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Assuming $360,000 appraised value, you are getting a loan for $306,000, since you are putting 15% down. The PMI would automatically drop at 78%, or $288,000. (Remember for automatic drop-off it's based on the ORIGINAL amortization schedule, extra payments don't help.)
I ran some rough figures assuming a 3.875% rate and a 30 year loan. It would take over four years to reach that balance.
Since you plan to pay off the second very quickly, it seems like that would be the better way to go.
The $18,000 figure is what I am short of reaching that 20% down. Four years is a long time. Will the first loan be at a higher interest rate? I think the second loan might be the better way to go. I so appreciate all this advise. This is can be very confusing.
I hope I can get some more answers to my PMI dilemma. We were going to put the 20% down but unfortunately, it's not gonna happen since we are purchasing a house that is a bit more than expected so it puts me $18,000 short. (purchasing a $360,000 house and putting 15% down on 15 year fix conventional loan)I wanted to get some advise on options to avoid PMI. Would I be able to get a separate loan for this money and if so how does one do it? I would actually be able to pay that $18,000 loan back by March, 2013 which is why I hate having that PMI on my loan. Any advise would be appreciated. Also, why doesn't extra payments to the principal help get rid of the PMI faster? They only use that LTV percentage?
It's very simple. Whatever lender you apply with will do an 80% 1st mortgage and an $18k 2nd mortgage. Both loans will close at the same time and your purchase will be funded.
I hope I can get some more answers to my PMI dilemma. We were going to put the 20% down but unfortunately, it's not gonna happen since we are purchasing a house that is a bit more than expected so it puts me $18,000 short. (purchasing a $360,000 house and putting 15% down on 15 year fix conventional loan)I wanted to get some advise on options to avoid PMI. Would I be able to get a separate loan for this money and if so how does one do it? I would actually be able to pay that $18,000 loan back by March, 2013 which is why I hate having that PMI on my loan. Any advise would be appreciated. Also, why doesn't extra payments to the principal help get rid of the PMI faster? They only use that LTV percentage?
So you are doing a 15 year? As far as I can tell 15-year FHA loans have no monthly mortgage insurance if the LTV Is less than 90%. Not 100% sure what all upfront fees you'd have to pay but it could be an option to look into.
Do NOT get a 30-year FHA loan. They will not remove the PMI based on loan to value. They will only remove it after you have paid down the original loan to 78%. Even if your house has doubled in value, they won't remove it. Additionally, FHA is about to increase their PMI amounts for new loans. I learned this the hard way....
You can get a second lien. Your loan officer should have contacts who can set that up for you.
When PMI can be dropped is often based on loan investors' and GSE (Fan/Fred) policies. An insured loan is a safer asset for them.
Hope to get an answer on deciding about this 20% down dilemma. I have a question into my loan officer asking about it but I also would like to get some advise on here. Some have mentioned about getting a separate loan vs. doing the PMI. To do a recap here... Wanted to initially put 20% down to get the best rates but unfortunately we saw a house that is higher in price that puts us out of the 20% range. I really don't want PMI and wanted to know other options so I was thinking of getting a separate loan for that 5% we are short. The reason I am thinking this way is because come March 2013 we will be able to pay off that separate loan in full. I didn't want PMI on my back for several years. I could wait until March, 2013 to purchase a house but the rates may be higher and we did find the 'home of our dreams' so trying to make this work. Is getting the separate loan fairly simple? We have outstanding credit so hopeful I can get a decent rate on that loan. Any recommendations?
Hope to get an answer on deciding about this 20% down dilemma. I have a question into my loan officer asking about it but I also would like to get some advise on here. Some have mentioned about getting a separate loan vs. doing the PMI. To do a recap here... Wanted to initially put 20% down to get the best rates but unfortunately we saw a house that is higher in price that puts us out of the 20% range. I really don't want PMI and wanted to know other options so I was thinking of getting a separate loan for that 5% we are short. The reason I am thinking this way is because come March 2013 we will be able to pay off that separate loan in full. I didn't want PMI on my back for several years. I could wait until March, 2013 to purchase a house but the rates may be higher and we did find the 'home of our dreams' so trying to make this work. Is getting the separate loan fairly simple? We have outstanding credit so hopeful I can get a decent rate on that loan. Any recommendations?
So long as your loan officer has a decent relationship with another bank that does second liens (or some banks can do both the first and second), it should be a relatively smooth process. The processor/loan officer at your primary loan bank will share the pertinent information with the second lien bank. The second lien bank may have some different underwriting standards and ask for some documentation in addition, or they may not. Expect a higher rate than on the primary loan, of course.
You are free to go get quotes on your own second lien, but then you will have to provide all the income/asset/etc documentation again.
Since you are planning to pay it off so quickly, I can't imagine a scenario where PMI would be better for you, and I also don't see the purpose of shopping around to different 2nd lien banks trying to beat a rate ever so slightly.
Hope to get an answer on deciding about this 20% down dilemma. I have a question into my loan officer asking about it but I also would like to get some advise on here. Some have mentioned about getting a separate loan vs. doing the PMI. To do a recap here... Wanted to initially put 20% down to get the best rates but unfortunately we saw a house that is higher in price that puts us out of the 20% range. I really don't want PMI and wanted to know other options so I was thinking of getting a separate loan for that 5% we are short. The reason I am thinking this way is because come March 2013 we will be able to pay off that separate loan in full. I didn't want PMI on my back for several years. I could wait until March, 2013 to purchase a house but the rates may be higher and we did find the 'home of our dreams' so trying to make this work. Is getting the separate loan fairly simple? We have outstanding credit so hopeful I can get a decent rate on that loan. Any recommendations?
Did you miss my post above?
Quote:
It's very simple. Whatever lender you apply with will do an 80% 1st mortgage and an $18k 2nd mortgage. Both loans will close at the same time and your purchase will be funded.
I wouldn't sweat the rate too much as it is going to be a relatively small loan and you are going to pay it off in 1 year.
I wouldn't sweat the rate too much as it is going to be a relatively small loan and you are going to pay it off in 1 year.
Yeah, my lender did recommend that second loan vs. the PMI. In our situation since we plan on paying it off within a year, it makes more sense. He said the 5% portion will be at an adjustable rate and the interest is not too bad. I guess it's a common type of loan even though I am just learning about it. I am sure there are a lot of folks out there that don't have 20%.
I am looking for clarification here on what two Lenders had advised me today. I would love some help!
Lender #1 said for me to get my 2nd secured loan at my local bank and he would handle the 1st loan. Didn't know this was possible. I thought the Lender needed to do both loans together? I am wondering if he is telling me to do this in order to keep these two loans separate to keep the 1st loan rate low. Reason I say this is because Lender 2 advised me he could take care of both the 1st and 2nd loan, however, the 1st loan will be at slightly higher than the going rate to do this type of loan which I think he called HELOC? Also, would that 2nd secured loan that Lender #1 is telling me to do essentially an secured personal loan? Any advise on how I should go about doing this 2nd loan?
Two words for you: seller contribution. Seller can kick in 6% or closing costs, whichever is lower. So have the seller pay all your closing costs. That should free up some cash.
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