by my community » Wed Dec 05, 2007 11:27 am
Hello,
I have been paying PMI (Private Mortgage Insurance) for about 2 years now but I find it a bit too much more so when it only helps the lender and not me! My question is that is it possible to discontinue the PMI by going in for a piggyback loan? Does any one have any idea?
Thanks!
I have been paying PMI (Private Mortgage Insurance) for about 2 years now but I find it a bit too much more so when it only helps the lender and not me! My question is that is it possible to discontinue the PMI by going in for a piggyback loan? Does any one have any idea?
Thanks!
Posted: Wed Dec 05, 2007 11:32 am Post Subject:
I'm not sure how a piggy back (is that same as home equity?) will do anything but have you aquire more debt...generally you can get PMI removed after you get your principle to 80% of the homes value...there is another thread on this very subject I'll go find it and post here. ok here it is
http://www.ampminsure.org/manage/about3441.html
Posted: Thu Dec 06, 2007 07:08 am Post Subject:
PMI is normally required when the borrower is making small/or no downpayment (usually less than 80% of the property value). PMI will guarantee the loan recovery in case the borrower stops paying the installments. You can't discontinue the PMI till you acquire 80% equity on your property. PMI may also cost around 1/2 percent of the total loan amount annually. Therefore, sometimes can put an extra financial burden on the borrower.
Piggyback can be a good alternative if it saves money for you. Moreover, you can enjoy tax deduction on the piggyback loans which is not available with the PMI. However, you need to evaluate all the possible alternatives available to you.
Hope the input helps. You can also seek the assistance of the loan officer to learn more about the options available to you.
Regards,
Juanita
Posted: Thu Dec 06, 2007 07:37 am Post Subject:
Hi my community, welcome on board.
Piggyback can be a good option for borrowers with little cash to make the downpayment. But there is a flip side too….piggyback loan normally requires good credit score, maybe 660 or even more. Additionally, the lenders can apply stricter qualifying criteria to write this second loan. Therefore, qualifying for a piggyback loan, especially with a poor credit score, can be difficult at times.
Third, refinancing will no longer remain an alternative for you with a piggyback loan. Piggyback loans actually limit this option.
Fourth, the piggyback loan may stick with you for a longer period of time (lifetime same as that of the primary mortgage) whereas, PMI can be dropped once there is enough home equity.
Fifth, you need to have the financial strength to run both the loans simultaneously. Otherwise, you may end up being nose-deep in debt (you have mentioned it very correctly Lori).
Therefore, as Juanita has already said, critically weigh all your options before actually opting for one. Tk cr.
Roddick
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