Rebellab Posted February 14, 2008 Share Posted February 14, 2008 (edited) Let's say that I am looking at a house that is in great shape, just not selling. They started at $275,000 and they now have it reduced to $249,900. A relocation company has it offered, and so we are going to submit a low ball offer of $225,000. We have no idea if they will accept it. We would have to have PMI, at what point will we not need that. For example, what if the house appraises for $267,000 and we have a mortgage of $213000 only putting down 5%. 20% of $265,000 is $213,600 Do we have to have mortgage ins? Edited February 14, 2008 by Rebellab Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted February 14, 2008 Share Posted February 14, 2008 (edited) Let's say that I am looking at a house that is in great shape, just not selling. They started at $275,000 and they now have it reduced to $249,900. A relocation company has it offered, and so we are going to submit a low ball offer of $225,000. We have no idea if they will accept it. We would have to have PMI, at what point will we not need that. For example, what if the house appraises for $267,000 and we have a mortgage of $213000 only putting down 5%. 20% of $265,000 is $213,600 Do we have to have mortgage ins? I think they all differ slightly but I had PMI until the appraised value of the house was 20% greater than the mortgage outstanding. Usually, these two amounts are moving in opposite directions making the gap bigger from both ends. Not true in a falling market, of course. Anyway, as soon as that threshold was crossed, I applied for the PMI to be eliminated and it was. Edited February 14, 2008 by Ursa Majoris Quote Link to comment Share on other sites More sharing options...
PSULions Posted February 14, 2008 Share Posted February 14, 2008 PMI is based on having 20% on the first mortgage and in the situation that you are speaking about it will be interesting to see where the appraisal would come in at. When we bought our house back in 2006, we put 10% down on the house and did what they call an 80/10/10 mortgage based on a fixed rate on both the 1st mortgage and the 2nd mortgage. With 80% on the 1st, we were not required to have PMI and the rate was only 3/4% higher on the 2nd mortgage compared to the 1st mortgage. It might be something to consider depending on how the numbers shake out. Good luck. Quote Link to comment Share on other sites More sharing options...
sundaynfl Posted February 14, 2008 Share Posted February 14, 2008 Let's say that I am looking at a house that is in great shape, just not selling. They started at $275,000 and they now have it reduced to $249,900. A relocation company has it offered, and so we are going to submit a low ball offer of $225,000. We have no idea if they will accept it. We would have to have PMI, at what point will we not need that. For example, what if the house appraises for $267,000 and we have a mortgage of $213000 only putting down 5%. 20% of $265,000 is $213,600 Do we have to have mortgage ins? The need for PMI is calculated using the purchase price not the appraised price... so you have ot put down 20% of the purchase price to avoid MI. There are also mortgage products out there that allow Lender paid MI that allow you to avoid a second mortgage... I n your case I would look into doing a loan with MI for a year and then apply for getting it removed when the investor allows for it. Fannie, I believe requires a 1 year seasoning and Freddi erequires a two year seasoning. The only nice thing about mortgage insurance is that you may be able to deduct it on your taxes!! Quote Link to comment Share on other sites More sharing options...
Cyclones Posted February 14, 2008 Share Posted February 14, 2008 The need for PMI is calculated using the purchase price not the appraised price... so you have ot put down 20% of the purchase price to avoid MI. There are also mortgage products out there that allow Lender paid MI that allow you to avoid a second mortgage... I n your case I would look into doing a loan with MI for a year and then apply for getting it removed when the investor allows for it. Fannie, I believe requires a 1 year seasoning and Freddi erequires a two year seasoning. The only nice thing about mortgage insurance is that you may be able to deduct it on your taxes!! This must differ from rules on construction. We built a house in 2003, cost us 300k and appraisal came in at 375k. We put nothing down on the house and did not need PMI, so our bank used appraised value as opposed to "purchase" or building price. Quote Link to comment Share on other sites More sharing options...
sundaynfl Posted February 14, 2008 Share Posted February 14, 2008 This must differ from rules on construction. We built a house in 2003, cost us 300k and appraisal came in at 375k. We put nothing down on the house and did not need PMI, so our bank used appraised value as opposed to "purchase" or building price. Yes the rules on construction to perm. financing are different... Quote Link to comment Share on other sites More sharing options...
Rebellab Posted February 14, 2008 Author Share Posted February 14, 2008 Well talked to the mortgage guy at the bank my wife works at and he said that it the appraiser has good enough reason to appraise the house 20% over the loan amount, then he may be able to get it thru. Due to the fact that the underwriters have taken it in the shorts, they are less willing to do this. So it may or may not be able to be done. The house is definately worth more than we will make the offer for, it is a relocation company from the east coast. We have two homes in foreclosure in the city, so we really haven't been affected by the housing slow down. They started asking $307,000, reduced it to $269,900 about three months ago, and now they have reduced it to $249,900. We are going to low ball at $230,000. If they don't accept it tough. Quote Link to comment Share on other sites More sharing options...
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