Forgotten Your Password?

Need to Register?

Question Icon

Is PMI mandatory in our situation?

We are applying for a conventional 30 year fixed rate mortgage to purchase a primary residence. Appraisal, CMA, and AVM on the house are all more than $280k. The official negotiated purchase price is $270k. (Sellers are highly motivated.) We are putting down $45,500. So, at the time of close, we will have less than 80% LTV. Does the lender have to charge us PMI? by JMom258 from Grosse Pointe, Michigan. Dec 28th 2014 Reply


Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,446 contributions

Mortgage insurance is required anytime you are over 80%. When buying a home, this is based on the PURCHASE PRICE. The appraised value will have no bearing whatsoever when it come to mortgage insurance. So in this case, your down payment is only 16.6%, so you will need to deal with PMI somehow. You can choose monthly PMI, single premium (you pay a lump some at closing), or lender paid (increase your interest rate). Talk to a local mortgage broker for more information. For loans in MN, WI, or SD, visit www.StPaul-Mortgage.com

Dec 28th 2014
2
0
Forrest Grant (Forrest)
#1073 ranked lender in California - 9 contributions

With the new Fannie Mae products that are now on the market as of this month, there are loan products which offers 97% & 95% financing with no monthly MI or lump sum payment. Also depending on the state, there are grants available that will pay the required 3% or 5% down payment. In California, we offer these products. Please review the pages below.97% Loan: http://www.afflending.com/97/Down Payment Grant: http://www.afflending.com/0-down-conventional-loan/

Dec 28th 2014
1
0
Linda Wintersteen (Linda123)
#64 ranked lender in Arizona - 1,250 contributions

IF the sellers are motivated, see if they will lower THE purchase price to get you at 80% or less for the purchase , or if you can put down more,, it is better than paying for the PMI..

Dec 28th 2014
1
0
Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,224 contributions

PMI will definitely be required unless you use a 2nd mortgage to lower the loan amount to 80% of the purchase price. If I were working with you I would structure the loan with financed PMI so you would never have a monthly PMI payment. Contact me if I can help, pdumouchel@primelending.com

Dec 28th 2014
1
0
Kenneth Kopper (KenKopper)
#1 ranked lender in Maryland - 502 contributions

JMom, for calculating Loan to Value on a purchase, the lower of the appraised value or sales price is used to calculate the qualifying Loan to Value. Based on loan amount of 224.5 and sales price of 270, you would be at 83% Loan to Value.

Dec 29th 2014
1
0
Jericho Cherry (Jerichocherry)
#58 ranked lender in Virginia - 1,107 contributions

Les than 80% LTV you should not have to pay MI.

Dec 29th 2014
1
0
William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,797 contributions

The necessity for MI is calculated based on the LOWER of the sales price or appraised value.. Since your purchasing it for $270K, then the loan to value is calculated using the sales price. You need to put $54K down to avoid paying mortgage insurance. ($270K X 20% = $54K). Conventional financing requires 20% down to avoid paying PMI.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Dec 29th 2014
1
0
Bert Carpenter (BertCarpenter)
#39 ranked lender in Arizona - 1,815 contributions

As several have stated, the LTV calculation is based on the purchase price or the appraised value, whichever is lower. Based on your numbers, you are borrowing 83.15% of the purchase price so MI will be required. Unless you put 20% of the purchase price down, your options would be monthly or up-front PMI. Lender paid simply means you are paying a higher interest rate to generate a credit the lender uses to pay for the up-front premium. It will cost you significantly more to obtain the up-front than it will to pay the monthly for the short time you will need it. Just making your regular payment will put you below 80% in about 25 payments and then you can cancel it. The monthly PMI paid during this time would be less than half of the up-front and you wouldn't be paying a rate premium. Have your lender work it out both ways to see which works best for your situation. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in Arizona (AZLO0911876 / AZBK0902429), Washington (WALO40586 / WACL3087) and California (CADOC40586 / CAFLL6036566). We are licensed by the CA-DBO under the CFLL and CRMLA. Loans made or arranged pursuant to CFLL or CRMLA license. ~ www.LoansA2z.com ~ 888-889-9950

Dec 29th 2014
0
0
Krysten Bunn (krystenbunn@gmail.com)
#65 ranked lender in Michigan - 2 contributions

HI JMom - Great question. As already indicated PMI would be required; however, he have an amazing product that allows you to put less than 20% down with no PMI - the rate would still be very competitive (low 4's) with excellent credit. I'd be happy to discuss your options to see what would be best for you.My phone number is 810-522-0072.Good luck!Krysten Bunn - NMLS # 28402

Dec 30th 2014
0
0
Subscribe to our news feed.