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A bonus for the bank?? The money goes to private insurers. And it does help people buy allowing them to purchase without saving up 20% down.
PMI does NOTHING for the actual borrower. Anyone borrowing over 80% LTV looking at having to pay this would be doing themselves a huge disservice if they dont look into a combo/piggyback loan to avoid it. PMI is like throwing money out the window!
PMI does NOTHING for the actual borrower. Anyone borrowing over 80% LTV looking at having to pay this would be doing themselves a huge disservice if they dont look into a combo/piggyback loan to avoid it. PMI is like throwing money out the window!
So, would you consider the extra interest being charged on the 2nd compared to the 1st as "money out the window" as well???
When you break it down it is usually 6 of one and half dozen of the other.
I realize that PMI helps people to purchase homes without 20 percent down. However, that money does not pay down the principal nor is it deductible. Borrowers without 20 percent down are still paying interest on their loan plus PMI. Keep in mind that this is only my opinion, but I consider PMI a bonus to the lender.
Actually it is tax dedcutible, at least temporarily (2207 &2008).
Sure there are ways to get your financing with less than 20% down and no PMI, BUT beleive me you will be paying more in one way or another. You can do a LPMI loan (lender paid mort. ins.), but it will come at a higher interest rate. Or, you can do the 80/20 you mention, but the rate on the 20 will be substantially higher than the 80.
It is not a "bonus" to the bank because the bank does not care which option you choose...PMI, LPMI or piggyback. Just know that if you are putting less than 20% down you will be paying "extra" anyway you look at it.
Actually it is tax dedcutible, at least temporarily (2207 &2008).
Sure there are ways to get your financing with less than 20% down and no PMI, BUT beleive me you will be paying more in one way or another. You can do a LPMI loan (lender paid mort. ins.), but it will come at a higher interest rate. Or, you can do the 80/20 you mention, but the rate on the 20 will be substantially higher than the 80.
It is not a "bonus" to the bank because the bank does not care which option you choose...PMI, LPMI or piggyback. Just know that if you are putting less than 20% down you will be paying "extra" anyway you look at it.
Everytime I work up a loan the 80/20 shows more savings to the customer then the PMI option. I always have and will continue to put my borrowers in loans without PMI. Many of the 2nds on these piggybacks have no closing costs which also give additional savings.
when your house burns down...who does insurance protect?
You or the mortgage lien on your home?
When you get into a car accident, and the car gets totalled..who does insurance protect?
You or the car loan?
When you get hurt....who does the insurance protect?
You or the hospital bills?
MyCommunity, HomePossible, and FHA have a lot less PMI than combo loans. I haven't done a combo loan in a long time due to the new products from lender paid PMI or the low PMI payments from other products.
Borrowers want a lower payment, and I'm not going to stick them with a 2nd loan just to make more money.
Quote:
Originally Posted by Brokerguy
Nice SPIN!! PMI protects the LENDER. Plain and simple.
Everytime I work up a loan the 80/20 shows more savings to the customer then the PMI option. I always have and will continue to put my borrowers in loans without PMI. Many of the 2nds on these piggybacks have no closing costs which also give additional savings.
That's great. I, more often than not, end up in doing the piggybacks as well.
THE POINT of my posts was that THERE IS NO FREE LUNCH.
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