Posted on: 25th Apr, 2006 12:36 pm
If the purchase price for a brand new preconstruction property is lets say $200000 with a 5% down payment. Is a PMI required if the same developer just recently sold the same, identical home for 270000? It seems to me that the LTV value is below 80% and that the property is above 22% equity already. Is there a way to eliminate the PMI at closing?
Hi Silverlining,
Normally if you buy a house by making a down payment less than 20% of the purchase price, you have to pay PMI.
But if you think you have 20% equity in your home then, the PMI can be removed. Ask your lender on how to get the PMI removed on the loan.
James
Normally if you buy a house by making a down payment less than 20% of the purchase price, you have to pay PMI.
But if you think you have 20% equity in your home then, the PMI can be removed. Ask your lender on how to get the PMI removed on the loan.
James
The PMI can be avoided with a lot of options. You may choose lender paid mortgage insurance, a combination of 1st. mortgage/2nd. mortgage or may increase the down payment.
Consult with your lender/broker to decide which type will suit you best and negotiate with him to avoid PMI at closing.
Consult with your lender/broker to decide which type will suit you best and negotiate with him to avoid PMI at closing.
hi silverlining,
it largely depends on the value of the ltv at the time you are going for the loan to make the purchase.
if you pay 20% less on a property or the ltv is more than 80%, it is likely that you need to pay a pmi.
there are some options to avoid pmi under this condition -
consult with your lender/broker to select the best option as per your condition and needs. as james said, if you think you have 22% equity already then, you can the lender for removing the pmi from the loan.
thanks,
caron
it largely depends on the value of the ltv at the time you are going for the loan to make the purchase.
if you pay 20% less on a property or the ltv is more than 80%, it is likely that you need to pay a pmi.
there are some options to avoid pmi under this condition -
- a piggyback loan - this loan allows you to take 80% of the purchase price and put it on a traditional mortgage. you can take remaining 10% to place it on a second mortgage.
- the finance single premium option - this option allows you to lower monthly payments in the same manner as a piggyback loan.
- no pmi loans - with this option your have to pay higher interest rate but you need not pay pmi.
consult with your lender/broker to select the best option as per your condition and needs. as james said, if you think you have 22% equity already then, you can the lender for removing the pmi from the loan.
thanks,
caron