A first time homebuyer had done some online research and told me they wanted a CHFA mortgage with a 30 year fixed rate of 4.00%. They had excellent credit, income and enough cash to put down 20% on their home purchase. They wanted more cash on deposit after their purchase and they were putting down 10% with both loan programs.
Here are the options I gave them -
CHFA = 2,000 in points for the rate
PMI = 150.00 per month for 5 years minimum (= 9,000)(average is 10 years)
200,000 loan @ 4% = 954.83 + 150.00 = 1104.83 per month
10% down 30 year fixed
1 time MI payment (complete tax deduction) = 2,250
200,000 loan @ 4.375% = 998.57 per month
CHFA = 1104.03 x 5 years = 66,241.80
10% down = 998.57 x 5 years = 59,914.20
A real dollar savings to them of 6,300.60 over 5 years, and remember the 150.00 per month for the mortgage insurance did not pay down the principal of their loan - it is a direct benefit to the lender.
and over 30 years
CHFA = 361,739
Conventional = 359,485
This is the kind of long and short term planning that is necessary for the best debt program for your needs.
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