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pb858guy | Is PMI required by law? home financing I meant.? |
Here's the issue. I am shopping for my first home. I live in San diego CA and 1st time buyer. I have k credit (I think 680) and no debts. Now that I started to look, I have an overwhelming # of lenders calling me to give me a loan. They seem to be popping up from anywhere I breathe. Since I don't have the 20%, I am thinking in shop for a loan that does not make me pay PMI. Can I do that? Is it required by law in California? Can I tell I won't pay PMI end of story. |
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Babs
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Sry - I dont live in Cali, but in Texas its part of the loan. You have to get PMI until you have enough equity built up. Once you have made about 10 yrs of payments then you can drop your PMI I believe.
Good luck! We just bought our first house a year ago and its amazing to own your own home. |
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goz1111
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Sure you can say I will not pay the PMI, but the lender is completely legal to turn you down for not taking the PMI |
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LeAndra
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PMI is required by lenders and is not regulated by state. Here's the deal. If you borrower more than 80% of what a house is worth it is considered to be a bad risk for the mortgage company because your risk of foreclosure is significantly higher when you borrower more than 80%. So if you do borrow that much they require you to pay mortgage insurance so that if you do default they get their money back. Just like car insurance. If you have a loan on a car you usually have to have "full insurance" on your car to protect the lender. Homeowners insurance however protects you the consumer. If your house burns down it means that you get a check from the insurance company to build a new one. You can tell them that you won't pay PMI but you won't get the loan. It is a rule for all lenders that if you borrow over 80% of what your home is worth you have to pay PMI, ask them about Lender Paid Mortgage Insurance instead. It's where the lender pays your mortgage insurance in exchange for a slightly higher rate. Then when you owe less than 80% than the home is worth you won't have to pay it anymore :) |
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Expert Realtor
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Yes, you can find a loan that doesn't require you to pay PMI separately and they are built into the rate...they are called subprime loans, and you have seen where that industry has went.
If you don't have 20% to put down, you will pay PMI, period.
ESPECIALLY, in California where some areas have shown 6-DIGIT drops in home values, you can bet your a$$ you'll pay PMI if you don't have 20% down unless you do an 80/10/10.
If you tell them you "won't pay PMI", they will shake your hand and show you the door. A bank will be more than happy to allow you to walk out the door before they loan you hundreds of thousands of dollars because you won't want to pay a measley $100 or so a month. |
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David L
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No pmi is not required by law but is required by almost all lenders.
If you have less than 20% down there are 3 ways of dealing with this.
1) Get the loan you want and get pmi (seperate). Today pmi is tax deductable and it used to not be.
2) You could get a "self insured" of lender paid pmi loan where the pmi is built into the interest rate. This is not as good if you are going to be in the home long term because the seperate pmi can be dropped later where as if it is lender paid your rate can not be lowered.
3) You could get a second mortgage. Get an 80% first mortgage a 10% second mortgage and you put down 10%. The rate on your 2nd will be higher and can not be changed. With this option you may be able to refinance and combined your 1st and 2nd at a later time. |
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dwalkercpa
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pmi is not required by law - but it will be required by the lender. pmi stands for private mortgage insurance. generally speaking if you don't have a 20% down payment, the lender will include pmi as part of your monthly payment.
obviously the lender is going to do what they can to protect their loan to you. all you need to do is read about sub-prime lending, the current credit crisis, and falling housing prices (in some markets more than 30%) to get an idea of why the lenders are really going to require it.
as to your last question. can you tell them you won't pay and end of story. absolutely. you tell them you won't pay it, they tell you end of story. |
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trblmkr30
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Not required by law. I would shop for loans and see what comes up. I just closed a deal that had a 97% loan without PMI, but that doesn't happen often. Interview and get a good mortgage broker, you will be fine. The brokers have access to many different loan programs, so I'm sure he/she can find one that fits what you want. |
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stephanie h
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it is not required by state law but it is required my almost all lenders if the loan to value exceeds 80%. you can avoid the MI if you split the loan into say an 80/20 but you want to check with your motgage company to see if that would be best for you. 2nd lien interest rates are much higher than first lien rates (higher risk for lender) so if you concider what your pmt would be on say a 90% loan at 6% with MI that will cancel when your loan to value is 78% OR if the pmt is lower splitting the loan and doing an 80/10/10.
hope this is of use!! good luck!! |
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Spock (rhp)
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without PMI or a 20% down payment, you simply aren't likely to get a loan anywhere.
that's the bottom line.
***
reason: such a loan would be unsalable in the secondary market which would make the lender carry it for its entire life on its books. since the loan has a 30 year legal life and estimated 7 year effective life [because people move] but nearly all lenders have no way of getting deposits for 7 year periods, the lender would be exposed to interest rate risk.
and PMI is cheaper than the charge for the interest rate risk [which would require an interest rate swap geared out 7 years in the future -- expensive]. |
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heyteach
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It really doesn't matter if it's "required" or not, you will NOT get a loan without PMI if you don't have the 20% down because it is protection for the mortgage company. Especially after their latest debacle, you won't be able to avoid it.
However, here's some info you may not know about it:
http://www.hud.gov/offices/hsg/sfh/res/respapmi.cfm
So if you won't pay PMI your choices are to buy what you can put 20% down on or not buy a house. |
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SSB662
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PMI is not required by law. However, any lender giving you more than 80% financing will usually require it. Some mortgage brokers will often times get the first mortage from one bank and the second mortgage from another bank so that you avoid PMI.
If you don't have any money down, seek out a solid mortgage broker who will get you the best deal. If you have some money down but not the 20% required by most banks, you may want to buy a home using some other source of creative financing that will keep you from having to put 20% down.
I am in San Diego as well and would suggest putting as little money down as possible and investing the rest. It's a great market right now. You can buy with as little as 5% down and avoid PMI. I can tell you more if you want.
Hope this helps. |
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