The 80-10-10 option is no longer available.
If your intention is to avoid PMI
â€¢ You can get a 90-10
â€¢ PMI amount is absorbed in the interest rate.
â€¢ PMI is not tax deductible
â€¢ Slightly higher interest % paid to avoid MI, is tax deductible.
â€¢ If your score is good you should be able to qualify for the lender paid MI, depending on the rest of the
â€¢ Just to let you know, in todayâ€™s market lenders are concern about the condition of the property when PMI
underwrites the loan. I.e. if you are buying a REO, a bank owned property that needs work that
unacceptable to your lender, you may face some issues to close that escrow.
If your intention is to payoff the other 10% after some time and just keep the 80% loan
â€¢ You may want to get a 90-10 loan now that doesnâ€™t have any prepayment penalty.
â€¢ Remember and try not to pay any non-recurring closing costs. Let that be absorbed in the interest rate
or you can negotiate an entire NRCC- non recurring closing cost paid for by sellers.
â€¢ When you refinance the 80% loan you donâ€™t pay that closing cost cash twice.
Jay, I negotiate Real Estate deals for my clients and help them connect with lenders I have experience with. If you wish to discuss more or are in need of an expert experience Real Estate Broker feels free to contact me at no obligation.
Good luck to you,
Mortgage brokers can't seem to close such loans where a 10% 2nd requires PMI, as PMI companies don't want to do business with Mortgage Brokers. So effectively, that shuts out that avenue.
Loan originators seem to be tied to the rules of the portfolio for which they are originating loans. And I'm finding that such lenders don't allow seconds.
However, I am working with two lenders who will allow a 2nd TD from a private party who does not require PMI, as long as that private party is not the seller in a carryback situation. In my situation, I am the 2nd TD lender, making the 10% loan to a relative to help in their home purchase. They are getting an underlying 80% conventional loan with no PMI.
Let me say, along the way, prior to hitting dead ends with mortgage brokers, I have been coached to "gift" the 10% to the buyer, or "record the trust deed after the fact". That kind of explains why the PMI companies don't trust brokers to make such loans anymore.
You think the brokers would have learned their lesson from the last several years, but many are eager to continue to commit loan fraud.
If you make under $100,000 per year, I believe mortgage insurance is tax-deductible. Check with your tax advisor to be sure.
And unfortunately, as the other professionals stated, 80-10-10's are no longer available in California.
If you do want to put 10% down, I recommend a conventional loan vs. an FHA loan because of the Upfront MIP.
You could look into a Lender Paid PMI option as well, to avoid the PMI.
I am a mortgage Broker. If I can be of further assistance, please let me know.
877-238-6324 Ext 704
So naturally, nobody wants to make such a risky loan any more. A good loan officer should be able to suggest some other possible alternatives (an FHA loan may work for you -- you only need to put 3.5% down).