Don't be afraid of a 30 yr mortgage especially on your first home. Mortgages are relatively cheap debt. Some people focus so hard on paying their house off sooner that they neglect putting sufficient $ towards things like retirement, emergency cash reserves, paying off more costly debts, etc. Also, most people don't live in their first house long term. I used to be a Mortgage Banker. I'm a Credit Analyst now.
We're at ~16% of our net and it's about where we want to be. We've never felt stretched, but comfortable. We put 20% down and went with a 20 yr note even though we were about your age when we bought. If we stay here we would be mortgage free by ~41 (paying a little extra), and as it stands right now, I have about $140K in equity I've built in 6 years. Pretty happy with that, and definitely partially because of the down payment. If you can't scrounge that up, and you're planning on staying put for a while, don't shy from a 30yr loan. The end goal, especially, for you (not staying forever), is to end with sufficient equity to make your next move without causing you to be house poor.
We are roughly at about 10% of our gross income for our Mortgage on a 15 year note(before taxes and insureance). We're at about 15% when you add in the loan for our land(on a 20 year note). We should have both nearly payed off in 10 years. What a feeling that will be If you can comfortably swing a shorter note, I recommend it. The amount going to principal at first on a 30 year note will just about make you cry.
Trevor... Being single and enjoying the outdoors as much as you do, have you ever thought about a tiny house? My wife and I love watching those shows, and they actually make sense in some situations. I'd think yours may be one of them. No mortage in a few years as opposed to 20-30 would allow for a LOT more extreme expeditions to add to your eventual trophy room. Just something to think about...
Haha they are a cool idea, but that would entail commuting from outside of town, not enough gear storage, and 6'2" 200 lbs doesn't agree with some of those tiny homes. I only get 3 weeks a year off anyway so my expeditions are limited for now. Now once my contract is up, I may or may not be taking an unpaid leave of absence for 2 months each fall, approved or unapproved. I may need to reign back the percentage I was thinking I could comfortably afford by the sounds of it. Good info for sure.
I'm interested in how you will get a mortgage with 5% down and no PMI, I'm a senior in college and once I graduate I can afford the payments easy but the down payment will be hard to scrape up Sent from my iPhone using Tapatalk
Call around, they are out there. I think a lot of it depends on the level of income you show on paper. Bancorp South, Quicken Loans, and a local bank I spoke with all have such programs as well as many other banks I'm sure.
The rate changed based on credit score and size of down payment, I think it was around .2-.3% difference to go from 20% down to 5% down in my scenario. I don't remember exactly but the worst rate I was quoted was still less than 4.25% and my other loans are at 6.4 and 5.4.
The PMI stuff isn't a lender choice. Its a regulation. 20% is the min. Depending on the type of loan it could be even more! 4% is the going rate for a standard 80/20 traditional loan. You can get a FHA loan (3.5% to 3.75) without the 20% down with a lower rate but you will have to pay PMI!
Lender Paid is an option if you find a bank willing to go this route, as are 80/10/10 or 80/15/5 routes (I don't like because the second loan is almost always variable and they have to be going up soon one would think). I realize the rates are a fraction higher on lender paid PMI routes to recoup some of that cost, but I can live with the rates I've been quoted thus far and I wouldn't be paying the monthly PMI myself with only 5% down.
A lender can advertise loans with LTV higher than 80% with no charge for PMI. The loan will have a higher interest rate to cover the lender's cost of the insurance. Or they can roll the dice and not insure the loan. There is no law which requires PMI if the bank keeps the loan in house. Also, USDA Rural Development loans do not charge PMI with no $ down.
