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My FH and I recently went through the process of trying to buy our first home. We were approved, and subsequently got all our paperwork done. Met with the coop board for our interview and got approved for moving in. We also got the loan commitment letter stating they would finance 90% of the purchase price. (We put down 10% knowing we would pay PMI, which was estimated at about $130-140 a month.) We recently found out from our loan officer that now we are not able to get PMI because apparently the companies didn't like the building. Now we're not sure what else do to, even after asking the LO if there were any other MI companies that would take us on, and he said that 2 out of the 3 companies denied us, and the third might do the same...
Is this common? Is there really only 3 companies in the whole country that issue PMI? Maybe I don't understand how this works, but is there a way around this?
Unless something has changed, FHA doesn't lend on co-ops.
That said, if the PMI companies are having a problem with the co-op, it might be a red flag that there is a problem either with teh building or the financials. It could be that they've had an unsually high number of foreclosures in that building and feel that there might be an underlying problem there that is causing people to walk away.
Find another 10% down to avoid PMI. See if the mortgage lender will do an 80/10/10. See if the seller will hold a 10% second. Get a gift for another 10%. Have your broker find out why the PMI company has a problem with teh property and what you can do to rectify the situation.
Not sure where you are but I've been keeping tabs on co-ops in my area in case something I can afford comes up.
I inquired with a few agents about 10% down buildings and was repeatedly told that even if the co-op board allows 10% down (not many here do), and all my ducks are perfectly lined up that getting PMI will be next to impossible.
Sorry to hear that you hit such a snag. Good luck to you!
Thanks annerk. cleasach I'm in Brooklyn, NY. Our lawyer is wondering why this lender decided to tell us about the PMI so late in the game. We got all our paperwork in order. We got the loan commitment. We got the board approval. This is the one piece he held out on.
Had we known months ago that PMI was going to be an issue, we would've tried to figure out some other avenue. Now we're weeks away from our deadline to close, scrambling to do something before everything falls apart.
And legally, I don't even know what type of recourse I have. Thankfully we made sure that worse case we get our deposit back. And our lawyer helped by giving us some leads for other lenders, (which means we'd have to do the entire loan application process over).
But why did this guy even let us get to this point? That's one thing I really don't understand. Is this normal?
Thanks cleasach. At least you got the warning ahead of time. This guy never even said anything until the day AFTER we found out we got approved by the board, when we called to ask to lock in our rate... This is so stressful.
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