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Old 01-18-2019, 09:08 AM
 
1,041 posts, read 435,345 times
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Quote:
Originally Posted by grannynancy View Post
Now I REALLY feel stupid.
My loan had PMI because it was less than 20% [loan made in 2002]
I just assumed ALL loans less than 20% had it.

Makes me less sympathetic towards those who bucked the system with a piggyback loan and those who allowed it.
Just to re-assure you, not everyone with a piggyback loan abuses it... we had one (I'd heard that PMI was notoriously hard to get rid of even after you reached 20% equity). We paid it off early and have been paying extra on the first mortgage since then.

We also bought way less house than we qualified for - I was astounded at the max loan amount, all I could think was we'd never be able to afford anything except a mortgage payment and basic bills, and what if something happened in the future (job loss, etc). This was over a decade ago, btw.
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Old 01-22-2019, 07:40 PM
 
Location: Annandale, VA
9,604 posts, read 7,792,425 times
Reputation: 6209
Quote:
Originally Posted by IndyDancer View Post
Just to re-assure you, not everyone with a piggyback loan abuses it... we had one (I'd heard that PMI was notoriously hard to get rid of even after you reached 20% equity). We paid it off early and have been paying extra on the first mortgage since then.

We also bought way less house than we qualified for - I was astounded at the max loan amount, all I could think was we'd never be able to afford anything except a mortgage payment and basic bills, and what if something happened in the future (job loss, etc). This was over a decade ago, btw.
I refinanced and got rid of the PMI by taking a second mortgage. Why pay over $600/month in non-deductible premiums when you can instead have a deductible home equity line to cover that 20%?
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Old 01-22-2019, 08:16 PM
 
18,919 posts, read 12,367,671 times
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Basically only two types of mortgages *require* insurance (PMI); those that will be sold on to Fannie/Freddie Mae, and or FHA loans.


https://budgeting.thenest.com/mortga...ory-27812.html

https://www.consumerfinance.gov/ask-...urance-en-122/

Private lenders who are going to hold paper on their own books and or other situations aren't required to get those putting less than 20% down to obtain PMI.


That being said and as noted in above links lenders can (and do) have other ways round PMI. One common is simply to attach higher interest rate to those not putting any significant skin in the game (down payment).
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Old Yesterday, 09:56 AM
 
Location: Holly Neighborhood, AUSTINtx
3,497 posts, read 5,172,552 times
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Quote:
Originally Posted by IndyDancer View Post
Just to re-assure you, not everyone with a piggyback loan abuses it... we had one (I'd heard that PMI was notoriously hard to get rid of even after you reached 20% equity). We paid it off early and have been paying extra on the first mortgage since then.

We also bought way less house than we qualified for - I was astounded at the max loan amount, all I could think was we'd never be able to afford anything except a mortgage payment and basic bills, and what if something happened in the future (job loss, etc). This was over a decade ago, btw.
Did not mean to insinuate that. A lot of defaults were not those intentionally looking to abuse the system, but more along the lines of biting off more than they could chew. I care more about the effect than the intent.

If our financial system would be more stable by doing away with PMI loopholes I could see legislation addressing this as a good thing. As an apples or oranges example, if there were loopholes to mandatory auto insurance it would also be good to deal with those.
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Old Yesterday, 10:03 AM
 
1,238 posts, read 374,977 times
Reputation: 2444
Quote:
Originally Posted by grannynancy View Post
Now I REALLY feel stupid.
My loan had PMI because it was less than 20% [loan made in 2002]
I just assumed ALL loans less than 20% had it.

Makes me less sympathetic towards those who bucked the system with a piggyback loan and those who allowed it.
All loans of greater than 80% of the value of the home do need PMI. You take out two loans. One for 80% of the value, and a second for 10-20% of the value of the home with a different bank. There's no PMI because no one loan is for more than 80% of the value of the home.

And yes, people who lost their homes have no one but themselves to blame. Banks didn't make anyone take out loans. If a person can't pay back what they agree to, they have to live with the consequences.
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Old Yesterday, 11:11 AM
 
4,540 posts, read 1,691,101 times
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Quote:
Originally Posted by Lekrii View Post
And yes, people who lost their homes have no one but themselves to blame.
Not always. There were predatory lenders in the mid-2000's who took advantage of people with poor financial skills or people who were not native English speakers. Unethical lenders committed outright fraud -- steering applicants to loan products with higher interest rates even though they qualified for a prime product. Telling applicants that they have a $1,000 per month payment without disclosing the balloon payment down the road. Not disclosing or explaining negative amortization. Some of the banks and mortgage brokers got caught doing this and had to pay large fines.
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Old Today, 09:12 AM
 
1,238 posts, read 374,977 times
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Quote:
Originally Posted by Elliott_CA View Post
Not always. There were predatory lenders in the mid-2000's who took advantage of people with poor financial skills or people who were not native English speakers. Unethical lenders committed outright fraud -- steering applicants to loan products with higher interest rates even though they qualified for a prime product. Telling applicants that they have a $1,000 per month payment without disclosing the balloon payment down the road. Not disclosing or explaining negative amortization. Some of the banks and mortgage brokers got caught doing this and had to pay large fines.
Not disclosing terms is the only scenario where it's not the consumer's fault.

Anyone else should have read the terms of the loans. If I buy a TV from Best Buy and charge it to a credit card, it's not Best Buy's fault if I don't understand that I need to pay the credit card off. This isn't all that different.
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