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I am about to buy my first home but I would like to save on the PMI if possible.

Example - If i am buying a house for $320,000 with a FHA a loan and 3.5 % - 5.0% down, but the houses is appraised by the lender/bank for $ 410,000 at the time of purchase, does that help me eliminate my PMI due to the equity.

Thanks in advance Confused

jenkin7 · Posted: Wed Jan 06, 2010 11:38 pm Post subject:

Hi aaja,

You need to pay PMI for loans if you make a down payment of less than 20%. But you can put down less than 20% and still avoid paying PMI. In that case, you need to buy a property at a price well below the market value. Your equity in the property is based on the appraised value of the house. If the appraisal done by the lender shows a value higher than the purchase price, you will have enough equity in the property. You can then avoid paying mortgage insurance.

eric1 · Posted: Thu Jan 07, 2010 5:27 am Post subject:

aaja

Before you move forward with the lender, ask about their policy on dropping the PMI over time. Some will allow you to send an appraisal one year later to determine whether you are at below 80% LTV

jveenstra · Posted: Thu Jan 07, 2010 12:43 pm Post subject: PMI

jenkin7, I do not believe your advice to be correct anywhere except New York State.

PMI is determined at the time of purchase based on the LESSER of the sales price or the appraised value. Therefore, if the purchase price is less and one is not putting a down payment of at least 20% of the sales price, the higher value of the house has no bearing on whether one needs PMI or not, except in New York State.

aaja1, Is the property in New York State??
The maximum FHA mortgage in most counties in the United States is $271,050. I assume you already know if an FHA mortgage is possible in whatever county you are purchasing???

Guest

Thank you all for the advise and your time. I certainly intend to request that the bank remove the PMI if the market value of the house is well below what we will pay for it.

The property is in NY State and the FHA loan limits are fairly high in NYC.

Is their a good website to track the daily interest rates as they have gone up some in the last cuople months. I will have to decide when to lock in a rate

Niicss · Posted: Mon Jan 11, 2010 4:40 am Post subject:

You can check out the mortgage interest rates from the given page:
http://www.mortgagefit.com/rates/

jveenstra · Posted: Mon Jan 11, 2010 7:47 am Post subject: PMI

You always pay the MIP with FHA loans, even in New York State.

FHA loans are different from conventional loans where you have PMI, not MIP.

With FHA loans you have MIP and must have it for five years before you can look at getting rid of it

With conventional loans, in New York, if the appraised value is high enough at purchase, you do not need PMI

Guest

Thank you John and Niicss

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