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Message
PMI: Is it as bad as I think it is?
Posted on 12/7/19 at 6:42 am
Posted on 12/7/19 at 6:42 am
Researching this as I'm looking at buying a home in the next year or so. I'm not OT wealthy unfortunately.
I know, money board but I can't remember to check that shite.
So is it worth biting the bullet on it and start building equity and getting out of a rental?
I know, money board but I can't remember to check that shite.
So is it worth biting the bullet on it and start building equity and getting out of a rental?
16
Posted on 12/7/19 at 6:44 am to EarlyCuyler3
Posted on 12/7/19 at 6:47 am to EarlyCuyler3
It’s not as bad as you think. Borrow $250,000 and you might pay an extra 1100 a year in PMI. The key is saving as much as you can in the next few years. If you can save and pay down the mortgage and reach 22% equity, the PMI automatically goes away after you request it.
If you believe home prices will continue to climb or it’s the only way to get a house for which you are desperate, PMI is viable. It certainly can be a good investment.
If you believe home prices will continue to climb or it’s the only way to get a house for which you are desperate, PMI is viable. It certainly can be a good investment.
Posted on 12/7/19 at 6:50 am to TulaneLSU
quote:
pay down the mortgage and reach 22% equity, the PMI automatically goes away after you request it.
Unless it's an FHA loan.
Posted on 12/7/19 at 6:54 am to frankthetank
quote:
Unless it's an FHA loan.
How does it work with FHA?
I've read it goes away automatically at 22% but you can request it at 20%.
Posted on 12/7/19 at 6:55 am to EarlyCuyler3
It made sense for my wife and I. We had the cash to put down 20%, but PMI was only $66/month and should fall of in around 4 years barring a substantial decrease in the housing market which shouldn't happen (DFW). We took the extra 10% and used it to invest otherwise.
Only negative for us is having to escrow property taxes and home owners insurance as we like to pay those things once a year.
Only negative for us is having to escrow property taxes and home owners insurance as we like to pay those things once a year.
Posted on 12/7/19 at 6:57 am to EarlyCuyler3
It’s a fricking scam
Posted on 12/7/19 at 6:58 am to EarlyCuyler3
Actually I don't know much about FHA loans.
This post was edited on 12/7/19 at 7:00 am
Posted on 12/7/19 at 7:00 am to TulaneLSU
quote:
If you believe home prices will continue to climb or it’s the only way to get a house for which you are desperate, PMI is viable. It certainly can be a good investment.
It kind of makes sense to me. I'm just burning money with rent. At least with ownership and PMI I'm building some sort of equity. I just get tripped up on the idea of paying insurance for a bank with no direct financial benefit on my part.
Posted on 12/7/19 at 7:05 am to EarlyCuyler3
quote:
just burning money with rent.
Unless the market slows, you get a job offer across the country in 8 months or the AC breaks twice.
The amount of equity in the short term is minimal and you push all the risk to someone else with rent.
Might make a ton of sense for your situation to buy ASAP but that phrase of wasting money to rent makes me twitch a little when I read it
Posted on 12/7/19 at 7:06 am to EarlyCuyler3
Bank wants to make sure you have skin in the game. It doesn't want to loan you a couple hundred grand and a few months later you default and they are left with a house they'll unload for 70% of market value.
PMI, as another poster said, is used by some who have the money to put down 20% and think that investing their money elsewhere will pay off. Let's say you borrow $300,000. You paid 10% down, with $33,000. You might only pay annually $1500, if your credit score is good, for that extra 33,000. Getting a general loan for under 5% isn't terrible.
PMI, as another poster said, is used by some who have the money to put down 20% and think that investing their money elsewhere will pay off. Let's say you borrow $300,000. You paid 10% down, with $33,000. You might only pay annually $1500, if your credit score is good, for that extra 33,000. Getting a general loan for under 5% isn't terrible.
Posted on 12/7/19 at 7:09 am to EarlyCuyler3
quote:
How does it work with FHA?
It doesn't go away with FHA anymore. Pmi is for the life of the loan. You'll need to refinance out of an FHA to be able to get rid of the PMI.
Posted on 12/7/19 at 7:09 am to EarlyCuyler3
Rent isn’t all that bad. You don’t realize all of the extra costs that go with owning a home. Maintenance is expensive and upgrades cost money as well. As far as I’m concerned, I have owned a hone a long time and I think I would have come out better renting so far with all the expenses that come along with outfitting a home. Window coverings, landscaping, fencing etc. then you are responsible for repainting inside and out, repairing driveways when needed, new roof when needed, etc.
Posted on 12/7/19 at 7:14 am to EarlyCuyler3
I didn't have $84K to put down, OT poor, and $90/month doesn't seem bad.
Posted on 12/7/19 at 7:25 am to EarlyCuyler3
FHA always has PMI. Only way out is to refinance to a conventional mtg.
Posted on 12/7/19 at 7:29 am to KennabraTiger
I know a guy who is paying $300 a month for PMI. His credit must be bad is all I can think. Mine is only $52/month but I have very good credit.
PMI is to protect the lending institution in the event you default on your loan and they can’t recoup their money by selling the house again. So naturally the borrower’s credit would be a determining factor in the cost of PMI. Or at least that’s how I would assume it works.
PMI is to protect the lending institution in the event you default on your loan and they can’t recoup their money by selling the house again. So naturally the borrower’s credit would be a determining factor in the cost of PMI. Or at least that’s how I would assume it works.
Posted on 12/7/19 at 8:01 am to mtcheral
This is true. I guess I'm thinking more in terms of having a fenced yard for the dog and the other things that come with a house. I do realize the upkeep and maintenance and upgrades are on me.
Another thing is I don't know if I'll be there 5 years or not, so I may not build any equity at all. But the mortage would be cheaper where I'm looking than rent is, so there are some savings there as well.
Another thing is I don't know if I'll be there 5 years or not, so I may not build any equity at all. But the mortage would be cheaper where I'm looking than rent is, so there are some savings there as well.
Posted on 12/7/19 at 8:22 am to EarlyCuyler3
Building equity is situational with many variables at play. 30 years ago the standard was putting down 20%——nowadays not so much. VA loans don’t require PMI if you’re a veteran.
Posted on 12/7/19 at 8:27 am to EarlyCuyler3
quote:
I've read it goes away automatically at 22% but you can request it at 20%.
Doesnt go away anymore
Buy your house FHA put the 3.5% down save the other money for a rainy day.
You are not gonna pay the loan off so enjoy the 30yr fix at 3.5% while you have it
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