You are considering the purchase of a $125,000 home with data as follows:
Borrower data
Monthly Federal Income Taxes $382
Monthly State Income Taxes $65
Monthly FICA withholding $148
Property Data
Hazard insurance premium $480 per year
Property taxes $408 per year
Maintenance expenses $492 per year
Utilities $1,272 per year
You would like a fixed-rate, constant-payment 25-year mortgage. You are a VA and are eligible for a VA guaranteed mortgage, however you have used your VA guarantee benefits. In your current occupation you earn $52,000 annually over the last several years. You incur expenses of approximately $8,000 annually related to that income. You have a good credit record, with current obligations of $250 monthly for car payment and $125 monthly for school loan. If you decide to take a FHA 203(b) mortgage the closing cost allowance will be $1,000. The property has been appraised for $125,000.
a. Calculate the maximum mortgage amounts for conventional insured and FHA. Do not include any of the costs of mortgage insurance in these amounts.
b. The appropriate FHA up-front mortgage insurance premium on the loan request is 3.2 percent of the mortgage amount and the annual mortgage insurance premium will be .75 percent of the beginning loan balance. Also, you determine that the renewal premium on conventional mortgage insurance will be .35 percent of the mortgage balance outstanding annually. You feel like the available interest rate on each of the loan types considered will be 6.75 percent. You would like to finance the FHA insurance premium in the loan amount rather than pay for them in cash. What would your monthly payment be for principal and interest and mortgage insurance or guarantee be on each of the loans being considered?