I am about to buy a house, but my only real option is to get a FHA loan for the mortgage.
I plan on staying in this house for a long time, so paying the MMI / PMI for most of the term of the loan (longer than I would have to with a traditional loan) does not make sense to me.
I want to pay the loan off well before term, but which method makes more sense financially?
- Stick with the FHA loan full term.
Make additional payments and / or pay more per month. Buy points during the initial financing.
- Refinance in a few years.
Put the money that would go to #1's additional payments into a savings account. Pay the required amount each month, and then refinance in a few years. Use the saved money to pay down the principal directly and buy points.