Home Buying in Wichita>Question Details

M.  Tetteh, Home Buyer in Wichita, KS

We have a contract on a 137000 USD home, want to put down 5 or 10 percent down..our how can we avoid paying

Asked by M. Tetteh, Wichita, KS Sat Dec 27, 2008

PMI and are we required by law to have an escrow account set up for us? Can we take care of our own taxes and home owners insurance? Thanks.
PS: We are planning to borrow 123K and our house might possibly appraise at about 150K? Thanks.

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Typically monthly PMI will will be on your loan until you reach 20% equity. To a lender, the equity will always be based on the LESSER of purchase price or appraised value. So, even if the home appraises for higher, it will not effect PMI (of course, it will help you chances if refinancing a year later).

Now, there are a few loan products that will not have monthly PMI such as VA loans and Rural Development loans, no matter what the down payment is.

Also, some little known ideas are if you put 10% down, a 15-yr term FHA Loan will not have monthly PMI. There is also an option for 10% down on a conventional loan without PMI as well.

Lastly, there are also 1st and 2nd mortgage combinations that will not carry PMI (1st mortgage usually with a 2nd lien Home Equity Line) that will avoid PMI, but you will still need 15% down.
0 votes Thank Flag Link Wed Mar 10, 2010
80-10-10 or 80-15-5 loans are still available if your credit scores are very good and would avoid the PMI. Talk to your lender about using this approach. If they do not offer it, then call around and find someone that does. The only other solution would be a Rural Development Loan and those are only available in certain areas outside the city limits of Wichita and you must fall within income limits. With only 10% down payment, the lending company will want to excrow for the taxes and insurance.
0 votes Thank Flag Link Mon Dec 29, 2008
Your lender should be able to readily answer these questions for you. Some of these items may depend upon your credit score as well as the ratio of your down payment to the balance of your mortgage. Most commonly the lender will set up an esgrow account to handle your taxes and home owners insurance.
In order to avoid PMI you must pay 20% down on the purchase price or you can have it removed by the lender
after you reach that amount on your mortgage. Be sure to contact your lender for specific answers to your situation.
I hope this helps!
Rebecca Dowty
http://www.WichitaWaterfront.com
0 votes Thank Flag Link Sat Dec 27, 2008
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