Go Back  DVD Talk Forum > General Discussions > Other Talk
Reload this Page >

YAMT: Private Mortgage Insurance

Other Talk "Otterville" plus Religion/Politics

YAMT: Private Mortgage Insurance

Old 04-17-08, 08:14 PM
  #1  
mbs
DVD Talk Platinum Edition
Thread Starter
 
mbs's Avatar
 
Join Date: Feb 2005
Posts: 3,519
Likes: 0
Received 0 Likes on 0 Posts
YAMT: Private Mortgage Insurance

I am moving from Berkeley, CA to Ann Arbor, MI and am planning on buying a house (soon). I had a loan pre-approved with an 80/15/5 piggyback with putting down 5%. This was to avoid paying PMI. Also, I am selling a house I inhereted (in Ohio) and planned on paying off the piggyback mortgage once that house sold.

Today I found out that no banks (at least in the area) will approve a piggyback loan. So I'm stuck with paying PMI.

Onto my questions.

1) I was told PMI _had_ to be in effect for at least 2 years? That is, if I sold the house in Ohio and used the profits to pay down the mortgage, I would still have to pay PMI for 2 years despite having >20% equity. Is this particular to the bank I talked with or common for all lenders?

2) If I buy a house that is appraised at 20% higher than the amount financed, do I need PMI? Would I even need a downpayment at all in this case? From what I have seen of the housing market in the Detroit area, this is certainly possible.

I have saved up about 10% (30k), but don't currently have enough to cover 20% and I'm trying to find a way I won't need to pay PMI. Given that I hope to sell the house in Ohio soon, PMI for a few months would be acceptable, but I would hate paying 24 months of PMI for no reason.
Old 04-17-08, 08:19 PM
  #2  
DVD Talk Hall of Fame
 
Join Date: Nov 2000
Location: On the banks of the Red Cedar
Posts: 9,867
Likes: 0
Received 0 Likes on 0 Posts
In Mich. I got a home equity after 1 year to eliminate my PMI. It may be in your lender contract on how long you need to keep it.

I also believt that if the amount you owe < 80% value then you won't need PMI either, but I am not positive on that one.


BTW, Ann Arbor sucks!
We may be moving out towards Howell, maybe we can hang out at some point.

*Goes off to check other mbs posts to check him out*

Last edited by jonw9; 04-17-08 at 08:21 PM.
Old 04-17-08, 09:02 PM
  #3  
DVD Talk Limited Edition
 
Join Date: Jan 2001
Posts: 6,635
Likes: 0
Received 0 Likes on 0 Posts
I believe after two years on the same loan, with no missed payments and 20% equity, you are QUALIFIED to get rid of the PMI (thats what they mean by you need it for at least 2 years). In jonw9's case, maybe his loan was eligible/matured after 1 year. So yeah, if you applied your profits to that current loan, then yes you would have to wait at least 2 years for the loan to mature.

But, You can always refi with a different lender if you have the equity to get rid of the PMI. (Assuming no pre-payment penalty on the original loan)

edit to add: Don't assume the ohio place will sell fast. Personally I would rent for 6 months, learn the areas better, sell your ohio place, then purchase. The housing market isn't going to skyrocket in the next year or 3, so no need to rush. You may even be able to save up an extra 5% down while renting.

The reason they aren't allowing 5% without PMI now is that FannieMae upped its limits to 10%, and for 5% loans, you are left with FHA loans that require PMI.

Last edited by grrrah; 04-17-08 at 09:08 PM.
Old 04-17-08, 09:03 PM
  #4  
mbs
DVD Talk Platinum Edition
Thread Starter
 
mbs's Avatar
 
Join Date: Feb 2005
Posts: 3,519
Likes: 0
Received 0 Likes on 0 Posts
Originally Posted by jonw9
*Goes off to check other mbs posts to check him out*
Find anything interesting?

Last edited by mbs; 04-17-08 at 09:07 PM.
Old 04-17-08, 09:06 PM
  #5  
mbs
DVD Talk Platinum Edition
Thread Starter
 
mbs's Avatar
 
Join Date: Feb 2005
Posts: 3,519
Likes: 0
Received 0 Likes on 0 Posts
Originally Posted by jonw9
I also believt that if the amount you owe < 80% value then you won't need PMI either, but I am not positive on that one.
I guess I can hope for this, but I'm know I cannot expect this to be the case. I do know the house I inherited in Ohio is listed for about 75% of what a bank-approved appraiser told us it was worth (two weeks ago). And much like in Michigan, the house in Ohio isn't selling, even at 75% of the appraised value.
Old 04-17-08, 09:13 PM
  #6  
Senior Member
 
Join Date: Apr 2006
Location: W.Mass
Posts: 305
Likes: 0
Received 0 Likes on 0 Posts
I know at my bank as soon as you hit 80% you can call up and have PMI taken off. We get nothing out of you paying it, so it's doesn't matter to us after that. If you don't call to get it taken off then once you hit either 76 or 74% (I forget which) it comes off automatically. I don't see any reason why you would be forced to pay it for 2 years, but every institution is different so you never know.
Old 04-17-08, 09:18 PM
  #7  
mbs
DVD Talk Platinum Edition
Thread Starter
 
mbs's Avatar
 
Join Date: Feb 2005
Posts: 3,519
Likes: 0
Received 0 Likes on 0 Posts
Originally Posted by so it goes
I don't see any reason why you would be forced to pay it for 2 years, but every institution is different so you never know.
LaSalle/BofA said it was due to the minimum contract with their PMI insurer being 2 years.

The posts here are encouraging that this isn't always the case. I am going to call other banks tomorrow.
Old 04-17-08, 11:40 PM
  #8  
DVD Talk Godfather
 
The Bus's Avatar
 
Join Date: Aug 2001
Location: New York
Posts: 54,876
Likes: 0
Received 0 Likes on 0 Posts
I'll take a look at this tomorrow once I'm not so "tired"...

But the value of the house is the lower of the appraised or the sales value. If the house is valued at $150,000 but you're buying it for $120,000, it's not worth $150k. It's worth $120k.

The secondary market is dry/dead. PMI is now tax deductible and is 7 times out of 10 the better choice. This was not the case a few years ago, but it is now.

FHA PMI I believe stays until the loan balance goes to 78% of the original sales price. Conventional PMI can be removed in 1 or 2 years, depending on the lender.

If you want, contact the MI insurers directly. The major ones are Genworth, MGIC, and uh, I forget the other ones. Theoretically, you should be able to get MI with whomever you want.
Old 04-18-08, 12:15 AM
  #9  
mbs
DVD Talk Platinum Edition
Thread Starter
 
mbs's Avatar
 
Join Date: Feb 2005
Posts: 3,519
Likes: 0
Received 0 Likes on 0 Posts
Originally Posted by The Bus
If the house is valued at $150,000 but you're buying it for $120,000, it's not worth $150k. It's worth $120k.
This makes sense.

Originally Posted by The Bus
PMI is now tax deductible
Well, provided you make less than $109,000, right? That will leave me in the non-deductable category (but not by much).

Originally Posted by The Bus
Conventional PMI can be removed in 1 or 2 years, depending on the lender.
I could live with 1 year. I just hate the idea of paying PMI even if I can (within a few months) get my equity to be >20%. I know I can just wait a few months for the house in Ohio to sell, but I have to move to MI in June (for the new job) and have no interest in renting (I'll pay 2 years of PMI if it comes to that to avoid renting any longer).

Thanks for your comments, Bus. I will call the PMI insurers you mentioned tomorrow or early next week. If I find a PMI company whose terms I like, will any bank accept whichever company I prefer, or do banks have one chosen PMI company?

Last edited by mbs; 04-18-08 at 12:21 AM.
Old 04-18-08, 12:29 AM
  #10  
mbs
DVD Talk Platinum Edition
Thread Starter
 
mbs's Avatar
 
Join Date: Feb 2005
Posts: 3,519
Likes: 0
Received 0 Likes on 0 Posts
Originally Posted by grrrah
edit to add: Don't assume the ohio place will sell fast. Personally I would rent for 6 months, learn the areas better, sell your ohio place, then purchase. The housing market isn't going to skyrocket in the next year or 3, so no need to rush. You may even be able to save up an extra 5% down while renting.
Even if the house in Ohio didn't exist, I would still be buying a house. I've been renting too long and I hate it. Where I currently live (Berkeley), I have no other option. But it seems with renting either I choose something nice and have very little leftover to save or I live in a shithole and save a good amount (which is what I am currently doing).

I do understand wanting to know the area. However, I have been there several times in the past year (interviews and other visits) so I have a decent idea of where I want to live.

The reason they aren't allowing 5% without PMI now is that FannieMae upped its limits to 10%, and for 5% loans, you are left with FHA loans that require PMI.
Makes sense. I can do the 10% (I'm at least very close to that now and can pinch some pennies to make it happen) and go with the non-FHA loans, would that not require PMI? From what I heard today (from the lender I had chosen earlier), it was either 20% or pay PMI. I will call other banks first thing tomorrow. Hopefully I can do 10% and no PMI.

Last edited by mbs; 04-18-08 at 12:33 AM.
Old 04-18-08, 12:44 AM
  #11  
DVD Talk Legend
 
Heat's Avatar
 
Join Date: Dec 2000
Location: Central Illinois
Posts: 16,701
Likes: 0
Received 0 Likes on 0 Posts
Any chance that you could take out a home equity loan on your Ohio house to raise your down payment to 20%?

Else, keep talking to banks - putting 10% down and taking out a line of equity for 10% to avoid PMI is a common occurance, one of the banks in the new area will do it.
Old 04-18-08, 12:49 AM
  #12  
mbs
DVD Talk Platinum Edition
Thread Starter
 
mbs's Avatar
 
Join Date: Feb 2005
Posts: 3,519
Likes: 0
Received 0 Likes on 0 Posts
Originally Posted by Heat
Any chance that you could take out a home equity loan on your Ohio house to raise your down payment to 20%?
My understanding is that you cannot get home equity if it's listed for sale. However, I have not seriously looked into it, to be honest. This was based on a quick internet search.

Else, keep talking to banks - putting 10% down and taking out a line of equity for 10% to avoid PMI is a common occurance, one of the banks in the new area will do it.
Good to know.

I appreciate all of the help and advice. It's very frustrating because I thought I had this all taken care of (securing financing) over a month ago. Then today I'm finally informed that my pre-approval for the 85/15/5 isn't possible anymore (gee, thanks for waiting 16 days to tell me that LaSalle).
Old 04-18-08, 06:40 AM
  #13  
DVD Talk Hall of Fame
 
Join Date: Nov 2000
Location: On the banks of the Red Cedar
Posts: 9,867
Likes: 0
Received 0 Likes on 0 Posts
I didn't actually look into your past, maybe when i get to work!
More importantly, how in the hell did you manage to find a job in Michigan??

I didn't realize the value thing (buy vs. appraised) but I am pretty sure what I did was after 1 year, have my house appraised, then got a Home Equity to cover the difference up to 20%.

These types of thing appears less likely now, as we are all being punished by those who didn't make their payments.
Old 04-18-08, 08:05 AM
  #14  
DVD Talk Special Edition
 
Join Date: Sep 2007
Posts: 1,915
Likes: 0
Received 0 Likes on 0 Posts
Pretty sure once your appraisal clears you, you can get out
Old 04-18-08, 08:44 AM
  #15  
DVD Talk Hero
 
Join Date: Aug 2001
Location: in da cloud
Posts: 26,196
Likes: 0
Received 0 Likes on 0 Posts
Originally Posted by Heat
Any chance that you could take out a home equity loan on your Ohio house to raise your down payment to 20%?

Else, keep talking to banks - putting 10% down and taking out a line of equity for 10% to avoid PMI is a common occurance, one of the banks in the new area will do it.

you must have missed all the stories where banks are taking huge losses on HELOC's and other loans that aren't a first lien and cutting them out even to good credit customers
Old 04-18-08, 08:50 AM
  #16  
DVD Talk Godfather
 
The Bus's Avatar
 
Join Date: Aug 2001
Location: New York
Posts: 54,876
Likes: 0
Received 0 Likes on 0 Posts
Originally Posted by Jacoby Ellsbury
Pretty sure once your appraisal clears you, you can get out
There's definitely minimum terms with some lenders.

Also, you can put down 5%. Fannie Mae / Freddie Mac still allow 5% down. In declining markets, they reduce that by another 5%.

The highest LTV that you can do with anyone (Conventional or FHA) is 97%, save some very very specific FHA programs. 100% conventional doesn't exist, or if it does, it's some subprime program you wouldn't want anyway.
Old 04-18-08, 04:13 PM
  #17  
mbs
DVD Talk Platinum Edition
Thread Starter
 
mbs's Avatar
 
Join Date: Feb 2005
Posts: 3,519
Likes: 0
Received 0 Likes on 0 Posts
I called a bunch of Ann Arbor banks today. Most of them told me with my credit score (which is in the "excellent" range, supposedly), I should be able to get a 5% down, no PMI loan with a piggyback. That said, there were no guarantees and everyone I spoke with today wanted me to have an offer on a house before proceeding. I'm meeting with two of them while in MI next week, but that will likely be after I have an offer out.

Is this normal? It seems like I should be able to find this out before putting an offer out. I guess it is a good thing I would buy despite the possibility to need PMI. Seems like a bad way to go, having an offer out and not exactly certain if I can find a loan that I am happy with.

One of the banks even seemed to indicate that my chances would be improved by having my savings and checking account with them. I might do it if I felt like I received a great mortgage loan, but I'm not switching to them on the chance it will get me a better loan. Seems a little shady.
Old 04-18-08, 04:15 PM
  #18  
DVD Talk Godfather
 
The Bus's Avatar
 
Join Date: Aug 2001
Location: New York
Posts: 54,876
Likes: 0
Received 0 Likes on 0 Posts
Originally Posted by mbs
Is this normal? It seems like I should be able to find this out before putting an offer out. I guess it is a good thing I would buy despite the possibility to need PMI. Seems like a bad way to go, having an offer out and not exactly certain if I can find a loan that I am happy with.
They're just being lazy. They can run your info through an automated underwriting system and get you your results.
Old 04-18-08, 04:28 PM
  #19  
DVD Talk Limited Edition
 
Join Date: Jan 2001
Posts: 6,635
Likes: 0
Received 0 Likes on 0 Posts
Originally Posted by mbs
Makes sense. I can do the 10% (I'm at least very close to that now and can pinch some pennies to make it happen) and go with the non-FHA loans, would that not require PMI? From what I heard today (from the lender I had chosen earlier), it was either 20% or pay PMI. I will call other banks first thing tomorrow. Hopefully I can do 10% and no PMI.
From what I understand, you can avoid the PMI with 2 loans (80/10), but the 10% loan will have a much higher interest rate and the extra cost is usually competetive with the price of paying PMI. You can only get rid of that by refinancing, whereas the PMI you just need to appraise (and pass the minimum time length).
Old 04-18-08, 04:34 PM
  #20  
DVD Talk Special Edition
 
Join Date: Sep 2007
Posts: 1,915
Likes: 0
Received 0 Likes on 0 Posts
How do the 5% Fannie Mae rates compare to say the best rate I find on bankrate.com Are you saying the 5% Fannie Mae's doesnt have PMI?
I can do a search for a 5% down payment loan on bankrate.com in massachusetts as most people dont have $50-100K for the 20% it would take to buy a home in that state, so 5% is pretty common and the lowest rate currently is 5.875% on a 5% down loan. Wow rates shot up from last week, up 1/4 percent. 5.625-5.5% last week when I was looking.
Old 04-18-08, 04:37 PM
  #21  
mbs
DVD Talk Platinum Edition
Thread Starter
 
mbs's Avatar
 
Join Date: Feb 2005
Posts: 3,519
Likes: 0
Received 0 Likes on 0 Posts
Originally Posted by grrrah
From what I understand, you can avoid the PMI with 2 loans (80/10), but the 10% loan will have a much higher interest rate and the extra cost is usually competetive with the price of paying PMI.
These "piggyback" loans are supposedly very rare since April 1. At least this is what I have been told. But this is the path that I prefer, as I can (assuming no pre-payment penalty) pay off the second higher interest rate loan once the house in Ohio sells. I had a lender approve me for this loan and then just recently tell me they do not offer them anymore.
Old 04-18-08, 05:01 PM
  #22  
DVD Talk Godfather
 
The Bus's Avatar
 
Join Date: Aug 2001
Location: New York
Posts: 54,876
Likes: 0
Received 0 Likes on 0 Posts
Originally Posted by Jacoby Ellsbury
How do the 5% Fannie Mae rates compare to say the best rate I find on bankrate.com Are you saying the 5% Fannie Mae's doesnt have PMI?
I can do a search for a 5% down payment loan on bankrate.com in massachusetts as most people dont have $50-100K for the 20% it would take to buy a home in that state, so 5% is pretty common and the lowest rate currently is 5.875% on a 5% down loan. Wow rates shot up from last week, up 1/4 percent. 5.625-5.5% last week when I was looking.
Rates did go up this week.

Yes, the rate is essentially the same but there's some modifiers based on credit, etc. So it will be similar if not exact.
Old 04-27-08, 10:30 PM
  #23  
mbs
DVD Talk Platinum Edition
Thread Starter
 
mbs's Avatar
 
Join Date: Feb 2005
Posts: 3,519
Likes: 0
Received 0 Likes on 0 Posts
Update:

I was in Ann Arbor last week and met with a few banks. While none of the "national" banks were willing to go with the portfolio loan (85-15 with 5% down), a local bank (which is a great mortgage bank according to my Realtor) was willing to do it, where they are holding the second loan in-house.

So it looks like one can still avoid paying PMI with only 5% down.

I still don't have a house, but did put in an offer. It was on a short-sale property, so it might be a while before I hear back from the seller's bank.
Old 04-27-08, 10:39 PM
  #24  
DVD Talk Godfather
 
The Bus's Avatar
 
Join Date: Aug 2001
Location: New York
Posts: 54,876
Likes: 0
Received 0 Likes on 0 Posts
Originally Posted by Jacoby Ellsbury
How do the 5% Fannie Mae rates compare to say the best rate I find on bankrate.com Are you saying the 5% Fannie Mae's doesnt have PMI?
Bankrate is full of bullshit.
Old 04-28-08, 12:15 AM
  #25  
Moderator
 
Jadzia's Avatar
 
Join Date: Jul 1999
Location: Michigan
Posts: 15,799
Likes: 0
Received 0 Likes on 0 Posts
Just wanted to say good luck with the move, mbs! I live in Ann Arbor (well, just outside in Saline.) Look me up if you ever want to hang out.

Thread Tools
Search this Thread

Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service - Do Not Sell My Personal Information

Copyright 2018 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.