The Melcher Agency

Additional Financial Info.

In Arizona, the primary vehicle for securing a loan made by a lender is a note and deed of trust. As a general rule, all loans in excess of 80% loan to value must be insured. The three primary insurers are conventional insurers, FHA and VA.

(A) Conventional insurance will cost from about 1.05% to 3/10 of 1% per year paid each month at 1/12 of yearly rate. Called "PMI." Origination fee is usually 1%.

(B) FHA - a cost 1/2 of 1% paid each month @ 1/12 of yearly rate. Called "MIP." Origination fee usually 1% plus about 1.5% for FHA fee. The maximum loan has been increased to $154,900.

(C) VA - no monthly fee after origination but must be an eligible veteran. Origination fee usually 1% plus a 2% or 3% VA fee.

Conventional Lenders:
There is a wide variety of loans available and they change almost daily. Most Buyers who have good credit find the most reasonable loan in a conventional loan. To move into a home, you should figure 2 to 3% cash needed to close in addition to the down payment. As an example, if you are buying a home for $200,000 and plan on putting $20,000 down, the loan would be $180,000. Therefore, you should allow up to an additional $6,000 for closing costs (3% of $200,000). This includes financing cost, escrow costs and prepaids (insurance and taxes).

It is always easier to work from an example. Below is an example for a $100,000 sales price. If you want to see the figures for a $150,000 with 10% down, just multiply all the figures under 10% by 1.5. For $250,000, use a 2.5 multiple. For $80,000 use a 0.8 multiple. Here is the typical chart:

Percentage Down 5% 10% 20%
Cash down $5,000.00 $10,000.00 $20,000.00
Loan @ 7.0% for 30 years $95,000.00 $90,000.00 $80,000.00
Principal & Interest 631.75 598.50 532.00
Private Mortgage Insurance 61.75 39 - 0 -
Taxes = 1,000
Est. Ins. = 480
1,480/12 = Total 
Approximate Payment
  Rounded Up:
$ 817
$ 761
$ 656
Gross Earnings Needed
    Per Month
    Per Year $35,004 $32,616 $28,116

These figures are approximate. The exact amounts will be determined by your lender, based upon your financial situation and the amount of other obligations you may have.

If you have any questions, please e-mail us or call 1-800-338-8160.

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