Posted: 2/24/2012 7:35:54 AM EDT
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Lets say the house I am looking at is $285,000. Putting down 5% on a 3.73% 30 year loan. So that is $17100. Is there anyway to avoid PMI? Can I take a hit on percentage rate to possibly avoid it?
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Put 20% down. I'd need to take out another loan (micro loan?) to afford the extra 14%. Also this is average price of a nice home where I live in MA. Some people do that - I think it used to be called a "bridge loan" - but I am not sure if lenders are as willing to allow that these days, or if it is much more difficult to get such loans. |
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Put 20% down. I'd need to take out another loan (micro loan?) to afford the extra 14%. Also this is average price of a nice home where I live in MA. Some people do that - I think it used to be called a "bridge loan" - but I am not sure if lenders are as willing to allow that these days, or if it is much more difficult to get such loans. Bridge loans are temporary financing to facilitate the move from one property to another, just FYI. As stated already in the thread, 80% is the magic number. If your 1st mortgage LTV is 80% or less, no PMI. Whether you take a 2nd or bring more cash to close doesn't really matter as far it's concerned. |
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not until you hit a certain percentage of the mortgage. Around here it is generally 20 percent of the appraised value. Mine is 20% appraised value OR 20% of sale price, whichever is harder to accomplish.  So even though I bought a foreclosure at 73% of market value w/ 5% down, I still get to pay PMI until I'm in for 20% of the sale price.
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Thanks guys!! was unaware of PMI going away after the 20%. It does not always go away. Some lenders will screw you and say you have to pay 5 years of PMI, no matter what the actual value of the home is (think appreciation or you paying it down to the 80% level). If you are doing 5 down, look for an 80/15 loan. |
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Thanks guys!! was unaware of PMI going away after the 20%. It does not always go away. Some lenders will screw you and say you have to pay 5 years of PMI, no matter what the actual value of the home is (think appreciation or you paying it down to the 80% level). If you are doing 5 down, look for an 80/15 loan. That blows!! I'd find a new lender. |
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Can someone explain the 80/15 80/20 loans in lamen terms. Did some googling around but its all chinese to me. It's basically a 2nd mortgage on the house. The first is for the 80%. and the 2nd is for whatever % you need + your down payment to equal 100%. The 2nd loan is usually a shorter term and slightly higher interest rate. Example house 200k 1st mortgage 160k (80%) 30year loan 2nd mortgage 40k (20%) 15 year loan |
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Can someone explain the 80/15 80/20 loans in lamen terms. Did some googling around but its all chinese to me. It's basically a 2nd mortgage on the house. The first is for the 80%. and the 2nd is for whatever % you need + your down payment to equal 100%. The 2nd loan is usually a shorter term and slightly higher interest rate. Example house 200k 1st mortgage 160k (80%) 30year loan 2nd mortgage 40k (20%) 15 year loan Also, the smaller loan has a higher percentage rate. When I bought my house, it was cheaper to pay the PMI than it was to pay the higher rate on the smaller loan. |
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80/20 loans It's two loans. One for 80, the other for 20. Mine was an 80/10/10. 80% mortgage, 10% cash, 10% second mtge. Kept me out of PMI and allowed me to do a lot of necessary work. Worked out very well for me. OPs money guy should be able to figure this out. If he can't, Op needs a new money guy. ETA: the secondary loan was a dreaded "interest-only" loan. 17 years of low low interest payments, with all the principal due at the end. I paid it off waaaaaaay faster than that. They work out well, if you know how to use 'em. |
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Lets say the house I am looking at is $285,000. Putting down 5% on a 3.73% 30 year loan. So that is $17100. Is there anyway to avoid PMI? Can I take a hit on percentage rate to possibly avoid it? PMI is fucking bullshit anyway.... But 20% is usually the ticket to avoiding it. |
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Thanks guys!! was unaware of PMI going away after the 20%. Yes, but in order for that to happen you have to pay a large premium up front. I want to say mine was 4% or so of the loan total. The monthly payment for PMI is lower this way and it also goes away after 20% equity. The alternative is a higher payment for the life of the loan but no initial premium. Quoted:
Mine was an 80/10/10. 80% mortgage, 10% cash, 10% second mtge. Kept me out of PMI and allowed me to do a lot of necessary work. Worked out very well for me. What was the rate on the 10%? 8%? |
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Quoted: Put 20% down. Or get a second loan (family?) to get to 20%. Or pay PMI but as soon as you hit 20% equity with your payments make sure PMI is removed. Pretty much this. We did an 80/8/12 loan with the bank when we bought our house (80% mortgage loan, 8% second loan, and 12% down). No PMI. The interest rate on the second loan is higher than the mortgage. Still was a lot cheaper than PMI. We didn't quite have 20% equity when we refinanced, but the credit union let us take out up to 5% as a home equity loan. We used that to pay the difference. |
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Sounds like 20% down isn't an option, so pay PMI until you reach 20% equity If property values rise, you could get 20% equity sooner than just making payments would get you there. Watch property values in your neighborhood, don't just "assume" your equity is exactly what the amortization chart says it is. Getting rid of PMI was a big motivator for me to make extra payments. On my loan (and most, from what I've heard) you couldn't get rid of PMI until after the second year of the loan. Paying PMI got me into a house sooner and saved a lot more rent than what the PMI cost me... PMI was a good thing and worked well for me. |
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not until you hit a certain percentage of the mortgage. Around here it is generally 20 percent of the appraised value. Mine is 20% appraised value OR 20% of sale price, whichever is harder to accomplish. So even though I bought a foreclosure at 73% of market value w/ 5% down, I still get to pay PMI until I'm in for 20% of the sale price.You might think about refinancing, if you shop around at banks/credit unions that keep loans in house, you can get closing costs of around $900 vs. $2500-$3500. That'll teach 'em to not cancel your PMI! |
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If this is your first house look into an fha loan. It has a lot lower pmi than most other loans. This may have changed, but last I looked PMI was "baked" into the FHA loans... only a small down payment was required, but the interest rate was higher for the life of the loan. There was no separate charge for PMI so it could never be cancelled. Therefore, anybody with enough down payment was better off to go conventional. |
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Thanks guys!! was unaware of PMI going away after the 20%. Yes, but in order for that to happen you have to pay a large premium up front. I want to say mine was 4% or so of the loan total. The monthly payment for PMI is lower this way and it also goes away after 20% equity. The alternative is a higher payment for the life of the loan but no initial premium. Quoted:
Mine was an 80/10/10. 80% mortgage, 10% cash, 10% second mtge. Kept me out of PMI and allowed me to do a lot of necessary work. Worked out very well for me. What was the rate on the 10%? 8%? Can't say i remember. It was indexed to the prime or some such. Started out at some nice intro rate for a few months, then indexed up by some specified increment each month until it reached the indexed value and oscillated with market rates after that. Not a lot, it was very managable. |