Keep in mind that PMI is not that bad anymore. I believe it was in the beginning of this year PMI payments are not allowed to be tax deductible just like your mortgage interest payments. So there is less of a reason to shy away from PMI payments when comparably they will most likely add up to be about the same payment as tacking on a second mortgage. Another option to consider is seller financing if the seller is willing to do so and the lender is willing to accept that type of financing, which most lenders are, as long as the loan falls within guidelines. Best of luck when it's time to find a home!
As far as getting PMI dropped after the house has appreciated, lenders are generally not required to do that just because LTV has dropped under 80% due to appreciation. In most cases they are expected to drop PMI if LTV has dropped below 75% if due to repayment of original principal. --
If it is less than 75% due to appreciation and sufficient time has passed since the mortgage was originated. go ahead and ask, it can't hurt.
On the other hand if you "bought it below market" and expect the lender to drop PMI two months later because you made a shrewd deal, expect shrieks of laughter at such an audacious request.
The idea of a second mortgage to cover the 20% is a good idea but these types of loans are becoming difficult to get even with high scores. Mortgage Brokers promise many things but you need to be sure they can deliver.
Be careful about refinancing promises. That is how the lending mess we have today started. There is no telling what the value â€œwill beâ€ as we found out. Many buyers were promised lower rates when they refinanced their homes and now the value is lower than what they owe.
You should try to get pre-approved as soon as you are ready to buy. This will put you in a good position with a Seller. Also get your rate locked. You should be able to modify the loan as long as it is before the closing.
Hope this helps!
Shoreline Property Specialist
Coldwell Banker Residential Brokerage
Iâ€™m pretty sure that when a purchase is made, they focus on the purchase price and not the appraised value. Once you have obtained ownership, re-finance, and the appraised value will now be the focus. Ask your loan officer how soon this can be done.
Melissa Mancini, Realtor, CBR, GRI