Posted by: Debt Relief : Category: 
Avoiding mortgage insurance is not always an easy thing to do, especially if the borrower is financially strapped. However, it can be done. What exactly is mortgage insurance? There is several mortgage-related insurance—mortgage protection insurance and private mortgage insurance (PMIs), to name a few. However, we will only be elaborating on PMIs when we use the term “mortgage insurance.” Mortgage insurance is therefore an insurance coverage that is required on the mortgage of a borrower who is putting less than a 20% down payment toward the purchasing price of a home.
Therefore to avoid paying mortgage insurance, a borrower must put down 20% or more toward the cost of the property. There are lots of other ways to avoid paying mortgage insurance, though. Another way to side step the extra expense is by taking out a second loan, sometimes called a piggyback loan or second mortgage that closes simultaneously with the first mortgage. The second loan can normally be a home equity loan or a home equity line of credit provided by the lender or lending institution.
By paying a little extra each month toward the mortgage payment, one can dramatically reduce the principal of the loan faster, which will facilitate the removal of mortgage insurance if one was used in attaining the mortgage in the first place. When 20% or more of the mortgage has been paid, a borrower with mortgage insurance can contact the lender of the mortgage and request a removal of the mortgage insurance. By law, the lender is required to remove the mortgage insurance when requested by the borrower, providing that 20% or more of the mortgage is paid.
Refinancing a home loan with a lender who does not require mortgage insurance can also help a homeowner do away with or remove mortgage insurance from a mortgage. People with good credit can ask their lenders to exempt them from paying mortgage insurance. Most banks are willing to work out deals with borrowers who have excellent credit because it makes good business sense. People with good credit are less likely to default on loans and are less risky for banks or other creditors. So lenders will be more apt to take a chance on credit worthy people and will be more than willing to wave the mortgage insurance requirement.
To conclude, avoiding mortgage insurance is not the easiest thing to do, especially when there is a limited in available funds. Banks and other lenders usually require borrowers to pay mortgage insurance when the down payment is less than 20% of the purchasing price of the home. However, there are many ways to get around paying mortgage insurance. Paying more than 20% down toward the purchasing price of the home and paying extra on the mortgage each month, so the principal can be paid down quickly are some of the ways people avoid paying mortgage insurance.
Watch the video related to mortgage insurance
www.themortgageadvantage.com It’s official. Our government is slowly killing the Arizona housing market. President Obama torpedoed the already distressed home financing industry by announcing the gradual raising of down payments to a minimum of 10% on conventional loans. He touted a 2009 survey by the Federal Reserve Bank of St. Louis that reported families who placed minimum down on their home purchases were more likely to default. Really? 2009 is eons ago in housing terms and those figures are probably reflective of the 100% loans offered from 2004 through 2007. But you would have to actually pay attention to today’s numbers to know families aren’t ‘Toughing it out’ in a house that has lost 50% (or more) of its value, no matter what they put down. In 2004 studies surfaced proclaiming 100 percent financing was hunky dory. At that time housing prices were increasing, the economy was swinging. What could possibly go wrong? Or maybe it was the same survey that reported the more paperwork you sign, the less likely you will foreclose. “Homes Are Now Difficult to Buy” incentive program, or HAND in keeping with the governments love of catchy acronyms, was joined by FHA’s broadcast of a second mortgage insurance premium (MIP) increase in six months to help shore up its reserves. Before September, the monthly MIP on a $200000 FHA loan was $91.66. After April it will be $191.67, that’s right, a $100.00 a month jump in payment. In the 30′s the government stepped in to save the <b>…</b>
October 6th, 2011 at 11:08 am
No there is no "law" because the California state does not dictate the lending policies of banks…..in fact NO state does. These days, you will be hard pressed to find a bank that will accept a ratio higher than 35-40%.
October 6th, 2011 at 11:11 am
October 6th, 2011 at 8:43 pm
Just make sure your lender is NOT using a subprime company that has a DTI limit of 55.49%. You don't need that, and it wouldn't be much of a benefit since their rates are very high.
Assuming your credit is pretty good, Fannie Mae's underwriting system has been, at least up til last week when they updated their underwriting engine, regularly allowing DTI's up to 65%. No kidding. 100% financing with 620 scores at 65%, all day long.
So if you have any downpayment, better than 620 scores, you should be just fine.
Also, and few brokers know this, if your home isn't sold, but is under contract, with a few extra steps (basically must prove your buyer is fully approved with appraisal for buying your home), you can exclude that debt even if it hasn't closed quite yet. This could help in a pinch, if at least one of the homes is under contract by then.
But 52% is, unfortunately, pretty normal for people, without having 2 extra houses they're qualifying for.
Feel free to email me through here with any questions.
October 7th, 2011 at 1:11 pm
October 7th, 2011 at 5:12 pm
I am not a mortgage lender so I don't guarantee this to be right, but here's my understanding of it.
I believe that ALL debt counts – mortgage (I think including taxes and insurance payments that are part of your mortgage payment), car loans, credit cards and any other installment loan agreement (e.g. furniture) including national credit cards like VISA or MasterCard and all store cards, and anything else that you owe and are making monthly payments on (e.g. a personal loan from your brother).
I think what matters is the amount of the payments due each month, not the total debt owed. The idea of this check is for the lender to feel comfortable that you can afford to make all the monthly payments that you need to make. I would guess that they'd use the "minimum payment" amount but I personally would use the amount you normally pay when calculating it for yourself. Credit card debt is VERY expensive and I think it would be a bad idea to cut back on your payments toward that in order to get a new mortgage. The sooner you can eliminate the credit card debt entirely and pay the full balance each month, the better off you will be. Interest on credit cards can be a huge anchor holding people back from getting ahead financially and in my opinion credit card debt should be avoided if at all possible.
I believe your current mortgage will not be used in the calculations unless you are planning to keep that house as a rental property or second home. Again, what they care about is whether you can make the payments on the new loan so if you won't have your current mortgage by the time you have to start making those payments, they won't care about that.
What limits you need to have varies somewhat by the type of loan you are getting but I think a fairly common number is that the mortgage payment itself (plus anything else that's rolled into it like taxes, insurance, etc.) should not be more than 28% of your monthly income and the total of all monthly payments you have for all types of debt including the new mortgage should not be more than 36% of your monthly income.
Again, I would not recommend cutting back on your credit card payments to fit within those limits. In fact, if at all possible, I'd increase my credit card payments to get them paid off. If you don't have to pay credit card interest, you'll find yourself with more money available for other things that benefit you rather than the credit card company.
October 7th, 2011 at 8:07 pm
October 7th, 2011 at 10:27 pm
you have to earn bonus income for two years. A lender will consider using bonus income if you have a history of bonus income in the past. For example if you earned bonus at Factory A and you now work for the competition factory B then yes you can use a two year average. The long shot option is to have your loan officer ask the lender if they can use your bonus income but instead of dividing by 12 months, divided bonus income by 24 months.
Brian
Underwriter for 15 years.
good luck.
October 8th, 2011 at 10:21 pm
Golferwh is correct with one exception. You have to be able to prove that you have been a landlord for 2 years (with tax returns that show rental income) before you can use any of it.
October 9th, 2011 at 1:24 am
I work for a mortgage broker so I know what I am talking about.
I will depend on the lender and the loan program. Some programs don't change on DTI no matter the downpayment, others open up the more you put down. (though, keep this in mind. there is a point where the more you put down, the guidelines don't change.
In your case, if you are looking at a 28/36, pretty much, it is what it is. If you go over that, you will be in a different program. (there is still a chance of the same rate though)