After talking it over with Harry we both really love the house so we went for the FHA loan with BofA. We had to decide if we were going to use points or not. With an FHA loan you already have 1.25 points but we could go higher and get a lower interest rate. Again Harry and I talked and decided that we would go with 3.375 points which would add an additional $9,271.97 to our closing costs of $4774.00 for a total of $14045.97 in closing costs but it drops our annual interest rate to 4.875%. We did the math and it will take us 4 years and 1 month to break even but then after that every payment will be saving $187 in interest every month. Another thing about FHA loans is that home owner taxes and insurance are built into your monthly payment. With conventional loans you can opt not to include them and pay them bi-annually. So with our house payment, mortgage insurance, home owner insurance and taxes our monthly housing payment will be $2,054.20 a month, but will include everything for the house. And in 4 years 1 month we lose $113 a month dropping our payments down to $1941.20 for the remaining 25 years.
So we started the process of our loan, I'm sure I'll be approved. Next up are well, septic tank and house inspections and then appraisal. And if all goes well the house will be our at the end of July. I'll keep you posted.
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