what are some home loan options that reduce the initial monthly payments?

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We’ve made an offer on a home, and i really love it!! it’s perfect!! (well, as perfect as we’re going to find within our budget) it’s $ 149,000.

we are getting $ 10,000 due to the Oregon Housing and Community Services (OHCS) Purchase Assistance Loan (PAL) and getting the rest via a loan (we’re covering the expense of the inspections, though). It comes out that our loan, at 6.75% (6.5% is the lowest that a loan would be here) will have a monthly payment of about $ 1200 (PITI, principal, interest, taxes, insurance–also $ 115 of that is mortgage insurance because the loan is >80%)

is there any options we can look into for lowering our monthly payment at the beginning? we just found out (after making the offer) that we’re having our first baby in feb and i’ve made a budget for my time off & shortly after & we’re just a little short due ONLY to medical expenses… my husband is trying to find a better job, too. we’re definitly going through with this if at all possible.
i was told to look into an 80/20 loan, that would reduce the payment by $ 70 / month.

is there any other loan options?

will Oregon Housing and Community Service (OHCS) Residential Loan Program State Bond Loan help to reduce the monthly payments? (i’m sure we’ll qualify since we qualified for the PAL)

4 Comments
  1. Reply
    valstpatrick
    January 25, 2011 at 5:24 am

    You will not get a better rate at this time or a better assistance program. You are using a MY COMMUNITY loan or some version there of. You are given a 30 year fixed loan with a pretty attractive interest rate given your circumstances – GREATER than 80% loan to value.

    If you elect the 80/20 option, you may NOT be qualified for the 10K or other type of housing grants. Keeping in mind the first loan is 80% at a rate (might be a little lower but not by much) then you have the 20% loan as a second at at least 9%-13% depending – certainly not better.

    If you are paying MIP – that is NOW tax deductible – so there is really NO upside to paying a higher interest aret – where as in the past some borrowers elected to pay higher interest to be able to deduct that amount from taxable income.

    Hope this helps,

  2. Reply
    dzwreck
    January 25, 2011 at 6:20 am

    An 80/20 will be a cheaper option than paying PMI. As for whether or not it will save you at least 70 dollars, it will be roughly around that amount. However, it will simply depend on what the terms of your 80/20 financing are. Shop around between a couple of lenders to find a good deal. The other option is to look into a buydown program such as a 2/1 buydown. This will reduce your interest rate up front and may be exactly something that will fit your needs.

  3. Reply
    JTT Properties
    January 25, 2011 at 7:06 am

    Wow.

    You want to live in the house, but you don’t want to pay for it. You know that constitutes theft right?

    You need to tell them you cannot afford the payments, and see what options they give you. Try to negotiate a short sale as soon as possible. Waiting longer does not help you, you will still owe the money (plus interest).

  4. Reply
    Top Dawg
    January 25, 2011 at 7:48 am

    Boy, that JTT guy is clueless …

    … I say, GET YOURS, SON! String ’em along for about a month, just tell ’em you’re not getting as many hours at work and can’t put food on the table AND pay the mortgage … then start a short sale with an experienced real estate guy, and then hide the cash in your mattress for, like, 8 months or however long it takes to be over (so you can move out with fat stacks, holmes).

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