I am about to buy a home and can pay only 10% downpayment. I dont want to Pay PMI and hence am trying to see what are my options. Since 2nd Mortgages are almost impossible to get, what are my options now to finance another 10% to avoid PMI.

Here are some details.

1. Home in BayArea CA.
2. I am a First Time Home buyer
3. Very good Credit Score.
4. Over 100k Salary.
5. Loan under process.
6. Home Appraisal by the lending bank came up 3% above the purchase price.So the home already has about 3% equity apart from the 10% downpayment I will be making.

Thanks for your suggestions.
Hans23

The appraisal for a purchase has nothing to do with your LTV. The value of the home is what you're paying for it in the eyes of lenders. That 3% doesn't exist.

There are no other options to get out of paying MI other than 1) putting 20% down or 2) getting a 2nd lien. Lenders offer Mortgage Insurance or a 2nd Lien to mitigate their potential risk over 80% LTV.

Find a bank or other source to loan without PMI. (few and far between i know)

I maybe wrong but GOVT loans are the only ones that legally require PMI. Others just do it because it protects them (its smart). Search around ... good luck.

PS: any rich relatives?

owenscott said:
I maybe wrong but GOVT loans are the only ones that legally require PMI. Others just do it because it protects them (its smart).


Since Fannie, Freddie, and FHA are all owned by the government then pretty much your only choices for loan qualification is through government sources. There are no Sub-prime lender anymore because the secondary market has collapsed.

All the above programs require mortgage insurance with a 1st lien Loan to Value about 80%.

Ask your lender if they have lender paid MI. You may pay a higher rate though to get rid of the PMI.

Guys,
Thanks for your advices.
As many of you stated, all the current programs require PMI be it Govt or Private. I am still trying to see if I can get a second mortgage.
The PMI for me wont be tax deductible since my wife works too and we are above the income limit for the PMI to be tax deducted.

Hans

Since I work for a FDIC insured bank I need to yell: "NO NO NO, FRAUD, FRAUD, FRAUD". This is loan fraud and it doesn't meet the No Oral Agreements Clause/Disclosure in ALL Mortgage Loans Paperwork signed at closing.

The other thing is that the above scenario just doesn't work. The buyer has to have bonafide funds in your own account for downpayment. A seller who is not family can in no circumstances give the buyer the down payment before closing. Probably 40% of the work on every file I do now is proving whether 100% of the funds to close is the buyer's bonafide funds. It makes my head spin and adds to my stress level how many times I see un-explained deposits in a buyers accounts. We look for it for 90 days in some cases on your bank statements. We as banks are actively looking for these types of transactions.

You may have to do this the old fashion way, wait until you can afford the house.

Hans23 said:Once again, Thanks for your advices. I am only looking for legal ways of getting rid of PMI.

Hans

There really are none. Your options are to buy a cheaper house, wait until you have more money saved up, or pay off the loan as quickly as possible at first so that you get below 80% LTV.