Any mortgage experts?

[mrsklamc]

We have a condo...wouldn't buy one again, but we love ours, it's home.

Contacted a broker about refinancing and he told us we couldn't get PMI because we don't have enough equity.

Since we have NO other debt, I asked how much cash we would have to bring to the table to bring the percentage up. He stopped returning my calls.

SO, does anyone know what that percentage is for a condo?

 

[njcarita]

Contacted a broker about refinancing and he told us we couldn't get PMI because we don't have enough equity.

now u have me all confused...... PMI is for people without enough equity????
PMI is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home's value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI.

 

[mrsklamc]

now u have me all confused...... PMI is for people without enough equity????
PMI is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home's value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI.

yes...we are saying the same thing. In order to not have PMI you must have more than 20% equity. However, I was that PMI is now not available to condo owners at all, unless they have a certain amount of equity. I am wondering what that amount IS for condo owners.

 

[punkin]

now u have me all confused...... PMI is for people without enough equity????
PMI is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home's value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI.

Yeah, I'm confused too.

 

[mrsklamc]

Help me understand why you guys are confused? You have to pay PMI if you don't have a 20% downpayment...so 20% of the equity of your home.

 

[vicki_c]

However, I was that PMI is now not available to condo owners at all, unless they have a certain amount of equity.

This is the part that doesn't make sense - I think you understand what you're saying, but I don't!

PMI is not usually thought of as "available" to the homeowner -- it's required by the lender - it's their protection, not yours. So it would not make any sense that they wouldn't allow you to get PMI without a certain amount of equity (whatever that is) -- that's the time they would make you get PMI. If you didn't have the right amount of equity AND couldn't get PMI, you would never be able to get a loan. I never heard of a different amount for condo owners, but I have not purchased a condo either.

I think I would find a different mortgage broker in any case, since the one you were talking to has not been responsive.

Edited: I did a little Googling after posting and found many references to condos requiring PMI if you don't have 20% equity, which is exactly the same for purchasing a house.

 

[mrsklamc]

This is the part that doesn't make sense - I think you understand what you're saying, but I don't!

PMI is not usually thought of as "available" to the homeowner -- it's required by the lender - it's their protection, not yours. So it would not make any sense that they wouldn't allow you to get PMI without a certain amount of equity (whatever that is) -- that's the time they would make you get PMI. If you didn't have the right amount of equity AND couldn't get PMI, you would never be able to get a loan. I never heard of a different amount for condo owners, but I have not purchased a condo either.

I think I would find a different mortgage broker in any case, since the one you were talking to has not been responsive.

We're interested in refinancing, but that's just it- I don't think we CAN at this point, because I don't think we can get PMI on a loan, because we don't have enough equity. We are going to try a different mortgage company but folks around here are usually pretty knowledgeable so I thought someone might know the answer I am looking for in the meantime.

 

[msmayor]

Definitely call another broker.

He/she should be able to tell you what LTV (loan-to-value) ratio is required to refinance. If it is 80% (which is normal in most cases) then you could only refinance up to 80% of the value of the home.

PMI may not even be an option for you simply because a lender may not permit you to take out a mortgage with a LTV greater than 80% in this refinance situation.

So...if the market value of your condo is $100,000, then the maximum mortgage you may be permitted to refinance to is $80,000. If you currently owe MORE than that on your existing mortgage, then you would need to have the difference between the current mortgage and $80,000 PLUS an amount to cover all closing costs available to you.

Many folks will roll closing costs into the new mortgage, but if you are at the maximum LTV with no room, you will have to pay them out of pocket.

Make sense?

 

[vicki_c]

Deleted since you got a better answer above.

 

[punkin]

If you have 20% or more in equity, PMI is not necessary. It may be that you have less than 20% and a lender will not take PMI. They want the full 20%.

 

[Bren's Mom]

I would try contacting both your current lender and asking about a refi, and also a local or work credit union. If you don't belong, join. And ask them about a refi as well.

I think you just got some odd information.

Perhaps you can't refi, that might be true, but it doesn't make sense to me that it's because you're in a condo with less than 20% equity and not allowed to get PMI. Something's wrong there.

 

[msmayor]

I would try contacting both your current lender and asking about a refi, and also a local or work credit union. If you don't belong, join. And ask them about a refi as well.

I think you just got some odd information.

Perhaps you can't refi, that might be true, but it doesn't make sense to me that it's because you're in a condo with less than 20% equity and not allowed to get PMI. Something's wrong there.

Not necessarily. In this market, with the upheaval in the mortgage industry, there may be some lenders that are simply unwilling to take any refinance with less than 20% equity. They are not required to allow a refinance with less equity just because PMI is available.

 

[Bren's Mom]

"he told us we couldn't get PMI because we don't have enough equity. "

That's what the broker told the op. And since he's a broker, he should have access to hundreds of lenders/programs. It DOES make sense to me that SOME lenders might not be willing to lend even with PMI, but it doesn't make sense that ALL lenders would not. Isn't an FHA an option for refi? I don't think there's a condo prohibition for an FHA, but I could be wrong.

I'm just saying she shouldn't take the word of this one broker, she should ask several reputable lenders.

 

[vicki_c]

Not necessarily. In this market, with the upheaval in the mortgage industry, there may be some lenders that are simply unwilling to take any refinance with less than 20% equity. They are not required to allow a refinance with less equity just because PMI is available.

That was where I was going with my deleted post - that the refi issue might not really be with the PMI, but about the equity / downpayment for getting a refi at all (I am in what I call "one nostril above the waterline" myself, and we are unable to refinance at this time due to the drastic drop in home values in our area).

 

[mrsklamc]

Yes, you guys have it now!

Although the gentleman did tell me something about it being specifically because it's a condo that we may not be able to get PMI.

In any case, we have significant savings so we may be able to bump the LTV so we can refinance.

DH is going to call the company Dave Ramsey is always recommending this afternoon and see what they say.

 

[phred52]

Yes, you guys have it now!

DH is going to call the company Dave Ramsey is always recommending this afternoon and see what they say.

What company is that?

 

[mrsklamc]

What company is that?

Churchill mortgage.

 

[fab5friend99]

FYI I refi'd this week under the making home affordable program. This is a government program available only through your current mortgage company and only if your loan is held by freddie mac or fannie mae. There is no appraisal required. I have about 40% equity in my mortgage so I'm not sure if you have 20% or less what happens. You must be current on your mortgage. Please check out this link and call your current mortgage company:

makinghomeaffordable.gov

There are also other programs described on this website.

 

[MommyJack]

First contact your current lender, see if they can do anything for you. If not contact a real bank or credit union. Don't use a broker.

 

[NCRedding]

I did a google search. According to the NY Times, there are 6 large companies that offer PMI to lenders. 5 of those are tightening limits so that only certain borrowers will qualify for PMI. One of the limitations on of the insurers is not allowing PMI on condos; others might limit PMI to single family residences, no manufactured homes, etc. There is even talk about no PMI on cash-out refis, and no PMI for people who work with brokers.

It is insurance and the insurer takes into account the risk involved. I second the recommendation to consider credit unions. Our credit union loans up to 90% LTV with no PMI.