Does mortgage insurance have a lot of power?


I’m 2 weeks away from closing on my first home. The bank has approved the loan, obtained good faith estimate, etc. Since my down pay is about 13%, it looks like I have to pay some PMI.

Everything was well until recently when I was told by the loan broker that mortgage insurance has not approved the deal.

That seems odd. Isn’t PMI a minor party in the deal? Can they legitimately deny the loan process even when the lender has approved?

Or is this some scheme by the loan broker to jack up the interest rate jut before closing? Loan broker has not locked the interest rate yet.


The PMI company is insuring the loan. Yes, they have the power o refuse to insure your loan, which will make the lender deny your loan.

Perhaps you are in a declining market and the property values are still going down. Perhaps there is something in your credit history that is the problem – a past bankruptcy or foreclosure, late pays, charge offs.

Can you come with with 20% down so you won’t need PMI?

Perhaps splitting the loan into a first mortgage at 79% ltv, a second at about 10% ltv and you pick up the remainder in down payment will negate the need for PMI.