Mortgage people - whats the deal with these new mortgage insurance rules and offers??

[Nuke And Juke]

Loans are standard now, the FED's changed everything back in 2011 when the Frank Dodd act was adopted. Lenders cannot have prepayments on traditional mortgages, lenders cannot put in any type of "gotcha" clauses. There are Non-traditional lenders getting back into the lending business. These loans are now known as Non QM loans, back in the day we called them Non-Conforming, Alt A, No Doc or B C loans. These lenders are few and far between and fill speciic niches that are no longer served in todays lending environment. Loans for foreign nationals, loans for non warrantible condo's, loans for SE borrowers without income verification etc.. These loans are based on equity and credit more than a borrowers ability to repay. These loans are not able to be sold to FNMA, FHLMC, VA or FHA. All traditional loans today are based on ability to repay and there are certain debt / income ratio limits that cannot be exceeded regardless of assets or equity.

He is absoulutely right. From the standpoint of tax deductions...Keep in mind of the following article. I highly recommend dumping PMI

https://www.bankrate.com/mortgages/deduct-private-mortgage-insurance/

 

[gh1950]

i’ve been in the PMI business and The mortgage business for 33 years. There’s no easy way to explain Pmi I can guarantee you. But it is a necessary evil. The good thing about PMI is that you can drop it when your loan to value reaches 80%. There is a much higher risk for loans over 80% loan to value. It’s just like any thing in life.... The higher the risk the more you pay. If there wasn’t such a thing as private mortgage insurance you would pay for it in the interest rate for sure and that would be over the life of the loan which would cost you much more in the long term . there are alternatives to PMI but you will pay for that as well.

Have to disagree. The facts as you state regarding default are correct.

The catch is the the interest the lender charges is supposed to include the default rate, and other costs, including the time value of money. The risk of default is supposed to spread across all the borrowers through the interest rate.

When the lender doesn't have to rely on the credit worthiness of the borrower, then you start getting the junk loans. I have look at the packages of thousands of low doc and no doc loans, and the stories behind them would be laughable if it wasn't your and my money making the loans good.

PMI is like making a bet and getting the other guy to guarantee that you will win. Flipping a coin with two heads and you get to call it.

Loans by their definition are supposed to involve some risk.

Also PMI stacks the deck against the borrower. The premiums are supposed to be based on the payout through claims, and the payouts are minuscule compared to any other type of insurance. That was one of the biggest factors in the reforms to PMI - the sum of all the premiums was way out of proportion to the actual risk.

 

[CAMSDADDY]

I commented on this in 2015. That was the last time we purchased a house. We are signing a contract to list our current house and will be in the market. I have used a friend in the past but he is no longer doing mortgages. I am trying to decide to try a local bank, my current lender (suntrust or whatever it’s called this week) or somewhere like quicken? We have plenty of equity and will be able to avoid PMI if we buy before we sell.
This all started in the past few days. I haven’t shopped. I haven’t looked into rates. We are currently at 4 for 30yr. We have been paying two payments a month for a while. Credit is 800+.
Just trying to figure out which way to go and what to expect.

 

[moosensquirrel]

 

[sarachambers81]

Love this picture. It's hilarious because it's so true! I had so much hope that something it's gonna change in the loan system during the pandemic. Maybe the government will reduce the interest rate for mortgage loans or taxes, but there is no miracle. My parents live in Essex and they wanted to buy a country house last year. They both are getting older and it's hard to live in a city. So they went through the banks to get the most competitive price and they got a good deal. But because of corona virus, my dad has lost his job and they had to hire a mortgage advisor they found on https://www.Essexmoneyman.com to refinance their loans.

 

[Scorpius]

I commented on this in 2015. That was the last time we purchased a house. We are signing a contract to list our current house and will be in the market. I have used a friend in the past but he is no longer doing mortgages. I am trying to decide to try a local bank, my current lender (suntrust or whatever it’s called this week) or somewhere like quicken? We have plenty of equity and will be able to avoid PMI if we buy before we sell.
This all started in the past few days. I haven’t shopped. I haven’t looked into rates. We are currently at 4 for 30yr. We have been paying two payments a month for a while. Credit is 800+.
Just trying to figure out which way to go and what to expect.

If you’re able to make a double payment on a home loan and your loan is 30 years then you should switch to a lessor period like a 10 or 15 year loan.