Author Topic: Avoiding PMI - ideas?  (Read 4384 times)

FastStache

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Avoiding PMI - ideas?
« on: February 06, 2014, 04:52:20 PM »
I'm shopping around for a second home and would like to avoid PMI.

1. Take 401K loan and pay back aggressively
2. Take a second mortgage, but how do I find a lender?
3. Pay PMI upfront, but this is still paying it.
4. Do a program where PMI is eliminated but usually with a higher interest rate.
5. See if it's possible to take a home equity loan on my current home?

Another other ideas or restrictions I should be aware of with each option?

FastStache

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Re: Avoiding PMI - ideas?
« Reply #1 on: February 08, 2014, 12:53:29 PM »
Has anyone done lending tree to avoid PMI?

clarkm04

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Re: Avoiding PMI - ideas?
« Reply #2 on: February 08, 2014, 01:12:23 PM »
Not to be too cheeky, but the easiest way is to save up 20% for the downpayment which means no PMI.

bikebum

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Re: Avoiding PMI - ideas?
« Reply #3 on: February 08, 2014, 01:35:13 PM »
Not to be too cheeky, but the easiest way is to save up 20% for the downpayment which means no PMI.

Agree. Why not just wait?

FastStache

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Re: Avoiding PMI - ideas?
« Reply #4 on: February 08, 2014, 03:18:55 PM »
Well, my thinking is interest rates on a bit on the rise and if I move, even with PMI my monthly spending will be lower than they are today.

bikebum

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Re: Avoiding PMI - ideas?
« Reply #5 on: February 08, 2014, 03:35:36 PM »
Well, my thinking is interest rates on a bit on the rise and if I move, even with PMI my monthly spending will be lower than they are today.

Sounds reasonable. Sorry I don't have any advice for you; I was just curious.

ShortInSeattle

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Re: Avoiding PMI - ideas?
« Reply #6 on: February 08, 2014, 04:28:43 PM »
We avoided PMI by getting:

A Mortgage + A HELOC (Home Equity Line of Credit)

This was back when banks were being stupid. Basically we put 10% down, got a HELOC against that 10%, which gave us a mortgage at 80% plus a seperate payment for the HELOC. We paid the latter down very quickly.

I'm not sure if banks still do this. Our lender suggested it at the time.




FastStache

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Re: Avoiding PMI - ideas?
« Reply #7 on: February 08, 2014, 04:38:36 PM »
We avoided PMI by getting:

A Mortgage + A HELOC (Home Equity Line of Credit)

This was back when banks were being stupid. Basically we put 10% down, got a HELOC against that 10%, which gave us a mortgage at 80% plus a seperate payment for the HELOC. We paid the latter down very quickly.

I'm not sure if banks still do this. Our lender suggested it at the time.

This would be doable for me if I can find a bank willing to give me a Heloc. With my savings rate I can pay this off in about 6 months-ish.

taekvideo

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Re: Avoiding PMI - ideas?
« Reply #8 on: February 09, 2014, 01:01:43 AM »
Hmm for the house I'm buying right now I put 5% down and got a 15% piggyback mortgage.
The main mortgage is 4% (7/1 ARM) and the piggyback is 4.5% interest rate (15yr fixed).
They even offered 100% financing but that would have been 5.5% interest rate on the piggyback mortgage.
I'm doing it through a credit union if that means anything.

gecko10x

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Re: Avoiding PMI - ideas?
« Reply #9 on: February 09, 2014, 07:30:45 AM »
We actually did #1 and #3.

Paying PMI up front is still paying it, but the rate should be much lower. If you go this route, be sure to shop around; the lowest monthly PMI company won't be the same one with the lowest upfront rates.

swimmer21

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Re: Avoiding PMI - ideas?
« Reply #10 on: February 09, 2014, 10:30:18 AM »
Some portfolio lenders will lend without PMI, even on loans less than 80% LTV.

Typically you can't get 30 year fixed mortgage from these programs, they'll only do ARMs and balloon loans. The banks that do these tend to be smaller, local banks, and will only do it with properties in their region. You can try searching for portfolio lenders locally, or just call a few of the smaller regional banks, and see if any have portfolio lending.

yahui168

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Re: Avoiding PMI - ideas?
« Reply #11 on: February 10, 2014, 09:48:44 PM »
If you find a property you're interested, you can ask about seller financing as a option. You put in x% down payment and seller finances 20 - x%.

TrulyStashin

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Re: Avoiding PMI - ideas?
« Reply #12 on: February 11, 2014, 08:52:51 AM »
What if you buy a foreclosure and your mortgage is, say, $90k but it's appraised value is $140k?  You'd have more than 20% LTV.  Do lenders still charge PMI in this situation?

Example (just so I'm clear):

Home's appraised value - $140k
80/20 LTV would be a max mortgage of $112k
Actual mortgage is $90k, therefore . . .
Actual LTV is 64/46

No PMI???