Financing in Columbus>Question Details

Inat, Both Buyer and Seller in Columbus, OH

PMI qualifications

Asked by Inat, Columbus, OH Tue Jan 5, 2010

Wife and I want to build a new home with a $425,000 value. We planned on putting 10% down - both of our credit scores are greater than 700 and the debt to income ratio is 30%. However, we were told that based on PMI trends, it is likely that we will not qualify for PMI and will not be able to close. We have $43000 to put down, but certainly not $86,000 - i was shocked to hear this and wouldnt think of selling our existing home if it was 'likely' we wouldnt qualify for the home we built over 9 months...

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11
Is this a construction loan? Thise face a different set of challenges.

If you are purchasing a new home which is complete, you can certainly do that with 10% down (I would go with 10.01 % to reduce the PMI). The best option in your case would be to do a one time PMI paid up front, with absolutely no monthly. This can be done on a conventional loan.
0 votes Thank Flag Link Thu Feb 11, 2010
Inat, there is one more thing that you should know. For loans that are brokered, it seems that credit score requirements are higher, and 720 is the number you would need. However, if you use a direct lender, the credit score requirements are lower, and your score now is fine. What will happen by the time you need to close is an unknown, however you could also go with an FHA loan as a fallback. I am sure that your 700 would be fine for that.
0 votes Thank Flag Link Thu Feb 11, 2010
I have a trustworthy mortgage broker that can help you..Financing has gotten crazy-alot of hoops to jump through, however Tony has alot of contacts and I believe he can assist you.

Tony Coplen, First Ohio Home Finance. 614-818-1850 or 614-570-1950.
0 votes Thank Flag Link Thu Feb 11, 2010
Inat, find a credit union or small community bank that may be able to hold a second mortgage for you. If not, let me know. I believe the bank I work with here, can do loans in Ohio. They will lend up to a combined loan to value (CLTV) of 95%. That way, you can split the loan at 80/15/5, contrary to Robin's statement. It may be that they are not offered in her state, but it doesn't mean it doesn't exist. Your score, DTI, and assets will qualify you for this loan. Rate is 9.49% for a 30 year fixed second. I won't get paid for this loan and I'm not licensed in Ohio, but if it will help... You'll have to make sure that your lender will accept a CLTV of 95% (they mostly do). I think you'll be fine. Email me and I'll email you the contact information to start the loan process with them.
0 votes Thank Flag Link Wed Jan 6, 2010
Inat, has anyone who has looked at your credit report given you any pointers about what you might do to raise your scores? Do you have enough credit, are any of your balances closer to you limit, are any of them over your limit. Have you closed any accounts recently? Contrary to what non-professionals tell you, this is a bad thing. I am assuming you do not have any kind of collection accounts, because that would be too obvious. it may not take you too long to get yourselves to 720, especially if someone does a rapid rescore for you.
0 votes Thank Flag Link Wed Jan 6, 2010
thanks for all the answers. I will be pursuing this a little further - I find it difficult to believe that with our income, debt ratio, and credit scores that we could not qualify for PMI. We meet all other guidlines - employed with documented incomes, over $200k in 401ks and IRAs... i guess this is where our relative lack of home buying experience kicks in :)
0 votes Thank Flag Link Wed Jan 6, 2010
TJ, lenders are not offering the 80-10-10 loans like they used to.
0 votes Thank Flag Link Wed Jan 6, 2010
lnat, Sounds like you havent spoke to the builder,kthey usually wont have it,and yes 20% is a chunk.Lenders,some,can do a 1st and a 2nd to avoid,and a regular FHA w/pmi I think you carry for 5yrs.Check w/ur REALTOR and good building.
Web Reference: http://tjrobertsrealtor.com
0 votes Thank Flag Link Wed Jan 6, 2010
Inat, at first I thought you were being mislead, but then I checked the PMI guidelines. In looking back most of my recent loans were below 80LTV, or were loans with 5% down so FHA was the best choice, even for people with 800 credit scores. The guidelines on PMI were changed in November, 2009. Now 720 is the minimum credit score for PMI. You are good on debt ratio, because the max on that is 41. However, you do have an alternative. You can use an FHA loan, where your credit score would not be a problem. Even though there is up front MIP charged, I have worked this out numerous times, and because the rate for monthly MIP is lower than PMI, the total monthly payment is virtually the same. I hope this helps.
0 votes Thank Flag Link Tue Jan 5, 2010
One of the biggest issues is because many lenders are no longer carrying new construction options. You will definately need to ask around. When you carry PMI on your loan you are dealing with two different guidelines, the lender and the PMI companies. Companies are also determining which areas are declining markets and requiring more equity to lend in these areas. We would have to check the zip code, which is what the other company may have been doing. Our company is out of Powell. I can check into this and if we can't help you, I believe I know someone in your area that will lend. Unfortunately, this is one of the big effects of the credit crisis, quality borrowers are struggling getting loans.
0 votes Thank Flag Link Tue Jan 5, 2010
Inat,
Please consult with another lender. Your debt-to-income ratio is low enough to allow for the additional increase in the payment with PMI. I am in the Cleveland area and can not imagine that the lender would be totally different in Columbus. Putting less than 20% is more common in lending today. PMI is typically not an issue. Please seek the advise of a lender. Best Wishe!
0 votes Thank Flag Link Tue Jan 5, 2010
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