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bojabu
Member since Sep 2010
1275 posts
| PMI bullshite (Posted on 11/14/12 at 8:53 pm)
I'm buyng a home, and was under the misguided impression that PMI was only needed when the home's appraisal value to equity (down payment) was less than 80%. Under further review, it's the purchase price, not value, unless you are refinancing. Is that correct? (Conventional mortgage)
If it is correct, could I in theory buy the home, then immediately get it refinanced and then avoid paying PMI that way?
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novabill 
LSU Fan
Crossville, TN
Member since Sep 2005
3940 posts
| re: PMI bullshite (Posted on 11/14/12 at 8:56 pm to bojabu)
In most cases, the lender will use the purchase price as the appraised value for the first year.
One option is going with single payment mortgage insurance. depending on the amount you put down, it may be only .25 higher in rate to get out of paying monthly mortgage insurance.
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bojabu
Member since Sep 2010
1275 posts
| re: PMI bullshite (Posted on 11/14/12 at 9:04 pm to novabill)
Single payment per year you mean?
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LSU9102
TBD Fan
West of the Mississippi
Member since Mar 2007
1518 posts
| re: PMI bullshite (Posted on 11/14/12 at 9:15 pm to bojabu)
I was able to get a 80/15/5 to get rid of pmi.
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bojabu
Member since Sep 2010
1275 posts
| re: PMI bullshite (Posted on 11/14/12 at 9:35 pm to LSU9102)
I'm basically deciding whether to do something to get rid of PMI, or using my $40k or so to just pay down other debts and suffer through PMI. I'd really rather stash the equity back in the house, but if I dump that in and still have (albeit less) PMI, I dunno. Going to do a little research on the loans you're talking about there...
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TJG210
LSU Fan
New Orleans
Member since Aug 2006
18444 posts
| re: PMI bullshite (Posted on 11/14/12 at 10:13 pm to bojabu)
Don't pay PMI, put 10-15% down, get a mortgage for 80%, and then get another loan for 5%.
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Franktowntiger7
LSU Fan
Member since Dec 2010
1622 posts
| re: PMI bullshite (Posted on 11/14/12 at 10:19 pm to TJG210)
I thought it was appraised value.
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bojabu
Member since Sep 2010
1275 posts
| re: PMI bullshite (Posted on 11/14/12 at 10:36 pm to TJG210)
TJG, which type of loan is it you get to supplement the mortgage? Is it another mortgage, or is it called something else?
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Pilot Tiger 
Georgetown Fan
Washington DC
Member since Nov 2005
50370 posts
| re: PMI bullshite (Posted on 11/15/12 at 7:22 am to bojabu)
you can get a heloc or sometimes even a seller held 2nd mortgage to avoid PMI
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ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
4595 posts
| re: PMI bullshite (Posted on 11/15/12 at 7:24 am to bojabu)
I've been getting my clients killer rate from a local lender here for 80/10/10 (+720)
3.5/4.25 respectively
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TJG210
LSU Fan
New Orleans
Member since Aug 2006
18444 posts
| re: PMI bullshite (Posted on 11/15/12 at 8:53 am to bojabu)
quote:
TJG, which type of loan is it you get to supplement the mortgage? Is it another mortgage, or is it called something else?
Honestly, it's been a couple years since it's been paid off, but I think it was a home equity loan. We received the large chunk through a mortgage broker, and then got the remainder through a bank.
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MikeBRLA
LSU Fan
Baton Rouge
Member since Jun 2005
8716 posts
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quote:
I thought it was appraised value.
Everything is based off the lesser of the appraisal or sales price. This figure is the value.
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CajunTigerBabe
LSU Fan
Lafayette
Member since Sep 2012
206 posts
| re: PMI bullshite (Posted on 11/15/12 at 2:32 pm to MikeBRLA)
First of all, you can't turn around and refi. There is a 12 month waiting period for you to use appraised value.
Some lenders let you do up front MI (UFMI). This is a percentage of your loan. You can pay it in cash or finance it back into the loan. It would be somewhere around 1.25% depending on LTV and credit score. You would not have any monthly MI if you choose this.
Some lenders also have a 2nd mortgage option. This is the 80/10/10. Not all lenders do this.
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Tigah in the ATL
LSU Fan
Atlanta
Member since Feb 2005
20596 posts
| re: PMI bullshite (Posted on 11/15/12 at 6:22 pm to bojabu)
How can the value of a home be different from its purchase price?
You just established its value.
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TJG210
LSU Fan
New Orleans
Member since Aug 2006
18444 posts
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quote:
You just established its value
Not in the eyes of a lender.
For example, if you have a 2,000 sq ft house, and comps in the neighborhood say it should go for about $100/sq ft. You agree to purchase it for $300K, if you go into default and the bank has to sell the house, it's unlikely they will sell it for the $300K you purchased it for leaving them in a bind.
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ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
4595 posts
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quote:
How can the value of a home be different from its purchase price? You just established its value.
TJG210, the lender will require appraisal and based on that if appraises at 200k and purchase price is 250k, either buyer will need 50k from other source or seller has to drop price.
Always make offer contingent upon inspection, financing/appraisal. If you agree to pay over market value, the seller is under no obligation to sell it there if contingencies are not in place.
Anyone who thinks a person saying "I feel like my house is worth 300k" and a lending institution will just go along if another individual agrees is foolish
This post was edited on 11/16 at 7:58 am
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yellowfin 
Illinois Fan
Paige is Pretty
Member since May 2006
51853 posts
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quote:
How can the value of a home be different from its purchase price?
You just established its value.
exactly, if the appraisal is more than the purchase price that just means the appraisal was off
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RandySavage
Member since May 2012
3805 posts
| re: PMI bullshite (Posted on 11/16/12 at 11:18 am to yellowfin)
If you re-finance do you have to start over and pay off 20% of the refi amount or is it still 20% of the original loan amount?
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I Love Bama 
Alabama Fan
Alabama
Member since Nov 2007
27078 posts
| re: PMI bullshite (Posted on 11/16/12 at 12:03 pm to yellowfin)
quote:
exactly, if the appraisal is more than the purchase price that just means the appraisal was off
herp derp much?
I just bought a house last week for $50,000 and it appraised for $120,000. It's called real estate investing. You should look into it.
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yellowfin
Illinois Fan
Paige is Pretty
Member since May 2006
51853 posts
| re: PMI bullshite (Posted on 11/16/12 at 12:25 pm to I Love Bama)
let me know when you sell it for the 120k
and you invest in real estate hoping it appreciates in value, when you buy it it's worth exactly what you paid
This post was edited on 11/16 at 12:27 pm
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