I am getting a mortgage on 2 properties in Dallas, TX with 10% down on each. I was wondering if anyone knows of a an option for me to avoid paying PMI on these loans since my down payment is less than 20%. Obviously, I am trying to keep my costs as low as possible. Just curious if anyone has any thoughts or options.
(1) If you can find a lender to do it, get an 80% first and A 10% second.
(2) Get an 80% first and borrow 10% privately (friend, relative, etc.)
(3) In the future, try to get the seller to hold paper…
I found a lender that will do 90%CLTV. It is a 80% fixed rate first lien and a 10% 30/15 Balloon…
My monthly cost is very close only a few dollar difference (slightly less if I do the 80/10/10). My question what is a better option. The 90% fixed rate loan with PMI or the 80/10/10?
You have a lender that will do a 10% 2nd to 90%cltv on a non-owner occupied property? As far as I know those aren’t out there. This must be for owner occ.
Ask your lender if they offer LPMI on NOO properties. I know my company offers it. Basically you pay 1% upfront and MI is waived. It pays for itself in no time. Especially if your MI factor is over 1%. In that case it will pay for itself in less than a year. Are you flipping or buying and holding?
The property is non-owner occupied and they will do 90%CLTV. They will not do LPMI on a NOO.
I am buying and holding.
MI factor is .9 which I thought was pretty high.
Vanic, I don’t know if you are new to this. I’m new and I almost got into big trouble when I was told that the banks are not lending more than 80% LTV for NOO when my deals were scheduled to close. Maybe it is possible and I had plenty of lenders that told me it 90% financing was possible but when it got to underwriting — forget it (see Zachj’s posting – he’s in the business)… Be sure you have a good referral to work with this person and that they know what they are doing in the current lending market. You may get taken down a rathole and out of your earnest money if you can’t come up with and additional 10% down, otherwise.
As an aside, I had the extra funds and my deals closed…best of luck to you!
By the way, check out www.mgic.com…there’s info on the upfront one-time payment…
I agree that the 10% second lien on a NOO property is suspect. Is the second lien with the same lender? If not, have you been contacted by or received any documentation from the second lien lender? If not you may be getting the runaround. That product is so limited right now I only know of one bank that does them and you can only do it in conjunction with a first lien with the same bank and the max CLTV is 80%.
The MI Factor of .9 means you are effectively paying almost another full point of interest annually. If you are buying at a large enough discount you could close on the properties with the MI and then immediately rate term refinance the properties at appraisal value and eliminate the MI immediately. Although the LPMI is still the best option.
LPMI does sound like the best option but all the lenders I have spoken to say LPMI is only for owner Occupied.