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Happy home hunting!
Jess
I live in chicago and I am taking out a mortgage for 240,000 with 5% down. The bank has offered me 6.625 with no PMI or 6.25 with PMI. Is this good or could I do better ?
You could get rate of 6.125 with PMI. Shop around.
Hello,
Both rates are good and reflect the market. How much you are charged for either rate is an important factor because of you are being charged (for example) 1 point or origination fee for the 6.625 %, in addition to other bank fees and third party charges, you are paying too much. You should definitely go onto major lenders’ websites for a comparison; Wells Fargo, Chase, Citimortgage, etc, are good sites because you can check out the rates without having to provide too much information.
You can always buy down the rate, but your fees will be higher and it will take you a longer time to break even on the costs. The rate difference between the two products is substantial, but you may also want to consider how much your monthly PMI will be and how long it will last.
By the way, have you even considered an 80/15/5? That’s a first mortgage with a 2nd mortgage. The 2nd mortgage has a much higher rate, but it will assist you with the 20 % down, it’s a tax write off whereas PMI is so far only a tax write off for 2007. Ask your LO about it.