PMI (Private Mortgage Insurance) is required when you borrow more than 80% of the value of your home.  The lenders felt that if you had less than 20% equity in your home there could be risk of foreclosure either by loss of value or simply inability to pay.  I guess their predictions came true.

In recent months the government has had many interventions in the mortgage industry to help shake the trees and loosen the nuts for homeowners that have been heavily burdened by the credit crisis. Again we hear Capitol Hill claim their rescue plan.  However, the Mortgage Industry again makes the new rules.

In the middle of August, the guidance for PMI will tighten again.  The big 5 PMI companies will soon be tightening guidelines and eliminating more products available to borrowers at large.  

A few of the big ones to go are:

• 2 family homes are no longer eligible
• Interest-only loans
• Debt-to-income ratios over 55%
• Certain bankruptcies less than four years
• Use of certain rental income
• Borrowers with previous foreclosures
• Various other tidbits 

 

If this might mean you, inquire within.  If you are applying for a mortgage with PMI and might fall into one of the above, you loan must be approved and interest rate locked by August 14^th.  It does not have to be closed, but I would suggest you grab the money and run real soon.  Dale Robyn Siegel