PMI problem!!!

Asked by Puflight, Canton, MI Thu May 7, 2009

My wife and I found an awesome house. The only problem is that it's techinically a site condo and cannot pass the FHA spot approval. So we looked into a conventional mortgage. At 10% down we can't qualify for PMI, short of putting 20% down does anyone know of any mortgage lenders that will give a mortgage without PMI for say 15% down?

Help the community by answering this question:

+ web reference
Web reference:

Answers

9
Puflight, Home Buyer, Canton, MI
Thu May 7, 2009
Once again thanks for the answers everyone. I agree with you 100% Andy! Supposedly from what I've researched there has been a push to allow FHA to approve all "site condos" but who knows how long that will take or when and if it will ever. happen. It creates quite a dilemma for my wife and I since we would like a newer built home and most newer developments are "site condos" We easily are approved for a FHA loan and would be approved for conventional if we could qualify for PMI. I was hoping if we found a way around this that by the time we would be ready to sell that this whole mortgage meltdown would be behind us and it would be a nice investment.
And Dp2, I think that is a good idea, I'm going to tell our agent that other wise we're walking away and the search continues! Thanks again!
0 votes
Andy Hargrea…, Agent, Plymouth, MI
Thu May 7, 2009
It's really total garbage IMO, because the builders skirted zoning and did these as "Site condos" when they're true, actual free-standing single family dwellings. Yet, FHA and VA are unable to discern the difference between site condo and CONDO not being the same thing.

Generally, unless the sub is over 70% complete (hence your issue with 2nd phase) and if the builder didn't get (or isn't getting FHA approval) then you're stuck.

A conventional loan doesn't have the same problem. The only way these are likely to improve in new construction is if people stop buying and the builder sucks it up to get the FHA certification OR FHA is able to understand a site condo isn't a condo.
0 votes
Dp2, , Virginia
Thu May 7, 2009
Don't give up! Negotiate. Have your agent help you to make an offer with 100% seller financing for that condo, and have him/her explain to the seller's agent that this is probably the only way the seller will sell that property--unless the seller is getting a lot of all-cash-offers.
0 votes
Puflight, Home Buyer, Canton, MI
Thu May 7, 2009
Thanks for the reponses everyone! Guess I'm dead in the water here. It stinks because my wife and I could easily afford the home, but because the home is a "site condo" it doesn't qualify for FHA. I suppose if it was built on a bigger lot without the HOA we'd be golden. Thanks again!
0 votes
Dp2, , Virginia
Thu May 7, 2009
Forget the down-payment issue for now, many lenders are treating condos like Superman treats kryptonite: something to avoid. The Fannie Mae and Freddie Mac lending guidelines, for lending on condos, have grown increasingly restrictive. (Please check out the link below for more info.)

If you really want that condo, then you'll probably fare better if you were to make your offer with seller financing.
0 votes
Andy Hargrea…, Agent, Plymouth, MI
Thu May 7, 2009
PMI isn't a debt ratio problem.

It's an equity issue.

Lenders are unwilling to insure a home without appropriate equity. Given the way the market is today, people are statistically much more likely to foreclose without 20% equity.
0 votes
Puflight, Home Buyer, Canton, MI
Thu May 7, 2009
I posted another question on here. The unfortunate thing is that it's a Pulte development in the Canton area. It's scheduled for 4 phases and is only on phase 2. The home in question is part of Phase 1 and there is no way we can get it to qualify for a spot approval. Would having a co-signer help lower our debt ratio to get PMI?
0 votes
Andy Hargrea…, Agent, Plymouth, MI
Thu May 7, 2009
Many of my clients have had the same problem and to sum it up -- no...there's not much that can be done.
The builder would have to go through a very complex and lengthy FHA approval and warranty process that is expensive (but they'd be smart to do it).

Is what you're saying that with the PMI your DTV is too high?
0 votes
Renee Badall, Agent, Ann Arbor, MI
Thu May 7, 2009
If your lender is ambitious, they could put the condo through the FHA approval process.
Web Reference:  http://ReneeBadall.com
0 votes
Search Advice
Search
Ask our community a question
Home Buying in Canton Zip Codes

Email me when…

Learn more