they mentioned no mortgage insurance payment at like 3%. Oh, I have offers for credit cards all the time, should I get one more to boost my max credit availability? I'm thinking maybe it will boost me to the 750+ range but don't want to take the chance right before applying for a home loan.
Wow I might look into schools I got a loan from them for a car when I was young 21,000 for a Mitsubishi Montero it was brand new in 2000 I wonder how they feel about giving me a loan for a home that's a great tip thanks and congratulations
I got a fha my credit is 698 put 7000 down 4% interest rate on a 200k loan insurance is 197 every 3 months and taxes is 588 every 4 months and monthly payment is 1540 how did I do it’s my first house in Virginia
People act like pmi is 400$ on top of your mortgage but most people i know pay 80 -150$ thats nothing lol what i spend eating dinner at nice resteraunt twice a month lol
@@chrisfamos yeah thats true but 20 percent on a 350k house is 70k how many medium income people can afford that i live in california a decent house in my area is around 300k +
@@chrisfamos it’s the poverty penalty. Poor people have to do what they have to do to secure things like homes and cars with higher fees and interest rates. It makes no real sense when you think about it because they pay more which doesn’t that mean they’d be able to afford the conventional loan? But that’s the way it works.
It’s not based off the market value though, people think it is and it’s not, also within first two years you can’t be considered for removal Unless you paid down the upb to meet the 80# and than a bpo is requested or you have done major upgrades. After two years you can request it based off the current value. Homebuyers need to know this bc they think my house value increase I can get it off, wrong. It’s not based off the current market value at all.
FHA inspections are very detailed and appraisals from FHA can be deal breakers if items fail the inspection. That is why some sellers do not want FHA loans.
@@virtuallyou3134 the seller I purchased from maintained their property very well. Perhaps that is why they weren't all that concerned with FHA appraisal/inspection
The best loan for first time home buyers are loans that they can afford. Thats pretty much it. In other words, get a loan that doesnt make you become home owners broke. Not loans that you are approved but loans that you can afford without having to eat Ramen noodles and get 5 jobs just to make ends meetThat is what causes so many foreclosures especially where I live in Southern California.
Had every ability to go conventional but forced to go FHA due to "medical" bankruptcy 2 years ago. @2.75, the OVERALL APR is decently close to a conventional. I will see where rates are when I am conventional eligible and crunch all the numbers to see if it makes sense to refi into a different product. Love your vids.
FHA rates can be attractive. You really gotta watch out for the fees that you're financing into your loan though. The FHA loan usually comes with 2 MIPs. The UFMIP and the annual MIP. You probably financed the UFMIP into your loan. You'll be stuck with that added cost once you finance it into your loan and if you refi you'll just carry it into the new loan. Definitely take your time and crunch your numbers. Good luck to you and Congrats on your new home.
@@lsweet6568 thank you. My UFMIP was $3,xxx and I opted to pay it up front as it's named. This market doesn't really allow for sellers credits so it's a hefty closing but will be worth it long term. The appraisal came in +$10,000 so that's a start!
The main reason for the 80/20 rule is that if you end of declaring bankruptcy, the lender has made enough money and the rest they can get by selling the collateral. Anything below 20, the lender is not sure that they will make all their money back by selling the collateral since there are additional costs of liquidation.
I would use Conventional but because my income is not high enough to even afford a decent starter home here i had to have parent co sign; to use conventional i was told that myself and my parent would have to be primary residences but problem is my parent isn't going to live there even though I have to 3.5-5% downpayment sucks that i have to use FHA with the extra PMI. Most single incomes can barely afford a starter home Im in a relationship but not married wanted to keep this in my name in case things go south later. Obviously they approved me for 375K with a parent I'm looking at low 300s to be safe and plus cant really find anything lower then that here. Im looking at monthly payment while shopping around low HOA etc and i feel like thats a smart move on my part to keep it under a certain number.
Trust me. You don't want down payment assistance. Don't take shortcuts. Come up with that money yourself. The 15k assistance they give means 15k thrown on top of your mortgage. You don't what that. It all sounds wonderful but no one is giving you 15k for free. They'll get it back monthly from you. Have down payment ready. Have emergency funds ready. Have closing costs ready. Have FICO score of 720+ ready. You will be more happy when you buy at a strong position.
Man, my credit score was in high 700’s but with Covid i defaulted on cards and i’m down to 580. I moved states to my hometown and couldn’t find a job for a long time. 😩😞
I understand completely, I had credit around 740-760 but got deployed & forgot to set my autopay. When I came back my credit dropped 250 points 🥲 now I’m in the 600s again but it’ll be a while before I can get back to 700s
Javier, this is off topic but I have a question regarding realtors and expectations. I have a realtor that I’ve been working with since this summer. I’m planning on relocating several states away so I rely heavily on his input. To make a long story short my realtor has gone MIA this week. Last time we spoke was Monday when he submitted the last offer. I did reach out but haven’t heard back from him. When do I finally throw in the towel and admit that although, I really like him this just isn’t working. It’s such a tough market and houses are selling at such a fast rate that I really need someone who’s more responsive. I did sign a contract so I’m wondering is lack of communication enough to get out of this?
What if you are a mixed couple (first-time buyer and an experienced buyer) buying a home for the first time and both people's salary will be considered for the loan? Would they qualify for a first-time home buyer loan?
Yes the couple would qualify for a first time home buyer loan because one is the applicants is a first time buyer. It’s kinda considered a trick of the trade lol
NOOOO!.. Question can you take collateral and lien property when you don't own it? DUH!.. NO, it's impossible.. Can you sign the Mortgage/refinance/lease agreement before the promissory Note/Check/Credit/GRANT?.. NO! Didn't you get credit/grant? YES! Grant means GIFT.. Closing means over, done, closed account. Loan is open, continue.. read that mortgage document.. borrower Covenants..
And you kind of trail off in Mumble could save you tens of thousands of dollars you know I think that's a pretty valid statement so I'll say it loud and clear for you save you tens of thousands of dollars so how can you get around not paying the mortgage insurance it seems to me saving the money up for 20% down payment pays for itself in extra fees from the mortgage insurance over the life of the loan is that right
I’m a little confused, you made a video kind of talking up fha and now the last few videos have been talking down fha. look the reality is how many Americans here can save 60 to 80K for a home? When the research suggests that most people don’t even have one month of savings for emergencies? So sorry people are going to continue trying to use fha no matter what. As home prices rise I predict more people are going to use FHA. It’s called the poverty penalty. Poor people end up paying more for things because they get penalized for being poor.
You can go fha if you want but you'll soon realize that most sellers (in a seller's market) will mostly ignore fha and prefer conventional as they see fha folks as barely scraping by and may not have back up funds in the event more funds are needed such as if you overbid on the home etc.
I dont think he's necessarily choosing one over the other or going back and forth, in general he's always said FHA is good for the short term if you're a first time home buyer looking to build equity towards buying your 'dream home' later. FHA doesn't make sense for the long term because you end up paying more in fees and interest as time goes on. You also dont NEED 20% down for most conventional loans anymore, and in the current market sellers are more likely to choose a conventional loan buyer over FHA. He's saying if you CAN do conventional, it's better to do that.
Conventional already offers 3% down, less than FHA's 3.5%. FHA has high PMI that does not care about your credit score. You're paying the funding fees and the high insurance with your monthly payment. Just because the government backed your loan and help you put a 3.5% down doesn't mean it's affordable for you monthly. They're getting money out of you regardless. At least with conventional loan your PMI can go as low as 60 bucks monthly if you have 740 FICO score and up. And PMI stays with FHA forever until refinance. Conventional PMI falls off after 20%. It's not him talking down. He's honest enough to tell you, don't take the more expensive route especially overtime. It's all dependent on your credit score.
PMI is kind of just the reality for most people, the average person isnt going to have 20%. I put 5% down on a conventional loan and had a credit score above 800, and my PMI is around $60. Very satisfied with that.
What percentage of your take home pay is the mortgage?
I’m 24 and have been saving with my girlfriend for 2 years . Putting 20% down on a 320k loan. We want are mortgage payments as low as possible
That's why i ditched the FHA mentality. If you have great credit, why go with FHA? Conventional makes so much more sense.
My wife and I are the definition of average and we're putting 20% down on a $397K. I am a RN now but I was a security guard at Marriott and my wife was a CNA while we saved over 100K in 6 years. Save ALL tax refund; put aside all remaining funds after paying rent light and water. LIVE WAYYY, way beyond your means, we've shared 1 car. Point is it's very doable, takes sacrifice and patience. Just envision the goal and seeing those funds increasing over time is satisfying.
@@RJ-cv2uw cool man. My girls a cna too lol . And I’m in the construction trades . Also saved 20% on a 320k loan
I got a 30 year conventional at 3.25%… Payment is $1,074/month Principal, interest, taxes, and insurance. I feel like that’s a decent deal in the market. House is valued at $240k, mortgage is $186k. Planning on being here for 5 years at minimum. Hopefully it pays off, will follow up on this comment in 5 years.
A 186k house wow
@@AndreiFantastic mortgage is $186k. The price was $235k and we put 20% down
@@schecterc1exotic still a very cheap house! Congrats
@schecterc thank you for sharing and congrats.I'm planning to buy a house in that range but half way close to 20%
Wow lucky 🥲
Hey Javier, Would love to hear your thoughts on Solar Panels, roofs and power walls and its impact on the valuation of homes.
Not good unless you purchase cash (not lease). If its a leased system and you are still making payments, it gets really tricky if you ever want to sell the home.
@@nueagedesign994 yes I walked away from making an offer after I heard the house still had a lease contract with a solar company. Because I didn't want to take the burden of paying another bill on top the mortgage. I never asked for those panels to be put up there.
This usually is an issue at buying and selling. I would personally only have the panels on my FOREVER home aka the house I live in without kids around my late 40s.
In my opinion, a housing market crash is imminent due to the high number of individuals who purchased homes above the asking price despite the low interest rates. These buyers find themselves in precarious situations as housing prices decline, leaving them without any equity. If they become unable to afford their homes, foreclosure becomes a likely outcome. Even attempting to sell would not yield any profits. This scenario is expected to impact a significant number of people, particularly in light of the anticipated surge in layoffs and the rapid increase in the cost of living.
I suggest you offset your real estate and get into stocks, A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!
@@fresnaygermain8180 You are right! I’ve diversified my 450K portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above $830k in net profit across high dividend yield stocks, ETF and bonds.
@@bernisejedeon5888 Mind if I ask you recommend this particular professional you use their service?
@@alexsteven.m6414 “Julia Ann Finnicum” is the coach that guides me, She has years of financial market experience, you can use something else but for me her strategy works hence my result. She provides entry and exit point for the securities I focus on.
I disagree. Still a sizable chunk of people who have loads of money otherwise. Lot of Silicon Valley tech folks having free cash flow who can afford to over bid
This was an awesome video. I just closed my loan a week and a half ago with a conventional loan. I initially started with FHA but backed out and went with conventional for the long term.
If you have high credit scores, there's no point of going with FHA unless you like to pay the highest MIP rates for the life of the loan
I was blessed with a USDA loan that got me 30 years fixed 2.5%, zero down in the Austin area. Bought last September, before the housing market really exploded. With interest rates higher, even with MIP of .35%, I’m still likely getting a better rate than what conventional is offering now. Plus my house has grown in value by 100K.
Yea but you have PMI for the life of the loan with a USDA.
@@rastafire1219 yeah, but the cost is low. I would have to get an interest rate of 2.35% to make refinancing worth it, after closing costs. PMI makes my loan effectively 2.85%. Nothing to get upset about in the long run. And if rates drop in the future, I could refinance. But I got my housing costs locked down for the next 24 years.
Austin sucks, but congrats on owning a house in eastern california😂
@@hustler-6922 it’s where my family is at, so I enjoy it. But yeah, it’s basically becoming Californian. :(
@@ganthc i can respect that.
If you are a veteran. Definitely utilize that VA home loan. It will expedite the process and without the PMI.
Yeah it just sucks for those of us who want to buy a fixer upper since pretty much everything has to be perfect for VA to approve the loan :/
Using my VA loan and closing next month. Pretty cool benefit to have.
I was wondering why he suggested the conventional over the VA home loan. I’m very green in the home buying process & educating myself years before I actually buy a home, but at my current knowledge, I’m not sure how the conventional beats a VA loan. Any insight?
@@Butyistherumgon conventional loans are more generally accepted by sellers because they are far less stringent in the requirements of the home. The VA home loan can be sticklers with some of the requirements to consider a habitable home. This could discourage a seller trying to close fast. Aside from that the VA home loan is a powerful product.
@@Butyistherumgon there are a variety of VA loans calvet VA one issue is that you may not acquire the equity in your home with one of the government loans you might not be able to sell or rent calvet as an example owns your home and finances you directly as opposed to a private lender with a private lender a conventional loan you have more rights over your home and property and what you do with it
Man dude, I was just house shopping. This information, is incredibly vital to me. Very grateful, conventional is the way to go for sure for my particular situation.
My wife and I are now under contract 😃, watch many of your videos and it definitely helped!
This was good. I just want to add that PMI was taken away from VA Loans Now. 💜🥰
This Housing market collapse might end up being a part of us for a very long time. With inflation currently at about 9%, my primary concern is how to maximize my savings/retirement fund of about $300k which has been sitting duck since forever with zero to no gains.
The stock market is a way to hedge against inflation. Most notably amidst recession, investors need to understand where and how to allocate funds to hedge against inflation and still make profits.
I paid up all my mortgages in 2yrs while working with an asset manager. I’m 50 and my husband 54 we are both retired with over $3 million in net worth and no debts. We got to realize that the secret to financial freedom is making better investments.
That is so amazing, I’m trying to get onto the ladder at 40. I wish at 55 I will be testifying to similar success. How can I reach this manager of yours? because I'm seeking for a more effective approach on my savings
Rebecca Noblett Roberts is her name. She is regarded as a genius in her area and works for Empower Financial Services.
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
The best loan is the one you can comfortably afford that offers the best pricing.
Never over-extend or put yourself in a short-term crunch...theres always the principle reduction option.
I’d be so glad to introduce you to this legitimate loan agent.
i’m new to this channel and have only watched a few videos but i love this community, we’re all here trying to learn and succeed. i love how so many people also share their own experiences to further provide useful information.
Can you please do a video on what out of pocket costs are related with closing a sale as a home buyer vs what is or could be covered by a loan?
Trying to figure out, myself, what I need to pay and what the loan will cover with closing costs. I know I can easily go to a loan officer and ask, but you're so much better at answering these kind of questions haha 😄
Thanks Javier!
Anyone coming to the comment section now end of 2022-23 you may want to reconsider some of Javi's advice particularly if you are a single or 2 lower income families.. with interest rates where they are right now the way to go is USDA Direct (if u qualify) there are income limitations based on the # of household members and what county you are looking to buy in BUT the interest rate right now is Fixed at 3.75!!. you aren't going to get that with a 97% conventional mortgage and you can use down payment assistance grants to offset your down payment/closing costs. Now if u make more than the guide lines for USDA direct.. u will qualify for USDA Guaranteed..that is NOT a fixed rate and you cannot use downpayment assistance..
Wow! This is the first time I've heard that PMI is based on credit score. Good to know. And you helped bring to the front that PMI is basically setting your money on fire every month. It doesn't help pay off the mortgage. So adding that fee up for the years was eye opening. Thanks!!
We didn’t get our offer accepted even with much higher offer because we had FHA loan. Then when we got accepted for conventional loan, BOOM it got accepted.
What changes in the mean time?? More down payment, better score, less debt?!
Thank you for taking your time and sharing what you know.
Not the lego rock raiders sound effect at 12:58 lmao! Great video man
Love the honesty in your video and actually giving good advice. I see you’re not looking out for your own gain and looking out for the real good for people. Good for you sir. Thanks.
Amazing! If you live in Texas and if you need information on first time home buyer mortgage then you can contact advisors for your need. Texas homes by Z is amazing if you live in Texas!
I'm so excited to buy a house in the future with all this knowledge! I feel the people I work with may or may not be annoyed about how much I know 😆
NOT true - I personally love clients that already have knowledge and ask a few clarification questions !
So glad I found your channel. Interested in buying a home within the next 5 years and I’m getting started with doing research, having zero knowledge to start with.
Feel free to reach out in the chat and consult me with any questions! I’m a licensed loan officer that is happy to assist
@@nickmoats1911 thank you!!! :)
@@Briana12906 anytime !
I was confused before this, and this video has helped make everything sp much easier to understand! Thank you!
This channel has been such a blessing to me, thanks again!
Can you talk more about USDA?
You're the best! You answered the PMI question I've been having.
Thank you 🙏 you explain things in the way I understand .. I’m first home buyer..
Just recently purchased a condo in Vancouver Washington under a VA loan, 3.0% rate. Waiting for the appraisal now. Condo price 224k, I make 61k a year and it's barely affordable, I have a wife and three kids and I am the only one working.
Congrats on the purchase! From what I’ve seen, Washington/Oregon state housing market is going to continue to grow. Also, congrats on making it in life on one income with a family of 5!! That’s crazy man!!! I’m guessing you know how to budget really well lol
Your videos are helping me so much this morning! Thank you for doing what you do!
Can’t you just refinance the FHA when your credit get better to get rid of PMI?
One thing I would like to hear is when javier said if the same offer on a house one conventional and one FHA why would it matter which one they choose if they the same offer?
My realtor explained to me that there are certain things that FHA requires and can tie up the process. Such as being pickier with fixing small issues at the house, vs a conventional where you could say "We'll fix the toilet flushing issue, if you could take $300 off the purchase price." FHA would require those fixed, and it can be a hassle for the sellers, making them less likely to choose it over a conventional. He said cash is king, conventional second, and then government below that. That's what I've found online as well.
On the MLS listing some sellers will have in the notes ( No FHA offers being accepted ) us the public cannot see that but your buyers agent will . Other listing wont have it in the notes but still hope for a non FHA offer but may take the FHA if it has been on market for a longer time
They actually have conventional loan programs that you can get. that requires no money down and no PMI so do your research it definitely helps
The VA Home Loan I would consider as the most powerful product out of all the products out there.
- No PMI
- 0% down
- favorable rates
Only thing that sucks is sellers will often snub their nose on this product.
THIS! We bought using VA but we submitted offers on 7 homes before we were finally accepted, but we had to pay ALL closing and all repairs. Had no negotiation power!
@@neethi3jois sounds about right. You are in a seller’s market
But you have to be a veteran or member of the military. So not available to everyone. It is the best deal though.
@@ganthc yep I served 2008-2012 US Army. My wife and I are waiting to refinance from our VA home loan onto a conventional loan since our home has gained 25% in equity in the past year. Once we refinance on a conventional loan we will be around 3% rate, no pmi, and no escrow. This will free up our va home loan to purchase a new property when we are ready to buy again. Use, wash, rinse and repeat. 😉
@@ganthc it is for that reason all my kids will join the military straight out of high school. Navy and Air Force preferably. The benefits offered can generate a lot of wealth when exercised correctly.
You are correct Javier about sellers snubbing their noses at govt backed loans. Buy new construction to avoid these a holes. I used VA loan. Good income and 800+ credit. Sellers wouldn’t consider my offer 😂. My VA rate I ended up with was 2.25%. Conventional and FHA couldn’t come close. Funding fee exempt too. Keep on keeping on fellow vets.
Congrats!
I landed the same interest rate also on a VA loan! Twinzies! Lol I had a problem getting my offers accepted too, but I finally landed a 60 year old property that I plan on doing a live-in rehab on.
I had the same problem. My offers were all ignored especially on houses that we really love. Just because we are using VA loan, but I guess it’s a good thing because you know they are hiding something or if not the house os overpriced and they know it. My rate is 2.75%, it’s a 60 yr old house.
what if I intend to buy a house, live in it for a year then put it up for rent? what would your point of view be on that scenario regarding loans? would it still be looking at the amortization? and overall balance after a couple of years
I believe conventional would be the way to go for that.
I feel caught in the MIDDLE. Today my "Mortgage credit" average is 656. Should I go Conventional or FHA. Or wait for the 700+ and do straight Conventional. My regular Fico average is 686? I'm looking at new construction and I have some time. Lease is not up until Aug 22
FHA downpayment is 3.5% which is not lower than a conventional first time home buyer of 3%. FHA is only beneficial if you don’t qualify for a conventional, you can use it as a starter loan and then refinance into a conventional loan later when your credit score improves
You can do that??! I don't think I qualify for a conventional because of the 2 year rule unfortunately. But If I can get fha (they require 6 months in the new employment from what I was told) i can get it.
Love ur knowledge and honesty
Be careful I have talked to a couple of lenders and the PMI dropping off is based on the LTV ratio of the loan or the appraised value of the house your are buying, WHICHEVER is less. So just because your home goes up in value and now the loan is 80% or less than the appraised value of the home, doesn't mean the PMI will drop off because it was based on your original loan amount, not current appraised ammount.
Mine dropped off ,yes they go by the purchase price for a while but my lender required me to wait two years to show a new appraisal that i had a purchase, check with lender might get lucky or have to wait
My husband & I have 700+ credit scores. We do NOT have the 20% down payment. We are looking at 3-5% down. We will have PMI regardless if we choose FHA or Conventional correct? However, If we choose conventional we would get a better interest rate compared to FHA right ?
Maybe but the PMI will def come off once you’re 80/20 on the loan. If you have an FHA loan you have PMI for the life of the loan unless you refinance.
Wow this is exactly what I needed thank you!!!
Which loan would be better for someone with a high credit score but a low down payment? I'll have mortgage insurance with either loan. Would conventional still give me a better interest rate even with a low down payment and high DTI?
Thank you for the breakdown and explanation..really helped me out
Hey Javier, I’ve purchased a new build. I’m thinking about going for KB home Loan but they won’t lock an interest rate until the home is built. Bc inflation is super high right now, it’s unsettling to just “hope” that the interest rate won’t also go up once our home is done being built in Nov/Dec. Any advice or suggestions for what kind of loan that could lock a interest rate? Ty!!
For FHA mortgage insurance, when you say permanent do you mean through out the life of the loan? Or does it continue on after you paid off the loan?
It's just until the day you pay off the loan. After that the lender has no need for PMI because their interest in the property is gone when the loan is paid in full.
Thank you for your videos. I’ve been watching them for a while and are very helpful. I had a question so you saying that with an FHA loan you cannot get the mortgage insurance removed when you read the 20/80 value of the loan? Removing PMI can only be removed with a conventional loan?
Also, rates are better for FHA when compared to a conventional! Please consult me for any mortgage or refinance needs
Is it possible to get a home as a single parent? Have you done a video with any tips dos/dont. Etc
Why wouldn’t it? As long as you have the money.
I just got a conventional loan with 10% down with no pmi but maybe it's because I have a ton of stocks in my taxable account
At what point do you think being rich and recruiting an army of tax lawyers will become a requirement for a home loan?
Mothe.F. ... banks. I've been believing the PMI was only for those who do not have 20% downpayment. Completely new to me that even with 20% down,,banks may impose PMI!
What u think of land contract when buying a house from a friend?
Great video Javier! I wondered is there any data about what percentage of americans or american borrowers fall within a specific credit score range? Is it possible that these loan types are getting less usage because fewer people need that accomodation? Even though we bought as first timers and with significant student loan debt we both had excellent credit so we went conventional. I feel like while millenials have many unique financial struggles that education about optimal credit usage is more common that it was for older generations. I would love your thoughts on the topic.
O o wh
I feel that if you can go conventional you should put down as much as possible. Ya putting even dollar you have is the best you can do. Why because your monthly payment drops. It’s your payment for the life of the loan . Unless you refinance then it’s gonna cost you money again the rate can change or your credit could go to shit. We’re it was great when you first purchased.
Thanks man, such a good video, I've been hunting for this information to decide on what loan to go for. I have money saved up and a 740 credit score. Definitely going for a conventional loan with Schools FIrst, they mentioned no mortgage insurance payment at like 3%.
Oh, I have offers for credit cards all the time, should I get one more to boost my max credit availability? I'm thinking maybe it will boost me to the 750+ range but don't want to take the chance right before applying for a home loan.
Wow I might look into schools I got a loan from them for a car when I was young 21,000 for a Mitsubishi Montero it was brand new in 2000 I wonder how they feel about giving me a loan for a home that's a great tip thanks and congratulations
Of course now that I think about it that truck did get repossessed and I was young but hey I got great credit now 👻
I got a fha my credit is 698 put 7000 down 4% interest rate on a 200k loan insurance is 197 every 3 months and taxes is 588 every 4 months and monthly payment is 1540 how did I do it’s my first house in Virginia
Thank you for this!!
Do you have to actively call your lender to get pmi removed from your hike when you think the value is 80/20?.
Yes
If your loan is less than two years most likely it won’t be removed, it’s not based off the current market value.
Great video sir!
People act like pmi is 400$ on top of your mortgage but most people i know pay 80 -150$ thats nothing lol what i spend eating dinner at nice resteraunt twice a month lol
Right pay PMI for 20 years and you lost a lotttt
Let alone the fact that you’re paying more interest due to lower down payment.
@@chrisfamos yeah thats true but 20 percent on a 350k house is 70k how many medium income people can afford that i live in california a decent house in my area is around 300k +
@@charliefabian7345 I agree. Just saying PMI is more long term than many realize. Still best to avoid at all costs.
@@chrisfamos it’s the poverty penalty. Poor people have to do what they have to do to secure things like homes and cars with higher fees and interest rates. It makes no real sense when you think about it because they pay more which doesn’t that mean they’d be able to afford the conventional loan? But that’s the way it works.
It’s not based off the market value though, people think it is and it’s not, also within first two years you can’t be considered for removal Unless you paid down the upb to meet the 80# and than a bpo is requested or you have done major upgrades. After two years you can request it based off the current value. Homebuyers need to know this bc they think my house value increase I can get it off, wrong. It’s not based off the current market value at all.
My offer was accepted in 3 days over other offers. I had an FHA loan. Seller doesn't care what loan you have. They are looking at the offer amount.
FHA inspections are very detailed and appraisals from FHA can be deal breakers if items fail the inspection. That is why some sellers do not want FHA loans.
@@virtuallyou3134 the seller I purchased from maintained their property very well. Perhaps that is why they weren't all that concerned with FHA appraisal/inspection
Very true
Government loans with a MCC could balance out the negative aspect of having the mortgage insurance.
The best loan for first time home buyers are loans that they can afford. Thats pretty much it. In other words, get a loan that doesnt make you become home owners broke. Not loans that you are approved but loans that you can afford without having to eat Ramen noodles and get 5 jobs just to make ends meetThat is what causes so many foreclosures especially where I live in Southern California.
Is it best to just pay down as fast as possible with FHA once in it? Or do you suggest refinancing with conventional?
I need info on home grants.
Is it a scheme?
Had every ability to go conventional but forced to go FHA due to "medical" bankruptcy 2 years ago. @2.75, the OVERALL APR is decently close to a conventional. I will see where rates are when I am conventional eligible and crunch all the numbers to see if it makes sense to refi into a different product. Love your vids.
FHA rates can be attractive. You really gotta watch out for the fees that you're financing into your loan though. The FHA loan usually comes with 2 MIPs. The UFMIP and the annual MIP. You probably financed the UFMIP into your loan. You'll be stuck with that added cost once you finance it into your loan and if you refi you'll just carry it into the new loan. Definitely take your time and crunch your numbers. Good luck to you and Congrats on your new home.
@@lsweet6568 thank you. My UFMIP was $3,xxx and I opted to pay it up front as it's named. This market doesn't really allow for sellers credits so it's a hefty closing but will be worth it long term. The appraisal came in +$10,000 so that's a start!
What do you use for your software? I like the sharp cuts in and out.
Can I use a conventional loan with a first time home buyers program?
🤔🤔🤔
How about if I'm a 100% disable veteran who wants to buy a house as investment property
Really good information!
Thanks for explaining this 👍
This is a very helpful video. Thanks
The main reason for the 80/20 rule is that if you end of declaring bankruptcy, the lender has made enough money and the rest they can get by selling the collateral. Anything below 20, the lender is not sure that they will make all their money back by selling the collateral since there are additional costs of liquidation.
I would use Conventional but because my income is not high enough to even afford a decent starter home here i had to have parent co sign; to use conventional i was told that myself and my parent would have to be primary residences but problem is my parent isn't going to live there even though I have to 3.5-5% downpayment sucks that i have to use FHA with the extra PMI. Most single incomes can barely afford a starter home Im in a relationship but not married wanted to keep this in my name in case things go south later. Obviously they approved me for 375K with a parent I'm looking at low 300s to be safe and plus cant really find anything lower then that here. Im looking at monthly payment while shopping around low HOA etc and i feel like thats a smart move on my part to keep it under a certain number.
What income would you need for conventional? I make 60k
What's your income? Your credit score they told you you had? What lenders?
You're videos are helping out a lot Javier, where do you recommend to look for down payment assistance programs?
Just save your own money. Come up with a plan. Save 10K per year for 5 years. Or 5K per year for 5 years or whatever
Trust me. You don't want down payment assistance. Don't take shortcuts. Come up with that money yourself. The 15k assistance they give means 15k thrown on top of your mortgage. You don't what that. It all sounds wonderful but no one is giving you 15k for free. They'll get it back monthly from you. Have down payment ready. Have emergency funds ready. Have closing costs ready. Have FICO score of 720+ ready. You will be more happy when you buy at a strong position.
@@RJ-cv2uw this is horrible advice, a houses INFLATION grows faster than that savings rate
Why are my Fico scores different from mortgage scores
Man, my credit score was in high 700’s but with Covid i defaulted on cards and i’m down to 580. I moved states to my hometown and couldn’t find a job for a long time. 😩😞
Dammm that's very unfortunate, hopefully u can get yourseld out of it
I understand completely, I had credit around 740-760 but got deployed & forgot to set my autopay. When I came back my credit dropped 250 points 🥲 now I’m in the 600s again but it’ll be a while before I can get back to 700s
USDA is actually the easiest. It requires a certain amount of income that's not higher than 80k a year
Javier, this is off topic but I have a question regarding realtors and expectations. I have a realtor that I’ve been working with since this summer. I’m planning on relocating several states away so I rely heavily on his input.
To make a long story short my realtor has gone MIA this week. Last time we spoke was Monday when he submitted the last offer. I did reach out but haven’t heard back from him. When do I finally throw in the towel and admit that although, I really like him this just isn’t working. It’s such a tough market and houses are selling at such a fast rate that I really need someone who’s more responsive. I did sign a contract so I’m wondering is lack of communication enough to get out of this?
Have you done a video on taking a margin loan on stocks for down payment?
What if you are a mixed couple (first-time buyer and an experienced buyer) buying a home for the first time and both people's salary will be considered for the loan? Would they qualify for a first-time home buyer loan?
Yes the couple would qualify for a first time home buyer loan because one is the applicants is a first time buyer. It’s kinda considered a trick of the trade lol
But why does the buyer care what type of loan you have as long as they get their money?
Any thoughts or advice on a FHA 203k loan ?
Your videos are the best!!!
NOOOO!.. Question can you take collateral and lien property when you don't own it? DUH!.. NO, it's impossible.. Can you sign the Mortgage/refinance/lease agreement before the promissory Note/Check/Credit/GRANT?.. NO!
Didn't you get credit/grant? YES! Grant means GIFT.. Closing means over, done, closed account.
Loan is open, continue.. read that mortgage document.. borrower Covenants..
JAVIER I WANNA BUY A 37,000 HOUSE MADE IN 1867 HAS TENANT'S IN IT PAYING 550 IN RENT...ITS THESE RECOMMENDED
Merced, mariposa County in California please
And you kind of trail off in Mumble could save you tens of thousands of dollars you know I think that's a pretty valid statement so I'll say it loud and clear for you save you tens of thousands of dollars so how can you get around not paying the mortgage insurance it seems to me saving the money up for 20% down payment pays for itself in extra fees from the mortgage insurance over the life of the loan is that right
Can you tell me about the Ohio housing market?
trying to buy with fha right now is a nightmare .
I’m a little confused, you made a video kind of talking up fha and now the last few videos have been talking down fha. look the reality is how many Americans here can save 60 to 80K for a home? When the research suggests that most people don’t even have one month of savings for emergencies?
So sorry people are going to continue trying to use fha no matter what. As home prices rise I predict more people are going to use FHA.
It’s called the poverty penalty. Poor people end up paying more for things because they get penalized for being poor.
You can go fha if you want but you'll soon realize that most sellers (in a seller's market) will mostly ignore fha and prefer conventional as they see fha folks as barely scraping by and may not have back up funds in the event more funds are needed such as if you overbid on the home etc.
I dont think he's necessarily choosing one over the other or going back and forth, in general he's always said FHA is good for the short term if you're a first time home buyer looking to build equity towards buying your 'dream home' later. FHA doesn't make sense for the long term because you end up paying more in fees and interest as time goes on. You also dont NEED 20% down for most conventional loans anymore, and in the current market sellers are more likely to choose a conventional loan buyer over FHA. He's saying if you CAN do conventional, it's better to do that.
@@ivy5554 I get it just saying he’s being unrealistic
Conventional already offers 3% down, less than FHA's 3.5%. FHA has high PMI that does not care about your credit score. You're paying the funding fees and the high insurance with your monthly payment. Just because the government backed your loan and help you put a 3.5% down doesn't mean it's affordable for you monthly. They're getting money out of you regardless. At least with conventional loan your PMI can go as low as 60 bucks monthly if you have 740 FICO score and up. And PMI stays with FHA forever until refinance. Conventional PMI falls off after 20%. It's not him talking down. He's honest enough to tell you, don't take the more expensive route especially overtime. It's all dependent on your credit score.
@@hangguy209 already know that
18:34 😂😂 2011???
thank you i learned a lot
This was an awesome video
What about a va loan?
Me when i only qualify for 250K, in an area that the houses are 300-500K
👁👄👁
A second home a buyer for 5% down in Florida
Just bought a house we did 3% down
thank you