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The Loan-to-Value (LTV) Ratio: A Guide for Borrowers in Texas

The Loan-to-Value Ratio (LTV) is a key mortgage term for homebuyers and homeowners to know and understand. We mention LTV a lot when breaking down other mortgage topics and products. Today we’re giving a crash course in LTV and explaining the impact LTV has on purchasing and owning a home. Loan-to-Value Ratio Defined The loan-to-value […]Read More

“PMI” or “Private Mortgage Insurance” Explained (Briefly)

PMI remains a great option for high-LTV financing in 2019, and all too many borrowers and agents do not fully understand how it works. First of all, PMI protects lenders (not borrowers) in the event of default. So borrowers with PMI will still be on the hook or liable for their mortgage debt even after […]Read More

Why Cash-Heavy Buyers Should Put LESS Down – Liquidity and Investment Returns!

We have had so many “cash-rich” borrowers ask us if they should put more money down lately, that we thought we should repeat this popular blog. Long-story-short:  borrowers usually should not put more money down as long as they have optimal financing and are not paying mortgage insurance. Borrowers also should not be so gung-ho […]Read More

Study Shows Mortgage Insurance Lessens Difficulty In Obtaining Down Payment

18 years of saving for a California 20% down payment. California’s increasingly competitive market has made property prices soar. With the high price tag associated with California real estate, many homebuyers are increasingly concerned about how they will afford a down payment on a home. Zillow recently released a study that showed that it takes […]Read More

52% of Homebuyers In California & Nationwide Have Down Payments Less Than 20%

Zillow recently published their Consumer Housing Trends Report 2018, which includes in-depth reporting surveys on trending household decisions across the nation. The comprehensive report found that nearly 52% of homebuyers across the nation are making down payments on home purchases with less than 20% down. This should come as a welcome surprise for homebuyers who […]Read More

First-Time Homebuyers Should Consider FHA

Federal Housing Administration (FHA) loans are an excellent option for first-time homebuyers looking to buy in the competitive California market. FHA loans have low down-payment financing options with flexible underwriting guidelines that are great for homebuyers with liquidity or credit issues. FHA loans are growing increasingly popular among the first-time homebuyer demographic. The Urban Institute […]Read More

Insurance & Mortgages; What Is Required? What’s It For?

There is often confusion in regard to all of the insurance that borrowers either should have, or are required to have, when they finance a home. Here is a brief outline that will hopefully alleviate some of the confusion. I. Fire, Hazard, or Homeowner’s Insurance. These terms are used interchangeably even though they are not […]Read More

The Loan-to-Value (LTV) Ratio: A Guide for Borrowers in California

The Loan-to-Value Ratio (LTV) is a key mortgage term for homebuyers and homeowners to know and understand. We mention LTV a lot when breaking down other mortgage topics and products. Today we’re giving a crash course in LTV and explaining the impact LTV has on purchasing and owning a home. Loan-to-Value Ratio Defined The loan-to-value […]Read More

Do First-Time Homebuyers Need Mortgage Insurance in California?

Mortgage Insurance (MI) can set off alarm bells for first-time homebuyers. Homebuyers are not automatically required to pay for mortgage insurance just because they are first-time homebuyers. MI requirements can vary between loan amounts and loan programs. Mortgage Insurance Triggers Buyers are generally required to pay for mortgage insurance if their down payment is less […]Read More

Why Lender-Paid Mortgage Insurance Isn’t Such a Good Deal

We are seeing borrowers come to us with quotes from online lenders for conventional loans with LTV > 80% but NO mortgage insurance. What the borrowers don’t realize is they are being quoted for a Lender-Paid Mortgage Insurance product (LPMI). With LPMI, a lender simply waives PMI requirements in exchange for a higher interest rate. […]Read More

How to Eliminate Private Mortgage Insurance or PMI

Here are three options for eliminating the private mortgage insurance (PMI) obligation associated with a conventional loan (FHA MI is permanent). Option #1 – Refinancing: If your property appreciates to the point where we can garner a new appraisal to support a value high enough to reduce your loan-to-value (LTV) ratio to 80% or less, […]Read More

The Case for Private Mortgage Insurance; PMI Is a Great Option Now

Private Mortgage Insurance (PMI) for buyers with less than 20% down has been much maligned for all too long. PMI is now, however, so much more competitive that it is often a far better option than the two highly touted alternatives: Lender Paid Mortgage Insurance (LPMI), and 80/10/10 (1st and 2nd mortgage) financing. PMI is […]Read More

Arch Mtg Ins; MUCH Cheaper; Algorithms

Today’s Blog is about Private Mortgage Insurance, normally a boring subject, but now fascinating for a few reasons. First, Arch MI is now available for strong borrowers as a fantastic alternative to traditional PMI, FHA financing, and 80/10/10 (1st/2nd Combo) financing. Arch MI is much, much cheaper b/c they use algorithms to calculate risk and […]Read More

95% LTV With No PMI? LPMI Not A Good Deal.

Many lenders are again touting their 5% or 10% down loans with no private mortgage insurance (PMI). Almost all lenders (including JVM) offer this through a product called Lender Paid Mortgage Insurance (LPMI). With LPMI, borrowers take a higher rate in exchange for no PMI. Lenders get more yield premium or commission with the higher […]Read More

Jan. 26: Big Day – FHA MI Drops; CU Appraisal Rule In Effect

January 26th, 2015 is a big day in the mortgage industry. 1. FHA “monthly” MI is lower (down to 0.85% for most loans) for all case numbers ordered from today on. Per HUD, expect delays in getting case numbers. 2. Fannie’s much feared new Collateral Underwriting (CU) Rule is now in effect. This is a […]Read More

FHA to Reduce Annual MI by 0.50% – 0.85% in Most Cases

President Obama is announcing a proposed reduction in FHA Mortgage Insurance today. Currently, most FHA Loans (with 3.5% down) have Annual Mortgage Insurance Premiums of 1.35%. The Obama Administration wants to reduce annual MI premiums by 50 basis points down to 0.85%. FHA (Federal Housing Administration) and Congress still have to buy off on the […]Read More

Lender Credits For Closing Costs Again – Effect on Payment?

Yesterday, we recommended Lender Credits for closing costs for borrowers who are tight on cash. We pointed out how such credits result in higher rates, but we failed to mention the effect on a mortgage payment. Our borrower yesterday had a loan of approximately $400,000. If she locked in a rate of 3.75%, with a […]Read More

Dow Hit Record High; Getting Out of PMI

A borrower recently called us to discuss his refi options. He had a 30 year fixed rate loan at 3.5%. He also had PMI that he wanted to eliminate b/c he now has substantial equity in his Bay Area home. As much as we wanted the refinance business, we told him not to refinance but […]Read More

Lender-Paid-Mortgage-Insurance – Overrated?

Many lenders tout Lender-Paid-Mortgage-Insurance (LPMI) as a way to avoid mortgage insurance. In fact, one of our lending sources (Quicken) has extremely good LPMI rates. With LPMI, borrowers can avoid mortgage insurance altogether by taking a slightly higher interest rate (3/8 to 1/2 percent higher for a 90% LTV for example). There is no free […]Read More

We Push 5% Down Conventional Over FHA, If Loan Is Under $417,000

We had a buyer come to us this weekend who had been approved for FHA financing by an online lender. The buyer, however, was very well qualified and should have been encouraged to take 5% down Conventional financing over 3.5% down FHA financing. Conventional financing is better than FHA financing, when buyers qualify, for the following reasons: 1.) […]Read More

No Cost Refi = No Risk = No Prepay Penalty = Savings for Free

We have many borrowers with Mortgage Insurance who qualify for “no cost” refinances that would save them as much as $500 per month in some cases. These borrowers are “ripe” for refinancing b/c their homes have appreciated rapidly since their purchase date. We of course contacted these borrowers and explained the benefits of a refinance, […]Read More

FHA “Mortgage Insurance” Rates; High & Permanent, But Necessary

All FHA buyers are required to get mortgage insurance no matter how large their down payment is. Currently, all FHA buyers must pay an Up Front Fee of 1.75% of the loan amount. Most FHA buyers also must pay an annual fee of 1.35% of the loan amount (divided into 12 payments). This annual MI […]Read More

640 FICO and 10% Down? FHA better than Conventional; $729,750 Limit

FHA remains the only or best option for many borrowers, despite the fact that FHA Mortgage Insurance is now permanent. We have a borrower with a 642 FICO and a 10% (of purchase price) down payment. He wants conventional financing but FHA is a better option for him b/c his low credit scores push his […]Read More

Lender Paid M.I. – Why We Don’t Recommend It

We talked a borrower out of pursuing “LPMI” yesterday, and it reminded us to re-publish the below comments. We have many conventional borrowers with less than 20% equity (or down payment) and an aversion to Private Mortgage Insurance (PMI). These borrowers often opt for Lender Paid Mortgage Insurance or “LPMI.” With LPMI a lender simply […]Read More

Eliminating PMI

We mentioned recently that FHA MI is now permanent, or required for at least 11 years, for FHA loans. Private Mortgage Insurance (PMI), however, has much less stringent guidelines. Below is the email we send to borrowers setting out ways to eliminate PMI. Eliminating PMI or Private Mortgage Insurance. Here are three options for eliminating […]Read More

FHA’s “Permanent” MI Means It Never Goes Away No Matter How Low…

We have addressed the fact that FHA MI is now “permanent” (in most cases) several times. We are, however, still getting questions about this so we thought we’d clarify (at the risk of being a bit redundant). Borrowers obtaining FHA financing, and putting down less than 10%**, are now required to keep their Annual Mortgage […]Read More

FHA MI Not Affected By Credit Score; PMI is Affected By Credit Score; PMI Rates Much Lower Than FHA MI

We were recently asked if Credit Scores affect FHA Mortgage Insurance (MI) rates. They do not. Credit Scores can affect FHA interest rates but not FHA MI. Credit Scores do, however, significantly affect Private Mortgage Insurance rates associated with Conventional Loans. For 30 year loans, FHA annual MI rates vary from 1.30% per year to […]Read More

FHA – Mortgage Insurance No Matter What the LTV IS

Starting in June, FHA will require Mortgage Insurance (MI) no matter how low the loan-to-value ratio (or how big the down payment) is.  This applies to both 30 year and 15 year mortgages. Many borrowers have to take FHA financing because they have issues that preclude them from obtaining conventional financing.  When this is the case, they […]Read More

FHA MI Permanent in June; 5 Years Now; FHA as Temporary Financing

This is a reminder that FHA MI becomes permanent for all case numbers ordered on or after June 1st. FHA Case numbers need to be ordered in May for any and all potential purchases that will close in the next six months. Case numbers expire after six months. FHA MI is 1.35% for most FHA […]Read More

10% Down to $833,000 with Conforming Rates; No PMI Either

We pre-approved a buyer for a $695,000 purchase with 10% down last year. That was the maximum conforming purchase he could get with 10% down. 10% down was and is the minimum down payment allowed for a conforming purchase. The buyer was pleasantly surprised to learn yesterday that he can now buy all the way […]Read More

“Millennials” Drive Housing Recovery/Future; Internet Driven

Reminder: FHA MI becomes permanent in June. This is an incentive for FHA buyers to find properties sooner rather than later. The below link is a graphic published by the PulteGroup. It illuminates why “Millennials” (18 to 34 year-olds) will be a major part of the housing recovery and housing’s future. http://goo.gl/94cyI Many of our […]Read More

PMI is NOT Permanent; Getting Out of PMI

FHA currently requires Mortgage Insurance for five years no matter what, and in June FHA MI will become permanent (for the life of the loan). This is why conventional financing with Private Mortgage Insurance (PMI) is often a better route. Several borrowers, however, recently told us they thought PMI was permanent too. It is not, […]Read More

FHA MI Increase on April 1st; Order FHA Case # Now W/ Address

This a reminder that FHA Mortgage Insurance rates are going up by 0.10% or 10 basis points on April 1st. If you or a client of yours is considering FHA financing for any property, whether you end up closing or not, you should have us order your case number by Friday (to preserve the lower […]Read More

FHA MI Increase; Reserving Lower MI; FHA Easier Than Conventional?

This is another reminder that FHA Mortgage Insurance Rates are going up again on April 1st. But, all borrowers have to do to preserve the currently lower MI rates (1.25% in most cases) is to identify a property and order an FHA Case Number prior to April 1st. The Case Number will run with the […]Read More

Appraisal Comes In Low; Seller Won’t Budge; 90% Becomes 95% LTV

Because the market is so “hot”, sellers are refusing to budge on contract prices when appraisals come in low (sellers believe other buyers are waiting in the wings that will pay full price). In this situation, buyers simply have to come in with the extra funds to make up the difference between contract price and […]Read More

Getting out of Private Mortgage Insurance – Options

Buyers who put less than 20% down for conventional financing have to get Private Mortgage Insurance (PMI). They invariably ask how they can get out of their PMI obligation. Below is the email we send to such borrowers. Here are three options for eliminating the private mortgage insurance (PMI) obligation associated with a conventional loan. […]Read More

FHA MI To Go Up Again; FHA MI to Become Permanent

FHA announced numerous pending changes this week. The two most ominous are: (1) another increase in the annual Mortgage Insurance Premium (MIP), from 1.25% to 1.35% for most loans; and (2) the annual Mortgage Insurance Premium will become permanent. To avoid confusion, remember that the “annual” MIP is paid every month on a pro-rata basis […]Read More

15 Year Fixed FHA Loans Have Low to NO Mortgage Insurance

Many of our well-qualified borrowers are forced to use FHA financing b/c of its more flexible credit standards or b/c of its higher loan-limits. This often frustrates them b/c FHA MI rates are high and imposed no matter what for FHA loans with 30-year amortization rates. What many borrowers do not know, however, is that […]Read More

FHA to Raise MI Again (to 1.35%); Make MI Permanent?

In 2013, FHA will likely increase monthly mortgage insurance premiums (MIP) to 1.35% from its current rate of 1.25% for most loans. Also likely in 2013: FHA may make MIP permanent. Currently, FHA borrowers can eliminate their MIP obligation after they have made 60 payments, and IF they pay their loan balance down to 78% […]Read More

90% LTV w/No PMI Is Not That Great; Take PMI Instead

We continue to have borrowers get all too excited about 90% loan-to-value loans with “no PMI” (after seeing advertisements from lenders). Borrowers have a real aversion to PMI, but we continue to discourage “no PMI” loans b/c they are not as advantageous as they seem. As we have explained before, lenders simply offer a higher […]Read More

Buying Condos With Little Money Down; PMI More Flexible Now

We frequently tout low down payment Condo purchases as an alternative to FHA. For loan amounts under $417,000 – buyers need as little as 3% down. For loan amounts above $417,000 (up to $625,500), buyers need 10% down. The big concern, however, for low-money-down Condo financing has always been Private Mortgage Insurance (or PMI). We […]Read More

3% Down Condo Financing; Alternative to FHA for Strong Buyers

One of our Private Mortgage Insurance providers now insures condo financing with as little as 3% down (for loan amounts under $417,000). This is a huge boon for first-time buyers with limited cash who are looking to buy in complexes that are not FHA approved. We have been touting 5% down condo purchases as an […]Read More

Lender Paid M.I. – Why We Don’t Recommend It

We have many conventional borrowers with less than 20% equity (or down payment) and an aversion to Private Mortgage Insurance (PMI). These borrowers often opt for Lender Paid Mortgage Insurance or LPMI. With LPMI a lender simply waives PMI requirements in exchange for a higher interest rate. For example, a $400,000, 90% LTV loan might […]Read More

FHA MI Going Up; Keep LOWER Rates to Apr. 9; 15 Year FHA w/ NO MI

We mentioned several times that FHA Mortgage Insurance (MI) Rates are going up significantly in April. Many lenders made April 1st the cut-off date, but we now have several lenders allowing us to order FHA Case #’s as late as April 8th or 9th in order to preserve the lower MI Rates. For most FHA […]Read More

Pay Cash for Home – Pull “Cash Out” Soon After

We occasionally pre-approve wealthy, cash rich investors who end up paying cash for investment properties out of necessity. Examples of purchases that preclude financing include: (1) buying a foreclosure on the courthouse steps; (2) buying a property with severe and glaring condition issues; and (3) buying a property with a very short (under 7 day) […]Read More

Must Pay ALL Income Taxes Even If There Are No Liens

In the “old days”, we only had to worry about “back taxes” in those cases when tax liens showed up on credit or title reports. Tax liens are typically filed when a tax liability is owed for more than 3 years. Now-a-days however, the rules are different. We have deals blow up or get held […]Read More

Single Payment or ALL Up Front PMI – No Monthly PMI

FHA requires an “Up Front MI” payment of 1% no matter what, as we mentioned yesterday. You cannot, however, pay extra Up Front MI to avoid Monthly MI with FHA. For Conventional Loans, however, you can pay ALL of your PMI (“Private Mortgage Insurance”) in a single upfront payment. This is a great alternative for […]Read More

FHA Requires MI No Matter What for 30 Year Loans

We have a buyer putting down 30% on a $400,000 purchase, and she can ONLY get FHA financing, and she still has to pay for MI (both the monthly rate of 1.10% divided by 12, and the Up Front fee of 1%). And, she has to keep MI for 5 years. This illustrates two points: […]Read More

3% Down Conventional – Alternative to FHA; Single Payment PMI

Several of our lenders are touting their 3% down alternative to FHA. The Monthly PMI rate for these 3% down loans is 1.15% (same as FHA’s), but there is NO up front PMI (FHA has a 1% Up Front MI fee). In addition, the down payment requirement is lower by 1/2 of a percent, and […]Read More

Getting OUT of PMI and MI?

We have many borrowers with both FHA (MI) and Private Mortgage Insurance (PMI) now, and they all want to know how or when they can get out of their MI obligation. With FHA, you must keep your MI for 5 years no matter what. Then, after 5 years, you can get out of MI if […]Read More