Private Mortgage Insurance (PMI) has been heavy on my mind lately. As a recap, PMI is required when you put less than 20% as a down payment.  The lenders feel that if you invest less than this, you have less to lose if you have to walk away.

 

Since, many lenders have done away with using a first and second mortgage combined to buy a house, the need for PMI has become greater. Unfortunately, MI companies are quickly pulling back on LTV’s, lower credit scores, declining value markets and stated documentation.  This will eliminate a slew of potential buyers and further put a kibosh on the real estate market.

 

The major mortgage insurance companies that the banks use are pulling out of the following loan types:

• Expanded Approval Findings with credit scores less than 660
• LTV’s over 95% unless both borrowers have at least a 680 FICO score
• LTV’s over 97%
• Primary income from wage earner on Stated Income
•  Credit scores less than 620
• More than 3% seller contributions with LTV over 90% (used to be 6%)

 

If you think you fall into this category, call your lender.  Inquire as to how long this program will be available. If you loan is already approved, see when you have to lock the rate and close in order to maintain the program.

 

Dale Siegel