Avoiding pmi

gnc0988

Ok. I'm really confused. If
I go the 5% conventional route instead of the fha route can I pay the pmi upfront and never worry about it again? Will I even have to pay the pmi? If the purchase price is 130k, the value of he home is 150k, and I put down $6500, aren't I at the 80% point to not hVe to carry pmi?

Just.... How can I avoid pmi?!

YellowTulips521

In order to avoid PMI, you must put at least 20% down. I'm only familiar with monthly PMI so I'm not sure if you can pay it all up front. Also, if you go FHA you now have to pay PMI for the life of the loan, instead of conventional where it automatically drops off at 78%.

YellowTulips521

Also, when purchasing a home it is the LESSER of the appraisal or purchase price. In your example, you would need to put down $26k. Usually there is not that big of a difference between appraised value and purchase price.

G2SoccerTaz

You have to put 20% down in order to avoid PMI. Once you reach having 20% equity in the house, the PMI will drop from your payment. For example the purchase price is 130,000 you will need a down payment of 26,000. If you can only put 6500 down, then you will have to pay PMI until you reach 26,000 paid on your principle.

The only way you can pay for PMI upfront and forget about it is with the 20% down. The PMI will be added to the monthly payment. Your monthly payment will include your principle, interest, home owners, property tax and PMI.

FHA loans will have PMI until you pay off the loan or refinance the loan.

Smitten2012

I agree with the prior posts regarding the 20% - I think that is what would make this a conventional versus FHA loan.

Also - I believe there may have been a recent update this past summer 2013 to the PMI to last through-out the duration of the mortgage - meaning it doesn't drop off at all. However please don't quote me on this - it was just an article I recently read and not sure if there are any ways around it - do your research - a great website is realtor.com & trulia.com both have forum boards with helpful information!

Best of luck to you

Sillygirl45

You do need to put 20% of purchase price to avoid PMI. We have FHA and it drops off after 5 years. My previous conventional mortgage did not have a time it would drop. I would have had to have the property appraised again to have it dropped.

Alikat9614

We are in the beginning stages of buying a house. The local bank we are going with is currently offering no PMI loans with 10% down. My FI happened to notice an add for it while checking his online banking and they are offering it through the end of the year. Local banks and credit unions in this area seem to be much better about helping my first time buyers than the big banks.