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How can I avoid paying PMI on my new home loan?

I know there are a couple options to not pay PMI for insurance, such as 20% down on the loan, but are there any other special programs I can take advantage of? This will be my first home, so any way to reduce the amount of money put down would be awesome. by tyler._119_504 from Boston, Massachusetts. Dec 16th 2011 Reply


Donald LaPlume (dlaplume)
#6 ranked lender in New Hampshire - 47 contributions

Hi Tyler, There are several ways to avoid PMI or at least reduce it. First would be the type of loan you get for your home purchase. A USDA loan has greatly reduced PMI. About 1/4 that of other loans and there is zero down payment required for this loan. A VA loan, only if you are a Qualified Veteran, has no PMI and no down payment. If you do not fit one of those programs you can put down as little as 5% toward your purchase price and not have PMI with a special type of conventional loan. Sorry for running on but there are options for you. If you would like to see which ones make the most sense please feel free to give me a call. My number is 603-543-3700 ext 1. I am available over most of this weekend. Should you simply want to learn more please check out my free online university for home buyers at www.homebuyeruonline.com .Thank you for the opportunity to hopefully help Tyler,Don LaPlume

Dec 16th 2011
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Blake Kleckner (BlakeK)
#390 ranked lender in California - 258 contributions

The only real way to avoid MI with a low down payment is to get a VA loan, assuming you are a qualified veteran. VA loans don't even need a down payment. Other than that, you will have to pay MI. With some lenders, you can agree to a higher interest rate and the MI will be paid from the additional interest in your monthly payments received by these lenders. It is called LPMI, or lender paid mortgage insurance.

Dec 16th 2011
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Craig Tashjian (craigtash)
#19 ranked lender in Massachusetts - 5 contributions

Hello Tyler, Unless you are putting 20% down it's difficult to avoid PMI. The only way to avoid PMI altogether is to do a first and second mortgage at the same time. The first is up to 80% of the value and the 2nd mortgage is basically part of your down payment and the rest is your cash down payment. These are more difficult to do and I don't really advise. Depending on your qualification there are ways to minimize the cost of PMI. As part of your home purchase negotiation you can have the seller pay your PMI through what's called a single premium mortgage insurance. The seller pays the PMI and you have no monthly PMI payment. Feel free to contact me for further clarification.

Dec 16th 2011
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Al and Cindy Lane (Al Lane)
#1 ranked lender in Washington - 38 contributions

If you cannot qualify for a VA or USDA Rural Mortgage as others have said it becomes difficult. However there is one program out there that may work for you and that is the HomePath program where you could put down as little as 5% as have no MI. You pay a little higher interest rate however the no MI is awesome. Our if you have credit above 700 then Single Premium could be a good choice for you. Any questions please call me at 360-901-1023 anytime.

Dec 16th 2011
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Kiyoshi Inui (Kiyoshi)
#537 ranked lender in California - 109 contributions

there is a product available outside the VA (only military) or USDA (only rural/agricultural land) Loans, but the selection is limited. go to www.homepath.com (Site for FANNIE MAE foreclosed properties), and see if there are any you're interested in. they offer 5% down for primary & usually 15% down for investments, but no PMI.

Dec 16th 2011
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Robert Oliveira (roberto)
#13 ranked lender in Massachusetts - 89 contributions

Hi Tyler,you can do what they call is a buyout of the PMI. In which you will pay a lump sum which is financed into new loan to eliminate the monthly PMI. Or the bank will charge you a slighltly higher rate to buyout the PMI Call me for more detailed info on these scenerios. Robert Oliveira Residential Mortgage Services in Dartmouth,Ma. 508 802 0935 or email me at roliveira@rmsmortgage.com. Thank you

Dec 16th 2011
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Brian Allen (ballen)
#43 ranked lender in Maryland - 191 contributions

Tyler, all reponses are sound and good information but there is not a lot you can do so you may just accept it, accepting it would give you an additional tax deduction MI is tax deductible. Then with property appreciation and principal reduction (make an extra payment per year) when your LTV gets to 80% LTV or below you can request the MI to be removed and then be left with a great rate. LPMI which one sugested is financed in the loan you will receive a higher rate and higher balance. So consider accepting it. I can be reached at ballen@accessnational.com or toll free 888-354-3299. Happy Holiday's

Dec 16th 2011
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Hi TylerThere is borrower paid monthly PMI that you are already aware of, and then there is Lender paid which usually results in a slightly higher interest rate. Historically your monthly payment is less with lender paid as compared to borrower paid PMI. Your other option is a onetime fee that can be paid for at closing or financed into the loan. You may want to ask the seller for a closing cost credit and apply that money to pay for the PMI premium. In summary PMI is paid in some capacity with a convention loan. Want to see what you monthly payment options are? You can reach me at 508 733 4858 Barry Little Licensed Mortgage Loan Officer @ Ind Home Loans Newton MA

Dec 16th 2011
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Bert Carpenter (BertCarpenter)
#37 ranked lender in Arizona - 1,823 contributions

If you are a veteran, VA loans require no down payment and they have no MI requirements. If you are looking for a home in an area designated by USDA as rural, A USDA loan requires no down payment, but there is MI required. However, the MI is significantly less than for a conventional or FHA. Conventional loans with less than 20% down will have MI. But there are several ways to work it. There is Monthly MI, Single Payment MI and lender paid MI. If you plan to be in the home for a while, Single payment may be your best option, but you would need to pay the premium at closing. Lender paid MI is where the Single Premium is paid for by the lender from the premium received for you accepting a higher interest rate. Confused yet? The best advise I can give you is to locate a local Mortgage Banker/Broker, rather than one of the big banks. Instead of an order taker, you will work with a Morgage Originator who has been trained, tested and is Licensed. A Licensed Originator will work with you to determine the best way to obtain the financing that will cost you the least and benefit you the most.

Dec 16th 2011
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