- quote -


Where will the 12k down payment be sitting if you do not put it down
on second example? If earning 3% in a money market that is one
issue. If earning 8% in stock market that is another issue.

I like the second example, in that you are putting less of your own
cash at risk. Less risky for you, more risky for banks.

Looks like the banks have not learned yet.

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

<chilangopolaco[at]gmail.com> wrote
- quote -

"the program"?

- quote -

Aside: Why is it this person does not have to pay any PMI?
Isn't this part of what led to the (now burst) bubble in the
first place?

- quote -

If the bubble bursts in Austin, then regardless of what
improvements you make a certain amount of equity will
evaporate, and you will take a loss.

You are not ready for a house for two reasons: (1) You do
not have 20% to put down; and (2) you do not intend to stay
in the house very long.

Rent. Save your money for that 20%. Get command of your
overall financial situation. I would be real curious as to
whether you have an emergency fund. Any other debts like
student loans and cars?

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

I am planning to take 7 yr ARM mortgage (conforming: similar to 30yr
fixed for the first 7yr years). I think I am not going to stay in my
home longer than that. Would you please help me compare 2 different
mortgages ?

Selling price 255K

1) No-fee mortgage from Bank of America:
They pay for closing cost and survey (part of the program). I have
locked the rate at 6.25 which means that 7 yr ARM would go for 5.625
(~0 points). I need to pay 5% down ($12750) and I am not going to pay
PMI. (part of the program - even with 5% down). So PI only would be
ca. 1394 (Insurance $80, Taxes $433 so PITI comes to $1907)

2) Wholesale countrywide program offered thru some broker
7 yr ARM, 0% down, rate locked at 5.125 with CW. As I wanted "lender's
paid PMI" my rate jumped to 6%. So my PI = 1528, (I= $83, T =$ 433,
PITI = $2044). Cost of brokerage + closing = 3.5K

If I go with BofA I pay 12750K down, but I have lower payment by $137,
I do not pay closing costs..
If I go with CW I pay 0% down, but I pay 3.5K in closing costs ...

When I took an amortization table I figured that If I stayed in the
house for exactly 7 yrs (then sold or refinanced) I would pay $90.5K
in interest if I went with BofA (242250 at 5.625%). I would pay $102K
in interest if I went with CW (255K at 6%)..so over 7 yrs there is
savings of ca. $12K. (PV ~ $8K, based on time value of money..)

It seems for me I should go with CW
+ less $$$ upfront
+ If I stay only say, 3 yrs the difference in interest would be even
less
+ declining values of homes...what If my place will be worth 230K in 2
yrs ? Austin, TX market is one of the best in US however nobody knows
how serious the crisis is ...so my take is ...instead of building equity
that might evaporate, perhaps I should use some of that downpayment
to update the house (1978 yr, located in prime Austin neighborhood,
however dated but clean)

Pls help out ..

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.