PMI tougher to come by

By
Real Estate Agent with RE/MAX Top Properties

 Yesterday, a client of mine was informed that he would not be able to secure financing on a home loan unless he were able to come up with 3% for Private Mortgage Insurance (PMI).

In brief: PMI is insurance payable to a lender that is required when taking out a mortgage loan with less than 20% down (though there's been ways around it). It is an insurance in the case that the mortgagor is not able to repay the loan, and the lender is not able to recover its costs after foreclosing the loan and selling the mortgaged property.

First-time and zero down buyers be aware of this.

This is in direct correlation to the number of defaults on current loans and the escalating numbers of zero-down/ gimmick loans that are in foreclosure. YOU may very well be hard-working, pay-on-time; every time buyers.....but you're paying for the "sins" of others right now with a declining number of loan programs available to you.

 

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Jim Ludes is a REALTOR with Century 21 Coleman-Hornsby in Grundy and Will County, IL. If you have a question about real estate that he might be able to help with, email him at Jim@JimLudes.com or call/text at 815-712-7786. If you'd rather observe from afar or become friends first, check him out at:

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Rainmaker
417,264
Debbie Malone
Londeree's Real Estate & Property Management - Lynchburg, VA
From Lynchburg To The Lake (434) 546-0369
Jim, with all these changes I'm holding my breath- I have a closing tomorrow that's gone way too smoothly. I'm waiting for the lender to call and say, oops!
Mar 20, 2008 06:18 AM #1
Rainer
130,186
Rich Dansereau
Positive Real Estate Professionals - Knoxville, TN
Though not the answer for everyone...FHA with 3% Down Payment Assistance (DPA) for primary residence is a viable alternative to a conventional loan. Not all brokers offer FHA because they may not use FHA approved lenders or they may not be comfortable with FHA guidelines or they may be under the misconception that FHA loans are all around more difficult (when this is NOT the case). Or it could be some other reason, this obviously is not a comprehensive list <<<smile>>> of reasons why someone might be reluctant to explore FHA options. Similarly, some lenders are not FHA approved; so if you are dealing with a lender rather than a broker be aware that not all direct lenders are FHA approved. There are some great blogs on AR regarding FHA. If your lender or broker does not offer FHA, you might want to dig a little deeper into their reasoning. I would also recommend checking out some of the excellent blogs on this site on this topic. 
Mar 20, 2008 01:37 PM #2
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Rainer
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Jim Ludes

Grundy/Will County, IL REALTOR
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