I'm getting conflicting information from mortgage brokers re: whether Hoboken is a declining market and

Asked by Buyer09, Hoboken, NJ Fri May 22, 2009

whether you need 15% down on a conventional loan. I'm being told that this is true by one guy, and another one says that it's a distressed market and if your credit score is above 700, you can put 10% down. Thoughts?

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Corey Grushin, Agent, East Brunswick, NJ
Fri May 22, 2009
LTV/Loan Amount
Loan Purpose Units Max. LTV/CLTV Max. Loan Amount Min. Credit Score
Purchase 1 95%1 $417,000 700
Condominiums – Maximum 90% LTV/CLTV
Ineligible: Nonwarrantable condominiums, manufactured homes
1 First-time homebuyers only – A fi rst-time homebuyer is an individual who: (1) is purchasing the property;
(2) will reside in the property; and (3) had no ownership interest (sole or joint) in a residential property
during the three-year period preceding the date of the purchase of the property.

I pasted this info from the PMI companies guidelines regarding (distressed markets) . It doesn't quite read correctly but 1 after 95% under Max. LTV/CLTV refers to a footnote which you can read . It starts as 1 First-time ...
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Corey Grushin, Agent, East Brunswick, NJ
Fri May 22, 2009
The closing time is not afffected by the loan program, so in this case the seller is incorrect in their thought. The rate is better conventional though, so your broker is correct. The ability to do financing on certain loans is affected by various influences though. In this case it may be because of the PMI companies. After my first response I looked up another PMI company that allows condos in distressed markets markets an allows 90% financing for "first time home buyers" but not for others. Non first time home buyers would have to put down more.
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Corey Grushin, Agent, East Brunswick, NJ
Fri May 22, 2009
PMI is the term used for conventional loan (Private Mortgage insurance). MI is the term used for goverment loans (Mortgage Insurance). MI on goverment loans has an upfront premium (added to the loan amount) of 1.75% thus a $200,000 loan turns to a loan of $203,500. The monthly premium is 1/12 of loan amount multiplied by .0055 (($203,500*.0055)/12= $93.27/month)
PMI has no upfront fee but has a higher monthly factor. Thye factor is based on the loan to value (LTV) in this case it should (varies by lender) be .0069 o5 $115/month (($200,000*.0069/12)
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Buyer09, Other Pro, Hoboken, NJ
Fri May 22, 2009
Yes, I am buying a condo in hoboken. First time buyer. The seller prefers that we do not do FHA bc she wants a faster closing (45-60 days). I don't specifically care and my broker told me that the rate is better with conventional, so we agreed to do conventional.
0 votes
Buyer09, Other Pro, Hoboken, NJ
Fri May 22, 2009
Is MI the same as PMI? It is higher for conventional than FHA?
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Corey Grushin, Agent, East Brunswick, NJ
Fri May 22, 2009
Help me help you Buyer09. Can you please answer these questions for me. Buyer09 are you buying a condominium? Are you a first time homebuyer?
0 votes
Luke Allison, , Asheville, NC
Fri May 22, 2009
I would err on the side of you having to put 15% down. Please note that if you have a rate of 5.125% with conventional AND Monthly MI, you can eliminate MI for a .5% bump on the rate through our Tax Advantage Mortgage Insurance. So for a rate of 5.625% (with no points or origination) you can avoid MI altogether. You can also pay points to buy your rate down from there. However, if you find 90% financing w/ MI and yoy prefer to go that route, I would not say that that would be unwise by any means. Just make sure that you have MI approval from the start or you would just be wasting your time.

Luke Allison
Bank of America Home Loans
828-777-8828
luke.allison@bankofamerica.com
0 votes
Luke Allison, , Asheville, NC
Fri May 22, 2009
I did price out the loan at 90% LTV and simply put, the rate was 5.125% with conventioanl financing and 5.375% with FHA. However, since the MI was so much more expensive with the conventional loan, the payment was higher with conventional. Please note that the fact I was able to price MI does not guarantee MI acceptance. I am just able to price it out before running the whole file through the system.

Luke Allison
Bank of America Home Loans
828-777-8828
luke.allison@bankofamerica.com
0 votes
Buyer09, Other Pro, Hoboken, NJ
Fri May 22, 2009
We do not want a FHA loan. We are definitely going conventional. My offer was accepted this afternoon and I want to know if I have to put 10% or 15% down. I just had another broker call me and say "only 10%" - Bank of America says no, 15%...
0 votes
Corey Grushin, Agent, East Brunswick, NJ
Fri May 22, 2009
FHA would be a slighty higher rate but not much, .125 or .25. Also it has a lower mortgage insurance premium. Buyer 09, since I do know the market I went further with my Mortgage insurance rate quote option. I believe you are looking to buy a Codo which are most of the purchases in Hoboken. Here is a copy of ther findings regarding Condo's in Hoboken.
"Condominium and Co ops with LTVs exceeding 85% are not eligible for mortgage insurance in this Market.
Loans with DTIs greater than 41% are not eligible for mortgage insurance. "
If the loan officer you are using hasn't suggested FHA to use, maybe he's not FHA approved thus can't do the loan.
Also know the condo would also have to be FHA approved as well. It's something I can look up for you.
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Buyer09, Other Pro, Hoboken, NJ
Fri May 22, 2009
My understanding is that FHA would be a higher rate...
0 votes
Luke Allison, , Asheville, NC
Fri May 22, 2009
Buyer-
If you are wanting to put 10% down then I would highly suggest just going with a straight FHA loan instead. Not only will you not have to deal with the MI issues, you can put as little as 3.5% down and still have no problem obtaining MI. On top of that, you will probably see a lower fixed interest rate and a lower altogether payment.

FHA has no policy regarding distressed markets whereas conventional financing does. Just a thought.

Luke Allison
Bank of America Home Loans
828-777-8828
luke.allison@bankofamerica.com
0 votes
Corey Grushin, Agent, East Brunswick, NJ
Fri May 22, 2009
Buyer 09 here is the result I received back form a PMI rate quote sight after inputting 07030 (Hoboken zip code) The site is a secure sight so I can't post the URL for you to go to.

This property is located in a distressed market as defined in the PMI Distressed Markets Policy. Properties in this market are subject to a maximum LTV/CLTV of 90% (or loan product/program maximum if less than 90%) to be eligible for mortgage insurance from PMI, and may be subject to additional underwriting guidelines or restrictions.

PMI is the most aggressive of the PMI insurance companies in the market right now. I would be more than willing to talk to you as well if you have any further questions.
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