Brian,

I am a loan officer in NH and we also do loans in MA,GA,ME and ID.
I'm not sure who is giving you your info but you have many more
options on programs. If you went with a cash flow ARM, you can decide
between 4 different payments types each month. It sounds as if you
are sure that you will be moving within 3 years, so you could make
interest only payments or a predetermined monthly payment. You
wouldn't make a dent in the principle but instead of wasting money
renting, you'd still get the write off. Or you could do a 3/27 ARM
with a fixed rate for 3 years with no PMI. And the rate would be
close to a conventional loan rate (depending on your credit). You may
want to shop around some more. If you have any other questions, let
me know.

Terry





(Brian Huether) wrote in message . com...
Thanks for the replies to my last post. I thought I would post a
follow up with more info. To sum up, I am trying to decide if a
80/15/5 loan makes sense for a $339,000 loan. I will be moving in 3
years, and so am going with a 3-1 ARM.

I am military and am moving to the Hanscom AFB area in MA. Renting is
out of the question - I am also a musician and need to modify the
basement to accomodate a recording studio. If the housing costs really
do plummet, then I will seriously consider taking a second assignment
there, or switching to civilian. Also, I am plain sick of renting.
Given that a house rental in the area is around $2200-$2400, I highly
doubt that renting would lead to a considerably better financial
position.

Here are some numbers:

loan amount: $339,000

option 1: 4.5% non-conforming 3-1 ARM, 30 yrs, 0 pts, $220/mo PMI
payment: $1,717.66
payment + plus PMI: $1,938

after 3 years:
balance: $321,828
int. paid: $44,664
equity: $17,172
PMI paid: $7920

option 2: 80/15/5
1. $285,600: 5% conforming 3-1, 30 yrs, 1 orig. fee pt
2. $53,550: 6.5% fixed, 15 yrs


orig fee = $2856

after 3 yrs:
balance: $272,301 + $46,558 = $318,860
int. paid: $41,895 + $9802 = $51,697
equity : $13,299 + $6992 = $20,291

In each case, downpayment = $17,850

I really don't know what to make of this. By avoiding PMI, I end up
with about $3000 more in equity (ok, equity is tough to estimate, but
I just assumed house value remains the same...). But I pay about $3000
for the origination fee. And I would have paid about $7000 more in
interest! But with the 80/15/5, there are tax benefits (which I have
no idea how to compute...).

So with the above numbers, what makes sense? It just isn't clear to
me... Should I do what many people do, and just pay PMI, with the
hopes that after the first year the house has appreciated enough to
remove PMI?

regards,

brian