I think above 420k you're out of fha and in the open market so things change, however from what I remember jumbo loans had less favorable terms overall. It may be higher for CA, but I couldn't find anything that avoided pmi with less than 20% down or even took less than 20% down iirc. I suspect even if you get into a setup like that there will be other ways they make it up.
Home buying thread
- Thread starter Pasteton
- Start date
-
Guest, it's time once again for the massively important and exciting FoH Asshat Tournament!
Go here and give us your nominations!Who's been the biggest Asshat in the last year? Give us your worst ones!
I got a house for 10% down and because my credit is so good I as able to buy off PMI for an extra 4k or so. Never heard of that option before but doesn't hurt to ask.
Vinen
God is dead
- 2,790
- 495
Jumbo loans were more favorable when my wife and I got our house (December of 2013). It was weird.
I wonder if leaving FHA-land allows for more risky plays.
- 16,742
- 7,767
Palum
what Suineg set it to
- 26,551
- 41,348
Yea no idea if this is a trap or not but on face value I guess it could make some sense if they don't want people to refi out of paying them interest instead of their competitors.
Hmm, I don't remember but it was around 8k more before I hit 10% additional principal paid.
Edit 4k number might be wrong too. I don't remember the figures off the top of my head.
The option was available for people with scores above 800 I think.
When I refi'd my house the PMI didn't magically go away when I was 20% invested like so many people on the internet says it does. I believe it used to go away now it stays for the life of the loan. I had to refi the house to get the PMI removed.
Vinen
God is dead
- 2,790
- 495
Hoss
Make America's Team Great Again
- 27,242
- 15,387
There's also 80/20 or 80/10 loans. I've bought 2 houses like that. You take out a second loan for the 20% to avoid PMI on the first one. A decade later, I did the same thing but I had 10% to put down so the second loan was only 10%.
As with all anecdotal loan advice, the laws might have changed since then.
Vinen
God is dead
- 2,790
- 495
Cad
scientia potentia est
- 25,426
- 49,042
It's perfectly common as long as you can qualify for both loans. The banks know exactly what the second loan is and the rate is a little higher on the 2nd to compensate for the risk. And you can pay down/pay off the second loan early and avoid PMI and lower your rate.
This is nothing sketchy or shady at all.
Hoss
Make America's Team Great Again
- 27,242
- 15,387
You probably need pretty good credit and for the bank to think you're white or something. Also, on my first house since I was a first time home buyer it was easier to get the full 20% on the second loan. When buying the second house, it was easier because they knew the first house was on the market and I was planning to pay off the 10% loan when that house sold.
But to be honest, I would rather have the discipline to save up the 20% beforehand.
But to be honest, I would rather have the discipline to save up the 20% beforehand.
Khane
Got something right about marriage
- 20,343
- 14,006
Except banks started doing this far in excess of 80/20 and even let people start taking out third and fourth loans to mortgage their properties.
It's pretty shady. The only reason these types of loans were ever created was to allow the banks' balance sheets to appear less risky than they actually were and to sell the riskier secondary, tertiary, and beyond loans as part of ridiculous financial packages to other banks/investors.
And let's be honest, creating a second loan with a higher interest rate just to get a house financed is pretty much the definition of shady business practice. Those loans weren't created to avoid PMI. They were created to get people who couldn't afford the house they were trying to buy financing.
Khane
Got something right about marriage
- 20,343
- 14,006
80/20 loans weren't loans for more than a house was worth necessarily. They were loans created for people who would get denied a mortgage for the sale price of the home, even if it was a foreclosure that was selling for 15% less than appraisal value. They were made to give people mortgages on houses they would not otherwise get approved for traditionally.
Cad
scientia potentia est
- 25,426
- 49,042
Proof?
Except they're still doing 80/20's today and there's no new private label securitizations since what, 2007?
How so? The first loan still has priority and will get paid off first (exactly as if the second mortgage didn't exist) and the second mortgage is known to be the second so the rate is a bit higher to compensate for that risk - the bank knows exactly what its doing when it takes on that debt or buys that mortgage. How is this shady exactly?
Except, if the person just borrowed 95% or 100% in one loan instead of 80/20 or 80/15/5 or whatever, they're still borrowing the same amount except now they're paying PMI and interest instead of just interest. How are they not created to avoid PMI?
Citations needed for your assertions, sir.