Financing in 40222>Question Details

Devon Pack, Home Buyer in Louisville, KY

Are there ways to avoid PMI even if you can only put 7-10% down?

Asked by Devon Pack, Louisville, KY Tue Jan 3, 2012

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22
Yes, there are! If you can find a Homepath home (which is a Fannie Mae owned foreclosure), you can put as little as 3% down, and pay NO mortgage insurance, using a Homepath mortgage. (Visit homepath.com to do a zip code search for properties that are eligible for a Homepath Mortgage. Properties are added all the time, so keep checking back.) Not all lenders are approved to close Homepath loans, so you will also need a Homepath mortgage lender. (I can help with this.)

Another option is something called "Lender paid mortgage insurance, or LPMI). You can put as little as 5% down and have the lender pay a one time mortgage insurande premium for you, which will eliminate monthly mortgage insurance on your loan.
2 votes Thank Flag Link Tue Jan 3, 2012
You cannot avoid it, you can however avoid paying it in the traditional sense. There are options for lender paid where your rate will be higher. You can make a single up front payment to not have to pay it monthly or you can finance it. Speak to your loan officer about these options. The best choice will depend on your long and short term goals for the property.
Web Reference: http://WeFixRates.Com
2 votes Thank Flag Link Tue Jan 3, 2012
Kentucky Housing Corp or KHC

KHC is used for mostly applicants in urban areas of Kentucky that don't have access to USDA or other government agencies to buy a home with no down payment.
Down Payment Assistance for Ky First Time Home Buyer, 100% Financing


You cannot have an owed a home in the last 3 years to use KHC down payment assistance to buy a home with zero down.

Kentucky Housing Program guidelines:
First-time home buyers, unless property is located in a targeted county.
Interest rate is fixed at 2.5 percent without Down payment Assistance Program (DAP) or 3.0 percent with DAP.
Maximum ratios 40/45 percent.
Executed purchase contract.
Existing or new construction property (purchase price limit $234,000).
Regular and Affordable DAP available.
FHA, VA, and RHS first-mortgage programs.
640 credit score and AUS approval.
Gross annual household income limit of for all household sizes.





--
Joel Lobb (NMLS#57916)
Senior Loan Officer
502-905-3708 cell
kentuckyloan@gmail.com
http://www.mylouisvillekentuckymortgage.com/


This web site is not the FHA, VA, USDA, HUD or any other government organization responsible for managing, insuring, regulating or issuing residential mortgage loans.
**Download Fair Housing Booklet – CLICK HERE
All approvals and rates are not guaranteed, and are only issued based on standard mortgage qualifying guidelines
- See more at: http://activerain.com/blogsview/4247651/kentucky-first-time-…
1 vote Thank Flag Link Tue Dec 17, 2013
The different types of mortgage insurance available for Louisville Kentucky Mortgage Loans
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Annual Plan – The first year premium is collected at closing, and then monthly payments are held in escrow for the following year.
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Monthly Plan – Two months of MI is paid at closing, then collected monthly as part of the mortgage payment.
•
Zero Up–Front Plan – Use that money for the down payment instead, as MI is paid monthly with the first mortgage payment, not at closing.
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Single/Financed Premium – Entire MI premium is paid at closing, and can be paid with down payment assistance or financed into the loan.
•
Split Premium – A combination of single premium and the monthly plan; the seller can help with the up–front premium or it can be financed in, resulting in lower monthly premiums.
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Single Premium Lender Paid Mortgage Insurance (LPMI)4– "Life of Loan" mortgage insurance that is paid after closing by the lender; no annual or monthly premiums or renewals.
Kentucky Mortgage and PMI, PMI Mortgage insurance, MIP, Mortgage insurance,





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Joel Lobb (NMLS#57916)
Senior Loan Officer
502-905-3708 cell
502-813-2795 fax
kentuckyloan@gmail.com

Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*

http://mylouisvillekentuckymortgage.com

The different types of mortgage insurance available for Louisville Kentucky Fannie Mae Conventional Mortgage Loans
1 vote Thank Flag Link Tue Oct 15, 2013
Community Homeownership Incentive Program (CHIP) loans puts the dream of homeownership within your reach. CHIP loans from BB&T have many attractive features to help borrowers along the path to owning their own home.

Benefits

CHIP loans offer home buyers the following benefits:

Up to 97% financing on the majority of allowed property types
First-time home buyers and previous homeowners eligible
Private mortgage insurance waived

Recommended For

A CHIP loan may be right for you if you:

Are unsure about qualifying income*
Are concerned about funding a large down payment
Lack of credit history

Property Types

The following types of property are eligible for CHIP loans:

Single family homes
Townhomes
Condos
Doublewide manufactured homes on permanent foundations

Maximum loan amount varies depending on property location and is subject to change without notice.

*Income cannot exceed 80% of your county median income. Consult your BB&T Mortgage Professional for details.
1 vote Thank Flag Link Tue Mar 5, 2013
This can be the bane to every borrower, every loan officer and every lender……and yes, to every realtor. How many times has a borrower said my credit’s good, only to find out that it’s not nearly as good as a borrower thinks or nearly as good as the borrower needs. Big stuff for sure. 640 is the bottom score (again with few exceptions) that lenders will permit. Below a 640, then you’re in a world of hurt. Even at 640, people consider you a higher risk that other folks and are going to penalize you or your borrower with a more expensive loan. 720 is when you really start to get in the “as a lender we love you” credit score. 740 is even better. Watch your credit!!!!! Check out my post:
1 vote Thank Flag Link Fri Jan 18, 2013
Private mortgage insurance or MI is a type of insurance provided by a private mortgage insurance company to protect a lender in the event of default on a loan. This type of insurance is generally required when a borrower has less than 20% equity in a home; i.e. the loan amount divided by the property value is 80.01% or greater.

Why does PMI exist?
Mortgage companies have found that those with less that 20% equity are more likely to default on a mortgage. The good news is that PMI allows homeowners to get into a house at good mortgage rates with less than 20% down. That's about 1.5 Million homeowners in 1999 - about 10% of all mortgages.
The purpose of PMI is to pay the mortgage company if the homeowner defaults on the mortgage.

Who pays for private mortgage insurance?
The borrower pays for mortgage insurance on a monthly basis in addition to the principal and interest payments that are made on a loan. The lender then transfers these premium payments to the mortgage insurance company.

Besides a monthly premium, are there any upfront fees to pay?
Yes. MI companies offer several options to the borrower at the time of closing. A monthly premium plan requires two monthly premiums be paid during the closing, with a set monthly premium due thereafter as part of the required mortgage payment.
An annual plan requires one year of premiums paid at time of closing, with a lower monthly premium due thereafter.
It is generally recommended that the borrower choose the lower upfront insurance premiums at time of closing with a slightly higher per month premium due thereafter.

Do I have to pay mortgage insurance if I have less than a 20% down payment for a home?
No. There are several ways to avoid private mortgage insurance premiums.
The first is to purchase a home with a combination first and second mortgage. The first mortgage would be limited to 80% of the home's appraised value. The second mortgage, which would close in conjunction with the first, would then provide for the difference between the home's purchase price, less the 80% first mortgage, less the down payment available . In other words, if you have a 10% down payment available, your first loan would provide for the 80% mortgage with a second mortgage of 10%. This is commonly referred to as an 80 -10 -10 transaction.

Another way to avoid incurring MI payments is to find a lender that offers self-insured programs. This type of loan would have a higher interest rate in place of the private mortgage insurance premium. While mortgage insurance premium payments are not tax deductible, the interest associated with a self-insured mortgage would be fully tax deductible.

The decision of whether to obtain a loan with mortgage insurance versus the above two options should take into account the combined total monthly payments of the various options, adjusted for the tax benefits of interest deductions.

Once my loan to value ratio drops below 80%, can the MI be removed?
Yes. Lenders will allow borrowers to remove the MI requirement once the property's appraised value increases such that the loan to value ratio is below 80%. The reality of trying to accomplish this can be somewhat challenging. Usually the lender will require that an appraisal be done by the lender's approved appraisal companies. Contact your current mortgage holder to determine their policy on removing mortgage insurance from an existing loan.

Another means to remove the MI is to refinance the original mortgage with the higher appraised value used to determine the new loan's loan to value ratio. However, if the current first mortgage held by a borrower is at favorable terms, it is definitely worth working with the current mortgage holder to eliminate the MI pre
1 vote Thank Flag Link Mon Aug 27, 2012
Devin,

Absolutely you can avoid mi. You will have to pay a higher interest rate, but some times it is worth it.
Let me know if you have more questions about pmi. http://www.mylouisvillekentuckymortgage.com/
1 vote Thank Flag Link Wed Apr 18, 2012
Had to stop by and give Michelle and Gregorio a Thumbs Up for their answers. Completely accurate. Interestingly (to me), Scott was given a Thumbs Up for a completely incorrect answer. I remain amazed by non licensed individuals who continue to provide incorrect finance information, to the very detriment of themselves and their clients. Just sayin....
1 vote Thank Flag Link Tue Jan 3, 2012
Devon unless you put down 20% you can not avoid PMI on a new mortgage. Once you get the mortgage and your equity builds so that your equiy builds toover 20%, you can ask your lender to remove it, some may charge a new apprailsal fee though. Simply ask your loan officer to outline PMI for your type of loan.
Web Reference: http://www.ScottSellsNH.com
1 vote Thank Flag Link Tue Jan 3, 2012
Let InBedrock.com help you answer the Rent v Buy v Invest question for yourself and your unique situation re: Your monthly rent expense option v house purchase price You would like to buy + all its associated costs like closing/title/mortgage interest/RE taxes/HO insurance/utilities + maintenance costs/broker selling commission/capital gains taxes/and more! InBedrock.com is educational, in-depth, and easy to understand for first-time homebuyers.
Web Reference: http://InBedrock.com
0 votes Thank Flag Link Fri Apr 8, 2016
You can also do 10% down then do the other 10% with a home equity loan (HEL). I have done this. You essentially use the 10% borrowed from the HEL to make 20% down on your first mortgage.
0 votes Thank Flag Link Fri Apr 8, 2016
Yes you can go with a loan where the Lender pays a single premium mortgage insurance policy known a LPMI. Most banks will Market 90 and 95% no MI loans but this is what the lenders are really doing. Expect to pay an interest rate of about .5% higher.
0 votes Thank Flag Link Wed Jan 15, 2014
Devon,

Hello there! A lender would be glad to give you an "informed" answer to your question. I have clients right now that were according to them to secure a no PMI loan, however their details were very specific.

If you might like to speak to some of the lenders that I do business with on a daily basis, I would glad to refer you.

Please call me at 678-595-8115 or feel free to email me at michael@michaelthackerrealtor.com!

All the best!

Michael Thacker
Realtor
0 votes Thank Flag Link Wed Jan 15, 2014
You bet, You can avoid PMI. You can avoid closing costs. You can even own the home at 60% of negotiated price! There are lots of options! I sure since you posted this question in Jan, 2012, you have found the solution best for you.
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Which solutions are available to you depends on your situation and purpose for the purchase.
There are even BETTER options available for those in select situations. It all starts with a conversation with your REALTOR to assess your situation.

Best of success,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, FL
727.420.4041
0 votes Thank Flag Link Tue Dec 17, 2013
Regardless of what people may think, saying there is NO mortgage insurance on HomePath is misleading. The MI is factored into the rate just as it is with LPMI. This is why HomePath rates are so high. Having LPMI IS paying mortgage insurance and certainly not AVOIDING it.
0 votes Thank Flag Link Wed Mar 6, 2013
There are loans available with no PMI.
There are several options depending on your circumstances.
0 votes Thank Flag Link Wed Mar 6, 2013
Yes.
http://www.homepath.com

or
http://www.homesteps.com

or
do LPMI (lender paid PMI)

Contact a local mortgage broker and he or she should be able to steer you in the right direction. Good luck!


Sean Cochran
http://www.qmlending.com
630-470-6830 office
630-330-2229 cell
0 votes Thank Flag Link Tue Mar 5, 2013
BB&T has a great program called CHIP (Community Homeownership Incentive Program.) Qualifying buyers can get up to 100% financing with no PMI. Interest rates are a little bit higher than those of conventinal loans, but with no PMI, it is deffinitely a terrific option. There are income/loan amount limits, and a few other buyer qualification requirements - please contact the bank directly for more info. Hope this helps!
0 votes Thank Flag Link Mon Aug 27, 2012
Devon --the answer is yes--it depends on getting some of the no PMI loans available...Jeff & Linda Levein
Remax100
0 votes Thank Flag Link Tue Jan 3, 2012
John seems to have a great program option for you!

Also, depending on where you purchase a home in Kentucky, the property itself may qualify for a USDA loan, which offers 100% financing and very minimal mortgage insurance compared to others. (There are income and property restrictions, so you'll want to speak to a loan officer to check on this for you.)
0 votes Thank Flag Link Tue Jan 3, 2012
PS, while HomePath homes say they have "NO mortgage insurance" that's not really true as it's just built into the rate as is LPMI. As stated, there is no way to avoid MI, you will be paying more for your loan either in rate or fees than you would if you put 20% down in all instances.
Web Reference: http://WeFixRates.Com
0 votes Thank Flag Link Tue Jan 3, 2012
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