nurkvinny Posted December 20, 2004 Report Share Posted December 20, 2004 I'm looking at buying a house next year (probably summer). I have a couple questions, and would appreciate some real-world answers as opposed to the vanilla quotes on every realtor's website. - What ballpark rates are we talking for a 20 or 30 year fixed, with excellent credit, ~15k down, on ~170-200k home? - Is it possible to avoid PMI even though the d/p is < 20%? I believe this was answered on here before, but just checking. That extra $80-100 a month would allow for a much nicer house. Also, for anyone who has sold their house and then bought a home immediately after or at the same time, did you rent an apartment for a couple months? Did you eat 2 mortgages for a couple months? Did you sublet your place? Whatever you did, did it work out? Would you do it differently if you had to do it again? TIA Quote Link to comment Share on other sites More sharing options...
Guest Atlas Posted December 21, 2004 Report Share Posted December 21, 2004 Assuming interest rates stay where they are and by excellent credit you mean a score of 700+. You're probably looking at about 5-6% interest on a 30 year loan. As to avoiding the PMI it depends on the bank but don't count on it. However, if you find a house selling for below market value for one reason or another with 15k down you might come in under the 80% mark to avoid the PMI. Quote Link to comment Share on other sites More sharing options...
Guest powers Posted December 21, 2004 Report Share Posted December 21, 2004 rates right now are about 5.75 for 20 and 30 yr loans. With 15% you can avoid PMI by buying the PMI out. Some lenders call this TAMI( tax advanyage mortgage insurance). Rates are going up. So by next summer I would expect to get a rate around 6.5% on a fixed 20 or 30 yr. Fannie Mae and Freddie Mac are the 2 largest insurers of mortgages in the US. When you go to the bank and get a mortgage it is underwriten to fannie or freddie's guidelines, so that the bank can have them insure the loan against forclosure. That bank still holds the paper most likely, they just want a back up and that is what fannie and frreddie provide. When you say I have GREAT credit this is the type of loan you are being quoted for a 20-30 yr fixed most likely. Having a 700 credit score is great but people with the right circumstances will get the EXACT same loan with a 640 credit score. Also Atlas you made a comment I just want to correct. However, if you find a house selling for below market value for one reason or another with 15k down you might come in under the 80% mark to avoid the PMI.This is not true. When doing a purchase the value for the home is the purchase price. REGUARDLESS of the appraisal value. The appraisal is there to ensure that the price is a valid and fair market price. So if you buy a home for 100K and put 15K down you will have PMI. The value remains the purchase price for 12 months. After that you can have the home appraised and drop the PMI. In most cases the PMI is very small if you have a decent down payment. Everyone's circumstances are different. That is why we sit down and disscuss this with every customer. Quote Link to comment Share on other sites More sharing options...
Guest Atlas Posted December 21, 2004 Report Share Posted December 21, 2004 I've done deals where the purchase price comes in under 80% of the appraisal value and there is no PMI. And the purchase price does not have to stay the price for 12 months, I've refinanced properties after a month and pulled out equity. What I'm saying is if he gets a house for 160k with a 15k down payment and the appraisal comes in at 200k some mortgage companies won't require this insurance. Quote Link to comment Share on other sites More sharing options...
Guest powers Posted December 21, 2004 Report Share Posted December 21, 2004 You have the details all confused. And will confuse others with this. On ANY conforing loan if your loan amount is 80.01% or higher of the purchase price you will have PMI. There are ways to buy it out but you will have to deal with the issue. You either have to wait 12 months for the value to season or you have to refi with a lender that does not require value seasoning, which is VERY FEW(only one that comes to mind is longbeach mortgage a subsidy of washington mutual). And what I am saying is the advice that you give is the kind of advice i hear all the time. Customers comein and say well my friend said this and that. I look at them and proceed to tell them their friend is stupid and to stop listening to people to do not do this for a living. Atlas if you feel anything I have told you is out of line I encourage you to "Prove me other wise" Quote Link to comment Share on other sites More sharing options...
Guest Atlas Posted December 21, 2004 Report Share Posted December 21, 2004 Like I said there are ways to get around it with that size of a down payment. At $175k purchase price with a $15k down payment he can get a primary loan for $140k and a secondary for $20k. Granted the second mortgage will have a significantly higher interest rate however combined the monthly payments will still be lower than a single loan with PMI. And because neither loan is over 80%, no PMI. As you can see I do this for a living and do know what I'm talking about. He originally asked if there was anyway to avoid PMI with a downpayment less than 20%, the answer is yes, I just told you one way to do it. If you feel I am wrong then go ahead and "prove me otherwise". Quote Link to comment Share on other sites More sharing options...
Guest powers Posted December 21, 2004 Report Share Posted December 21, 2004 No you said that if you get an appraisal that is higher than the purchase price that you will not have PMI. I have already said there are ways around it. I can tell by your replies that you do not know what you are talking about. You're like most realtors and investors that have an idea of how shit works but does not know the facts. I will now site examples of you mis speaking. However, if you find a house selling for below market value for one reason or another with 15k down you might come in under the 80% mark to avoid the PMI.totally untrue, Loan to value is based on the purchase price not the appraisal amount. http://www.ehow.com/how_8128_calculate-loan-value.html At $175k purchase price with a $15k down payment he can get a primary loan for $140k and a secondary for $20k. Granted the second mortgage will have a significantly higher interest rate however combined the monthly payments will still be lower than a single loan with PMIThis is not good advice for people looking to stay in their homes. Most of the time people try to aviod the PMI they end up costing them selves more in the long run. It really depends on the loan to value. The payments on the PMI often times turn out to be less than an a piggyback loan combo. I know I do about 40 purchase loans a year. How about you? What you do 3-4 a year and are an expert right? Yea you must be licensed to originate and sell loans right? NO? Oh my bad. I am licensed, I do mostly purchase loans. Like I said I can't tell you how many times i have heard half truths and it drives me nuts. I now invite you to find an untruth in any of my posts. Quote Link to comment Share on other sites More sharing options...
Akula Posted December 21, 2004 Report Share Posted December 21, 2004 When I purchased my first home I had 10% and my mortgage company had something called a second saver loan, it was a second, short term, mortgage on the house for the other 10% and I didn't have to pay PMI. The great thing was that once I had the second paid off I had a really low payment. House cost $100,000 and I had $10000 down. Second Saver for $10,000 at a payment of something like $120 per month. Then I mortgaged the house at $80,000 for something like $680 (these numbers are fictitious and just for an example) So my total payment was $800 for the first couple of years, but I put all the money I could on the second. After owning the home for two years I owed $78,000 on the original note for a $100,000 home. Pretty sweet and I took all the money that would have been eaten by PMI and invested it in the home. When it sold I had TONS of equity and bought a much larger, much nicer home in a much better neighborhood. Quote Link to comment Share on other sites More sharing options...
Guest powers Posted December 21, 2004 Report Share Posted December 21, 2004 FOLKS PMI is 24 a month on a 90K loan. Most of the time you will only have it for 24-36 months which is about $600. You will not only pay that in the 300-400 they charge in fees on closing the 2nd mortgage but also in the additional interest on that second loan. So please understand how it works FULLY before you do a loan. There are alot of fine details that people over look. Even people who know what they are doing, or have done it many times. Quote Link to comment Share on other sites More sharing options...
Mowgli1647545497 Posted December 21, 2004 Report Share Posted December 21, 2004 I like peanut butter. Quote Link to comment Share on other sites More sharing options...
Guest Atlas Posted December 21, 2004 Report Share Posted December 21, 2004 Thank you Akula, just because it's not conventional doesn't mean it's not better. I will now site examples of you mis speaking. quote: -------------------------------------------------------------------------------- However, if you find a house selling for below market value for one reason or another with 15k down you might come in under the 80% mark to avoid the PMI. The companies I work with don't make me get PMI when I get a property for under 80% of its appraised value. It sometimes is even possible for the seller to take a second mortgage for the amount needed to get under 80% and are usually very reasonable on interest. So you see, I am not mis-speaking, I've done it and know other people who have done it. What you do 3-4 a year and are an expert right? I've bought 28 properties in 3 years, on all of these I have not put any money down and have had the seller pay closing costs, oh and I've never paid PMI. On several I have even gotten money back at closing. Expert? You decide. Quote Link to comment Share on other sites More sharing options...
nurkvinny Posted December 21, 2004 Author Report Share Posted December 21, 2004 Originally posted by BIG PAPA: Having a 700 credit score is great but people with the right circumstances will get the EXACT same loan with a 640 credit score. Big Papa - if it matters, I am above 800 on the beacon score. You mention $24 on a 90k loan, however, my current PMI is $78 on a 111k loan. Am I getting screwed? I can afford a 20% d/p, but can invest the money that I would put towards the loan at a better interest rate than the 5-6% that the loan would be. I always figured that if I could get a 12% return on my 'other' investments, I was ahead to do that instead of paying down my loan. Quote Link to comment Share on other sites More sharing options...
Guest Atlas Posted December 21, 2004 Report Share Posted December 21, 2004 Oh and Nurk.. as to your last question, there is no guarantee that you will sell your house right away, so unless you can afford to pay two mortgages for an extended period I would not recommend it. As to renting your house while trying to sell it, tenants may be a turn off to some buyers who don't want to deal with them. Additionally renting a property if you have lived there for two or more years can really hurt the tax breaks available. If you sell the current house shortly before you buy a new one you can roll the equity you recieve into the new house tax free, see a cpa for help doing this if you have questions. Quote Link to comment Share on other sites More sharing options...
Guest powers Posted December 21, 2004 Report Share Posted December 21, 2004 Originally posted by NurkVinny: Big Papa - if it matters, I am above 800 on the beacon score. You mention $24 on a 90k loan, however, my current PMI is $78 on a 111k loan. Am I getting screwed? I can afford a 20% d/p, but can invest the money that I would put towards the loan at a better interest rate than the 5-6% that the loan would be. I always figured that if I could get a 12% return on my 'other' investments, I was ahead to do that instead of paying down my loan. Pmi is calculated based on the loan type. use your money for other investments if possible. Putting down money on a house does not make you money. Just saves a little. Oh and Atlas everytime you post I laugh at you for being to dumb to understand your own financial transactions. You are doing non conforming loans not non convetional. 99% of of non conforming loans do not have PMI. They have higher rates, fees, and pre pay penalties. If you look a few few posts up you will notice i made a point to say I was talking about conforming products. I even explained them. You crack me up . No, you are not an expert. graemlins/lol.gif Quote Link to comment Share on other sites More sharing options...
Guest Atlas Posted December 22, 2004 Report Share Posted December 22, 2004 Whatever you need to say to make yourself feel good about your life big papa. Ive never paid points, my interest rates are in the 5's and 6's and the only fees I've paid are to my brokers at 1% I never claimed to be talking about conforming loans. Keep putting people down who are trying to help people get a good deal instead of what you think everyone should be doing, it's a sure sign of a winner. Good job. Oh and go ahead and call me dumb for explaining his options, I probably make close to if not more than you do, and I'm 20 years old... yea I must be a moron. Quote Link to comment Share on other sites More sharing options...
Akula Posted December 22, 2004 Report Share Posted December 22, 2004 Back on subject, clearly (as this post has illustrated), you have to do some homework. It took me a while to get my 4.25% 15 year I have on my house now. If you do plenty of research and don't fall in love with any deal without looking for another deal, you will be fine. Quote Link to comment Share on other sites More sharing options...
nurkvinny Posted December 22, 2004 Author Report Share Posted December 22, 2004 Yeah, I research the Hell out of everything in life. smile.gif The question I was really getting at was how people have handled selling one house and buying another at the same time, and how it worked out. Quote Link to comment Share on other sites More sharing options...
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