Posted by Helene on October 03, 2007 at 12:36:18:
I’m sorry about the confusion. I personally loath institutional lenders and am working very hard on creative deal making. My goal is to never have to deal with these “institutions” again…
I love the idea of subject to and am trying to get my head around why anyone would want to do this type of deal.
anyway, thanks for all of your input. Points are valid and well taken
removing MI - Posted by Helene
Posted by Helene on October 02, 2007 at 17:16:09:
Just called chase to inquire about removing mortgage insurance. Spoke with India.
He said he’d put in a request to the investor, which I just found out is not Chase, but Federal Home Loan M C something of other. I’ve been in the business a while and had no idea Chase was not the actual investor.
Anyway, he said I’d be getting a letter in a week or so. Wouldn’t this be spelled out in my loan docs? I’ll have to go find them.
It’s coming on a year and I’m sick of the payment, almost 1,500 pi----- away per year. And what, MI covers only up to 20% of the loan anyway. What a joke.
I could cut an equity line check for the remaining 10%, but that would defeat my original purpose of having little down. Is this a bad idea to slap another 25K down. I don’t want to.
Any suggestions?
At a Lou Brown seminar earlier this year, someone suggested I mention to the investor that I can nicely make the payment, but that it’s starting to get tight with the added mortgage insurance. And that I could keep going nicely if they would just remove it, otherwise, I may be falling behind. That little extra stretch is just too much.
I would never do that mind you, I just can’t stand wasting money like this.
Re: removing MI - Posted by matx
Posted by matx on October 03, 2007 at 21:26:15:
The letter you’ll get will spell out requirements, which vary from lender to lender, though they all require at least 2 yrs of on-time mortgage payments.
We had our PMI removed by Nat’l City, WF and CW the past year. The LTV is usually 70-75% for investment properties (80% is usually for OO properties). Nat’l City and CW required appraisal, but WF gave us options for appraisal or BPO ($150). We chose the BPO (of course!) CW and Nat’l City let us choose our own appraiser. Nat’l City also let us e-mail the appraisal report to them.
Re: removing MI - Posted by Mark (SDCA)
Posted by Mark (SDCA) on October 03, 2007 at 07:34:32:
“I’ve been in the business a while and had no idea Chase was not the actual investor.”
Chase is jsut the servicer. Often the company you send the payment too is NOT the investor.
Removing PMI: Yes, it should be in your loan docs. If not, Chase WILL send you a letter. Typical: 2-3 years of on time payments.< 80%LTV (normally requires a new appraisal). Though I have heard of some ludicrous reqs like 65% LTV.
I would not add the extra DP money. If this is an investment, the PMI is tax deductible. What is happening to the property value? If it isn’t plummeting then just ride it out till you get to 80% LTV.
Re: removing MI - Posted by DaveD (WI)
Posted by DaveD (WI) on October 03, 2007 at 06:54:36:
Putting down another 10% for the purpose of waiving off PMI sounds like an extreme measure to save a few bucks each month. Think of PMI as the price you pay for conserving your cash. A cost of doing business in the nuthin’ down world. Deal with it!
What is your long term goal with the house? If you are getting any appreciation, you might be better off with refi.
The first (and only) house I bought with PMI was 5% down. Having to pay PMI wasn’t a grind, it was a blessing! It’s what got me into the game many years ago.
Re: removing MI - Posted by Eric (MI)
Posted by Eric (MI) on October 02, 2007 at 18:37:33:
I really wish I could remember the specifics of how we had our Mortgage Insurance removed (wife at the time dealt with them on it) but I do know it was 2 years without a late pay.
Re: removing MI - Posted by Barry (FL)
Posted by Barry (FL) on October 02, 2007 at 17:44:02:
check your mortgage and note, should be in there somewhere, if not in the package itself. Many lenders won’t take it off until after 2 years and that’s without being late, ever. You’ll probably have to pay for an appraisal too.
Another thing - Posted by DaveD (WI)
Posted by DaveD (WI) on October 03, 2007 at 07:11:39:
Used to be you needed to have 20% down, or don’t bother. As you may guess, few had that kinda dough. Average house was $20,000 and average wages were $4,545 in the late 1950’s. Go figure. The advent of PMI exploded the market of homebuyers and set in place generations-long expansion of homebuilding.
Rather than being a joke, it was an innovative exercise which has benefited millions of otherwise renters.
Re: removing MI - Posted by Helene
Posted by Helene on October 03, 2007 at 07:06:10:
Your right. Paying another 10% is extreme and thanks for pointing that out. It is obvious. It’s just painful to think over two years; the MI is about 3K. I can refi for that, yet, I wouldn’t be getting the good rate I locked in last year.
I put this loan on to never have to refi again, until I sell. And I have no plans on doing that.
So I’ll suck it up for another year.
Thanks for the reality check.
Re: removing MI - Posted by george
Posted by george on October 02, 2007 at 19:31:23:
I wonder about needing an appraisal. The contract on my personal residence says that it will be removed when my loan balance is 78% of the original amount borrowed.
Doesn’t mention anything about other avenues of getting it removed. Nor does it address the value of the home at any given time.
Unless I start paying a lot of extra principal, looks like I’ll be stuck with it a long time.
Re: removing MI - Posted by Helene
Posted by Helene on October 02, 2007 at 17:47:40:
Nope, never late. That’s one thing I’d never do. Can they insist on holding out for longer than two years. I figured I’d need an appraisal at some point.
Even after two years you still need an appraisal?
Maybe I should pay the additional 10% down.
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Re: removing MI - Posted by Helene
Posted by Helene on October 03, 2007 at 07:19:21:
No, the joke is that the insurance will only cover up to 20% of the loan balance, in this case, just under 40K.
I can offer them my own mortgage insurance.
Re: removing MI - Posted by Mark (SDCA)
Posted by Mark (SDCA) on October 03, 2007 at 07:36:06:
"Even after two years you still need an appraisal? "
Yes. How else would they know what the LTV was? Besides, it’s typically a bureaucratic rule.
How do you do that? - Posted by DaveD (WI)
Posted by DaveD (WI) on October 03, 2007 at 11:26:44:
Helene, how would you offer your own mortage insurance? How do you have the financial means to guarantee the top 20% of a loan, when you aren’t putting much down to begin with? This isn’t mortgage life insurance, it is designed to step in and make the lender whole if you default. Expect them to come after you as well. They’ll want to be repaid.
I’m not sure you understand the point of PMI. There is no need to insure a mortgage for the other 80% because it’s assumed the house has value, and the lender should be able to get 80% of the value back out if push comes to shove, and they have to take back and resell the house via forced sale.
Banks are not stupid. They will not write a loan beyond 80% LTV because nobody will buy that loan on the institutional secondary market. Now you have guys who will for a price come in and say “relax, we will cover the top 20% of the loan at the point of default.”
Knowing that most loans never default, and being able to spread the risk over portfolios of billions of dollars… I think that is a perfect use of the concept we refer to as insurance. And mind you, I hate insurance!
Re: removing MI - Posted by Helene
Posted by Helene on October 03, 2007 at 08:21:00:
Mark, where are you in San Diego. I lived there and still have a place in Carlsbad.
Appraisal is BS. Banks used to, in the good old days at times use desk top appraisals. For HELOC’s anyway.
I just read my loan docs and they explain what MI is, but nothing about the specifics of length of time, value, etc.
Re: removing MI - Posted by Helene
Posted by Helene on October 03, 2007 at 08:20:07:
Mark, where are you in San Diego. I lived there and still have a place in Carlsbad.
Appraisal is BS. They used to in the good old days at times use desk top appraisals. For HELOC’s anyway.
I just read my loan docs and they explain what MI is, but nothing about the specifics of length of time, value, etc.
Re: How do you do that? - Posted by Helene
Posted by Helene on October 03, 2007 at 11:39:37:
Your making one huge assumption here, that I don’t/didn’t have any money.
What you don’t understand is “leverage” I like to use other people’s money and leave my cash alone, unless it’s absolutely necessary. If the bank is willing to loan me up to 90% LTV and it makes sense for me, including paying their MI for a couple of years why not. After a couple of years the MI is removed, I have a great loan and have hung onto the other 10% cash. Hopefully to go buy another additional property.
I could have put 20% down, but chose not to.
That’s all.