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I've read that PMI is something to avoid in mortgages because it's an additional cost and is not there to help the homebuyer, it's there to provide protection for the lender.
However, if it was possible to "cancel" PMI through refinancing after enough of the principal was paid down? Is that something buyers would have to negotiate with a lender, or would they need to know that before deciding on a lender and moving forward?
Say homeowners have very high credit scores, take out a 15-year mortgage, and were only able to have 10-15% of the downpayment-- would PMI be worth it?
Are there homebuyers here who had PMI and were able to successfully remove it?
Definitely. It is done all the time, especially for first time homebuyers. In 1972, my first house was new and cost $34k. My husband had a good job, but we needed to scrape every dime together to make it work, including PMI. In just a few years, we were able to refi to get rid of both the PMI and the 8%+ interest rate.
Why not get a 30 year mortgage though? You could still pay it down in 15 if you want.
PMI sucks, refinance out of it ASAP as we did. It's forever in an FHA loan. I begrudgingly (putting it mildly) paid $150 a month for 2 years until we refinanced when rates dropped.
Though now, interest rates have doubled so make sure you'd be actually saving money.
My issue with PMI was that I know I would never miss mortgage payments...ever. I have money and family money to lean on if something catastrophic happened, there's no way my mortgage would never get paid in my circumstances. Never.
So take that $150 in PMI we were paying and multiply that by 12 and then that by 30 years.... that's $54,000 completely flushed down the toilet had we not refinanced.
Banks are robbing you as well, but that's just how it is for mortgages for everyone since the beginning, no escape. PMI I loathed having, though.
PMI sucks, refinance out of it ASAP as we did. It's forever in an FHA loan. I begrudgingly (putting it mildly) paid $150 a month for 2 years until we refinanced when rates dropped.
Though now, interest rates have doubled so make sure you'd be actually saving money.
My issue with PMI was that I know I would never miss mortgage payments...ever. I have money and family money to lean on if something catastrophic happened, there's no way my mortgage would never get paid in my circumstances. Never.
So take that $150 in PMI we were paying and multiply that by 12 and then that by 30 years.... that's $54,000 completely flushed down the toilet had we not refinanced.
Banks are robbing you as well, but that's just how it is for mortgages for everyone since the beginning, no escape. PMI I loathed having, though.
$54 grand in stupid pointless insurance.
So you would never, ever miss a payment and even have family money as a back up, and yet you didn't have enough and couldn't get enough family help to put 20% down to avoid PMI in the first place?
So, the buyer doesn't agree to PMI and they don't get the house? In that light, I think buyers who want to buy are benefited.
I did a bit of Googling and can't find the answer... what is the statistical difference in default rate for mortages with PMI and those without? How do those compare to VA default rates (that typically have small or no down payment)?
So you would never, ever miss a payment and even have family money as a back up, and yet you didn't have enough and couldn't get enough family help to put 20% down to avoid PMI in the first place?
I meant to add, we were stuck with PMI/FHA because my spouse's credit wasn't good then, mine always was. One thing about FHA is people with less than perfect credit can still buy a house which is good.
Just because my family has money doesn't mean I use it or want to use it. But for the record we did have about 16% down, still got stuck with PMI.
I meant to add, we were stuck with PMI/FHA because my spouse's credit wasn't good then, mine always was. One thing about FHA is people with less than perfect credit can still buy a house which is good.
Just because my family has money doesn't mean I use it or want to use it. But for the record we did have about 16% down, still got stuck with PMI.
You didn't get "stuck" with PMI. You chose to buy a house before you had an adequate down payment to mminimize the risk of loaning you and your wife (with poor credit) hundreds if thousands of dollars.
I don't get why people don't understand that the other side if a mortgage is an investor RISKING money, wanting to make money on that risk, and wanting some assurance that they will get repaid. I'm pretty sure most regular folks loaning somebody a couple of hundred bucks expects to get it back.
You didn't get "stuck" with PMI. You chose to buy a house before you had an adequate down payment to mminimize the risk of loaning you and your wife (with poor credit) hundreds if thousands of dollars.
16% is pretty adequate. Spouse's credit was less than great at the time, we refi'd under 3% 2 years ago and it was the easiest thing I've ever done. By the way, skip the financial advice. We've made over a 100% return in 5 years. That choice has added well into 6 figures into my net worth.
Quote:
Originally Posted by Jkgourmet
I don't get why people don't understand that the other side if a mortgage is an investor RISKING money, wanting to make money on that risk, and wanting some assurance that they will get repaid. I'm pretty sure most regular folks loaning somebody a couple of hundred bucks expects to get it back.
Oh cry me a river, banks are thieves, the biggest thieves of all but that's just the only way to borrow money for a house. Have you ever calculated just how much money a bank makes off a mortgage???? For a $200,000 loan they make I believe about $140,000. And how many notes do they hold? Yours, mine, all the neighbors, etc. etc.
Oh cry me a river, banks are thieves, the biggest thieves of all but that's just the only way to borrow money for a house. Have you ever calculated just how much money a bank makes off a mortgage???? For a $200,000 loan they make I believe about $140,000. And how many notes do they hold? Yours, mine, all the neighbors, etc. etc.
Then rent or save up to pay with cash. My first home was FHA, 3% down, 9.5%, without PMI I could not make it work. Put in a lot of sweat equity and within 3 years refinanced for a conventional. There's always a way.
Oh cry me a river, banks are thieves, the biggest thieves of all but that's just the only way to borrow money for a house. Have you ever calculated just how much money a bank makes off a mortgage???? For a $200,000 loan they make I believe about $140,000. And how many notes do they hold? Yours, mine, all the neighbors, etc. etc.
You clearly don't know how mortgage lending and secondary markets work. Banks (depository institutions) are not the only source for mortgage loans. The majority of mortgage lenders sell servicing rights and do NOT keep the interest made on the loan.
Investors are the ones benefiting from the interest paid on those loans. By the way, chances are good that your own pension/investment portfolio holds some shares of those thieving banks and/or is benefiting from those large investors' purchases of mortgage backed securities, which begin their lives as a single mortgage loan funded by a bank or other lending institution.
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