I almost made the title "Avoiding PMI Insurance" but I knew Jason in my office would jump all over my case for saying "Private Mortgage Insurance Insurance".
My wife and I bought a home but didn’t have enough money for the 20% down payment at the time. The PMI was only going to be $50 per month for two years. So the question was whether to just pay the $1200 over the two years and take the deduction or to try some creative financing.
One option was for a piggy back loan at a much higher interest rate for the extra funds needed over my down payment to make up the 20% down. It kind of looked like this was going to be more than $1200.
Another option was to shop around for a lender that wouldn’t charge PMI but would self-insure and bump up the interest rate themselves. That seemed to yield the same results as the piggy back loan.
Having the property re-appraised was another option but that would have made me go from a no docs loan to conventional loan which meant digging through tax records for all the documentation which for my situation was not worth the $1200 it was going to cost me since I am involved in some corporations.
There may be other options that others want to share but the point I am making is to know there are options to PMI (Piggy back loans, raised rates, and re-appraisals).
I chose not to avoid PMI. What have the rest of you done? I'm not looking for "I just paid cash" or "I had the 20% down" type answers but for alternatives to PMI if a person doesn't have the 20% down. Hopefully, this info and AR community's comments will help a buyer or two some day.
Thanks!
Rob Lang, ePro, GRI Realtor® for Lawrence Kansas Real Estate
Realty Executives, Hedges Real Estate
300 Rockfence Pl, Lawrence, KS 66049
785-393-2274 (cell) 785-542-1661 (fax)
rob@LetRobDoIt.com (same website name if you want to visit)
NOTE: This blog was written in the past about properties on the market at the time of the blog being written and should not be considered as active listings beyond the date of this blog.
