Luckily after our BK7 (Dec. 1997) we were able to find a bank that has been wonderful to us. Gave a checking account without question, only with stipulations such as return checks and they will close account. It has been 4 years and NO returned checks, everything great. We have been talking to them about getting a mortgage. We started the pre-qualify papers 3 weeks ago and have been in constant contact with them. Today they called and said that everything looks great since the bk and the only thing they still have to look into is getting PMI. If they are successful in getting the insurance, we get the loan. Anyone know how strict the mortgage insurance companies are? I am so anxious, but I know, or so I have been told good things come to those who wait. Any insights will be great. Thanks Micki
Is your bank authorized for funding FHA loans? Private mortgage insurance (PMI) is for banks who approve FHA loans. PMI is to protect the lender if the buyer defaults on the loan. It is required for any mortgage loan when less than 20% of the home value is given as a down payment. Most banks are conventional and require a 20% downpayment so they don't have to deal with PMI. There are ways around this though. If you are approved for an 80/10/10 or a 80/15/5 there's no PMI involved. But it all depends on what mortgage programs your financial institution offers. Hope this helps. Dani
PMI is not just for FHA loans. I have a conventional loan and I have PMI on my mortgage. It is the bank's responsibility to obtain the PMI, not the individual's.
FHA mortgages don't have PMI, their mortgage insurance is called something slightly different (MIP, I think) And the rules are different at least in terms of when you can drop it - i.e. w/ PMI the law now states that once a homeowner reaches 20% equity they have to drop it - there is some difference that I didn't bother to remember with the FHA version. Also, utilizing a first time homowner program with Bank of America I got a mortgage earlier this year with 3% down, market interest rate, no points, and (best of all) no PMI. If you're a first timer, check out the availability of special programs w/ your city, county, state housing agencies. Many of these are OK with a BK or questionable past credit is OK, as long as the last two years were good.
My FHA mortgage has PMI. After eight years of on time payments the PMI is cancelled. Or if I reappraise the house at an earlier date and it is worth more than I paid for it (78%) equity I can call and cancel the PMI. Dani
There are no requirements for getting PMI. And getting it off is pretty hard once you get it on. Even if you are obviously below 80%, you need an appraisal (which costs $100 - $350). I've know several people for whom it was such a hassle that they wound up refinancing rather than argue with the mortgage company.
I HAVE ABOUT 66% EQUITY AND THE "PMI" COMPANY SAID NO REFUND AFTER 36 MONTHS...I DON'T REMEMBER SEEING THAT IN THE PAPER WORK...
Thank you all for your insight. I feel much better. We are in an odd situation as we own the land through a land contract and will be building a home. The first appraisal (I guess what is an estimate) shows that the completed home etc. will value at 82% of the loan. I have contacted the original owner and he has agreed that if the value stays at the 82% he will reduce the final sales price enough to lower the ltv to 79%. We may not even need PMI. I just want to be prepared if we do. I was tickled pink to hear that there are no requirements for PMI. I am so darn excited, if I could get this big rear off the ground I would do a cartwheel! LOL I have every possible body part crossed! LOL The bank told me Tues. morning that I would hear something within 2 days. So anytime. I do realize with the horrific tragedy that struck us Tuesday things may go slower and that's fine. I will let you all know when I hear. Again thank you Micki
If possible, do try to avoid the PMI. I have heard that often it is a pain in the a$$ to get it removed. One technique you could consider is an 80% LTV first mortgage, and then a 10 or 15% Home equity loan or even line of credit to cover the remainder. Most banks have a program like this to avoid PMI. It is called a 80/10/10, or an 80/15/5. I've even heard it referred to as a "piggyback" loan.
