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Old 03-11-2009, 08:26 PM
 
1 posts, read 6,063 times
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I was told today that my PMI could get denied because I'm only putting 5% down on my first home. This lender told me that no one in the area (Eastern Massachusetts) would get approved because we are in a declining market? But the lender I am dealing with says that we are not in a declining market and that my PMI will be fine. I've know the first lender for a long time as a friend and I know they are not just trying to get my business. I just want to know what the facts are about getting approval for your PMI. I have a mid 700s credit score if that helps.

Thanks!
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Old 03-11-2009, 09:18 PM
 
148 posts, read 507,598 times
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I'm confused. I thought PMI was an an extra insurance you have to pay the lender in addition to your mortgage until you have 20% equity?
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Old 03-11-2009, 09:57 PM
 
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,262,258 times
Reputation: 958
Quote:
Originally Posted by OD1010 View Post
I was told today that my PMI could get denied because I'm only putting 5% down on my first home. This lender told me that no one in the area (Eastern Massachusetts) would get approved because we are in a declining market? But the lender I am dealing with says that we are not in a declining market and that my PMI will be fine. I've know the first lender for a long time as a friend and I know they are not just trying to get my business. I just want to know what the facts are about getting approval for your PMI. I have a mid 700s credit score if that helps.

Thanks!
Here is a list of declining market counties in MA.

Barnstable
Norfolk
Plymouth
Suffolk
Middlesex
Essex
Berkshire
Bristol
Franklin
Hampden
Hampshire
Worcester

You could also check mortgage insurance company websites. Many of them have rate calculators. You input your specific info and the website will generate a rate quote. If you are in fact in a declining market, as I suspect you are, the rate quote will not price out or there will be an additional message stating that your parameters may not meet guidelines. At 95% LTV your MI coverage will be 25%, so enter that in the appropriate field.

http://radian.biz/mortgage/micalc/ratefinderinput.aspx (broken link)

https://www.e-pmi.com/pmib/MIOrigination/GetRateServlet (broken link)

MGIC Rate Finder: Calculate Quotes
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Old 03-12-2009, 10:53 AM
 
2,384 posts, read 4,573,154 times
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I'm not in Mass (I'm in NY) but I inquired about an apartment and putting down 10 percent. The real estate agent said that would be fine with the Board and the bank but he didn't think that I'd be able to find anyone to underwrite the PMI as they have tightened up so much so I was best off waiting until I have 20 percent down.
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Old 03-12-2009, 11:57 PM
 
222 posts, read 800,549 times
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I don't think the PMI will be affected by your down payment but the declining market can affect your down payment.

Confused yet? We were going to put 5% down on a home and we were having to pay for PMI because of it. Everything was fine, the appraisal and inspection were done and then it was off to underwriting. It wasn't until it came back from underwriting that we were told we would need to put 10% down because the appraiser marked that there was an "oversupply" and it was a declining market. The loan info had been in underwriting for 2 weeks and our LO was notified of this 1 week before closing and we were notified 2 days before closing.

Needless to say the LO should have known when it came back from the appraiser but he didn't bother to look the appraisal over before sending it on to underwriting. The LO challenged the appraiser and it was reversed so we only had to put 5% down but that was after 4 days of continuous checking up, calling the supervisor of the LO because he wasn't communicating with us and it ended up that we were 2 days late in closing. The frustrating part is he could have been challenging it the whole time it was at underwriting if he had only looked at the appraisal before sending it on.

My husband thought that the bank was just after the extra 5% down since they knew that we had it but the LO said it was a rule with Fannie and Freddie but he had never had it enforced. We were the first ones this had happened to (that he had worked with) after 18 years in the mortgage business. That didn't make me feel any better. Good luck!
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Old 03-13-2009, 08:23 AM
 
Location: Visitation between Wal-Mart & Home Depot
8,308 posts, read 34,900,717 times
Reputation: 7107
Quote:
Originally Posted by OD1010 View Post
I was told today that my PMI could get denied because I'm only putting 5% down on my first home. This lender told me that no one in the area (Eastern Massachusetts) would get approved because we are in a declining market? But the lender I am dealing with says that we are not in a declining market and that my PMI will be fine. I've know the first lender for a long time as a friend and I know they are not just trying to get my business. I just want to know what the facts are about getting approval for your PMI. I have a mid 700s credit score if that helps.

Thanks!
Just to be sure we're talking about the same thing - PMI (Private Mortgage Insurance) is a way for banks to stick you with an additional fee if a potential borrower is unable to demonstrate solvency by paying 20% of the total loan amount.
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Old 03-13-2009, 10:46 AM
 
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,262,258 times
Reputation: 958
Quote:
Originally Posted by Bridget View Post
I don't think the PMI will be affected by your down payment but the declining market can affect your down payment.

Confused yet? We were going to put 5% down on a home and we were having to pay for PMI because of it. Everything was fine, the appraisal and inspection were done and then it was off to underwriting. It wasn't until it came back from underwriting that we were told we would need to put 10% down because the appraiser marked that there was an "oversupply" and it was a declining market. The loan info had been in underwriting for 2 weeks and our LO was notified of this 1 week before closing and we were notified 2 days before closing.

Needless to say the LO should have known when it came back from the appraiser but he didn't bother to look the appraisal over before sending it on to underwriting. The LO challenged the appraiser and it was reversed so we only had to put 5% down but that was after 4 days of continuous checking up, calling the supervisor of the LO because he wasn't communicating with us and it ended up that we were 2 days late in closing. The frustrating part is he could have been challenging it the whole time it was at underwriting if he had only looked at the appraisal before sending it on.

My husband thought that the bank was just after the extra 5% down since they knew that we had it but the LO said it was a rule with Fannie and Freddie but he had never had it enforced. We were the first ones this had happened to (that he had worked with) after 18 years in the mortgage business. That didn't make me feel any better. Good luck!

These days PMI can be affected by your down payment as well as your credit score, property type, occupancy status, purpose of mortgage (purchase, rate and term refi, cash out refi) and location. Lenders are not the only one's who have tightened up, mortgage insurance companies have tightened up plenty.

Quote:
Originally Posted by jimboburnsy View Post
Just to be sure we're talking about the same thing - PMI (Private Mortgage Insurance) is a way for banks to stick you with an additional fee if a potential borrower is unable to demonstrate solvency by paying 20% of the total loan amount.
With all due respect, it is not up to the banks when it comes to PMI. Due to government regulation FNMA and FHLMC cannot purchase loans over 80% loan to value without mortgage insurance. If a lender wants to sell their loan to the GSEs they absolutely need the amount over 80% LTV insured.
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Old 03-13-2009, 07:00 PM
 
1,319 posts, read 2,224,183 times
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So what's the scam when these lenders offer no PMI with less than 20% down? I noticed this offer in my local newspaper when I was looking through rates.
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Old 03-13-2009, 08:49 PM
 
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,262,258 times
Reputation: 958
Either they are a portfolio lender that holds their loans rather than selling them to the GSE's, or it is lender paid mortgage insurance in which they will pay the one time premium in exchange for a higher rate to recoup their cost.
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Old 03-15-2009, 09:50 AM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,436,101 times
Reputation: 1008
They can both be right because rules/regulations may only be specific to a lender or program.

Declining market may not apply to FHA loans but not all lenders offer FHA

Declining markets may apply to Conventional loans, but some lenders lend their own money and do not sell the loan. (Portfolio loans)

Lenders may say that you have no hope...but they're probably speaking about their own programs.

my point......shop around for programs and rates
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