Lurker Question

anuabby · May 2012

Hi!

I love reading all the information on this board, makes me feel so much less alone as a First-Timer...

My hubby and I are going to apply for our mortgage on the home (offer accepted, inspection done) and are planning to apply for an FHA loan, as we're scared to put out too much of our savings right off the bat. So when I was making the appointment with our broker today, she's all "Hmmm, maybe you guys can get a LPMI loan...." I asked her what that was and she said its a "Low PMI loan." Read "duuhh"

I have never heard of this?? I'm hoping someone here has?

TIA

GeorgiaRiah · June 2012

FHA Loans have PMI. PMI is the extra mortgage insurance that you pay until you have paid of 20-22% of the LTV (loan to value). Usually about the first 7 years if you only put 3% down. There are loans out there that are not FHA that require less down payment and have either lower or no PMI. I would definitely get the details. The PMI on my loan is $96 a month (FHA) and I only loaned $111,000. So as you can see it can save you quite a bit.

Lala7819 · June 2012

To add to the last poster, LPMI would mean you can do a downpayment <20% but (possibly) be paying lower PMI than with an FHA loan. Also, some places will do a low down payment and no PMI loan. In case you don't know, PMI is mortgage insurance for the bank in cases of buyers having low equity <20%). If the buyer defaults the bank would get some money back, the plan being that it would be enough to cover the difference between remaining loan amount and selling price at the time of the foreclosure. PMI is a percentage of your total loan to be paid monthly until you have 20% equity in the home. Low PMI loans (usually) calculate the monthly PMI payments based on a lower percentage than average.

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