Mortgage Loan Question for the Experts

[tetra316 0]

With simple numbers: If my house appraises at $10 and my loan is only for $8 does that mean I have my 20% equity and can forgo the mortgage insurance? I'm trying to talk my purchase amount down just a bit more to get to the 80% level.

Yes I will ask my lender, but I can't till tomorrow.

[MikeMcLean 0]

Generally yes. The mortgage company is free to offer you a mortgage with PMI with slightly different terms -- which you are free to turn down in favor of a better offer.

In today's market, 20% down should pretty much guarantee you a "good" mortgage (good being relative to your local housing market to some extent).

Also, if you house appraises for $90 and your loan is for $70 (77%) you should be able to make your first X (until you reach 80%) mortgage payments and than apply to the loan company to drop PMI.

It wouldn't hurt you to think like a fucking serial killer every once in a while - just for the sake of prevention

[lawrocket 3]

That depends on your lender.

Nowadays, most lenders will look only at the "purchase price." In a depreciating market, even more so.

You'd probably need to get mortgage insurance until you can refinance.

My wife is hotter than your wife.

[tetra316 0]

I have no money down. But was told the home appraises for quite a bit more than they are asking. It's a condo type unit in a development that the builders are tying to sell.

[billeisele 122]

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I have no money down. But was told the home appraises for quite a bit more than they are asking. It's a condo type unit in a development that the builders are tying to sell.

red flag alert
an appraisal should be a reflection of market value, if it sells for "quite a bit less", then that may be what it is worth in the "market", if all the units can be bought at that price then that is the market value and the appraisal should reflect that value, but then again maybe you are the one lucky winner and getting a deal that no one else is being offered, you won't know until you see the appraisal, you may want to write something into the contract that allows you to back out unless the appraisal equals $xxx and returns all your earnest money, proceed with caution

Give one city to the thugs so they can all live together. I vote for Chicago where they have strict gun laws.

[peregrinerose 0]

Exactly who told you that?

The first home we were going to buy supposedly appraised at $190K a year ago. We knew the numbers were inflated for that particular property, the comps didn't match the house, they added a bedroom to the appraisal that didn't exist... the appraiser should lose his license over something as bizarre as that one. So we had an appraisal done... it came back at $165K. Owners still have the house on the market, a year later now, still trying to get $195K. Oh well.

Until you have a signed contract and an appraiser goes out to the house, trusting what someone else who's trying to sell the house says isn't probably in your best interests.

Do or do not, there is no try -Yoda

[lguard8 0]

I worked as a loan officer/home mortgage consultant for 5 years. I can pretty much say for sure that you will be paying mortgage insurance if you have no money down no matter what the property appraises for. The lender will make you put 20% down of what the purchase price is not the appraisal. Also Appraisals always seem to come out right where they need to so I wouldn't expect it to be much higher than your purchasing it for. The only way I know that something like your saying would work is if the appraisal actually did come out at least 20% higher than your paying for it and the current owners wrote up what is called a gift letter where they say they are gifting you the 20% equity as a down payment. This can usually only be down if it is family transaction though. I have been out of the business for about a year but the lending policies have only gotten stricter so I wouldn't expect anything different on the matter. Hope that helps!

www.lukeevens.com
http://beachbodycoach.com/lguard8

[tigra 0]

When determining value for the loan to value ratio, the lender will generally use the lower of the two- purchase price vs. appraised value. That's especially true in this market. So, even if your house appraises for 10, if you are paying 8 and borrowing 8, as far as your lender is concerned, that's 100% financing and you are at their mercy in terms of the rate, closing costs and PMI. You have a LOT more options if you put 10%, 15% or 20% down.

[ryoder 1,384]

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I have no money down. But was told the home appraises for quite a bit more than they are asking. It's a condo type unit in a development that the builders are tying to sell.

When I was in the market for a home a few years ago, I was shown an assortment of condos, townhouses, and standalone houses, by developers/builders in a large development area on the South side of Denver. EVERY one of them told me that same thing.

"There are only three things of value: younger women, faster airplanes, and bigger crocodiles" - Arthur Jones.

[Remster 24]

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I have no money down. But was told the home appraises for quite a bit more than they are asking. It's a condo type unit in a development that the builders are tying to sell.

When I was in the market for a home a few years ago, I was shown an assortment of condos, townhouses, and standalone houses, by developers/builders in a large development area on the South side of Denver. EVERY one of them told me that same thing.

No offence Tetra, but with all the press these BS no money down mortgages have been getting lately, you are STILL looking into one?

Remster

[RevJim 0]

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I have no money down. But was told the home appraises for quite a bit more than they are asking. It's a condo type unit in a development that the builders are tying to sell.

When I was in the market for a home a few years ago, I was shown an assortment of condos, townhouses, and standalone houses, by developers/builders in a large development area on the South side of Denver. EVERY one of them told me that same thing.

No offence Tetra, but with all the press these BS no money down mortgages have been getting lately, you are STILL looking into one?

You have to look at each mortgage individually, Remi. I bought my house in '03 with a zero down mortgage. It was through my local bank, and it's a standard 30 year with no points. No money down isn't the same as interest only. Those are what's screwing the system right now.

It's your life, live it!
Karma
RB#684 "Corcho", ASK#60, Muff#3520, NCB#398, NHDZ#4, C-33989, DG#1

[NWFlyer 2]

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You have to look at each mortgage individually, Remi. I bought my house in '03 with a zero down mortgage. It was through my local bank, and it's a standard 30 year with no points. No money down isn't the same as interest only. Those are what's screwing the system right now.

Yep it's very possible to enter into a responsible mortgage situation with low or no money down. My original mortgage in 2002 was 5% down, a 15% second and 80% first mortgage, for an amount that was well within my monthly budget. That way I avoided PMI, but my second mortgage had a higher interest rate than the first. I refinanced last year and rolled it all into a single mortgage (by this point my loan-to-value ratio was well under 80% because the value of the home had appreciated significantly).

Of course, the loan officer then asked me "so how much cash do you want to take out?"

He seemed rather befuddled when I told him I just wanted the new mortgage to pay off the amount of the existing mortgages. How could I possibly resist cashing in on the ridiculously inflated market value of my home?

Uh, maybe because I recognize that for what it is ... an inflated market value that may or may not exist next year.

"There is only one basic human right, the right to do as you damn well please. And with it comes the only basic human duty, the duty to take the consequences." -P.J. O'Rourke

[DrewEckhardt 0]

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I have no money down. But was told the home appraises for quite a bit more than they are asking

If the home was actually worth more they'd be asking something like $1123 more than it's actually worth (people are used to dealing with small amounts a dollar at a time, and have the impression that a larger amount that doesn't end in 0s or 9s is actually smaller because of this).

Chances are that it will magically appraise for the purchase price.

Or you might get "lucky" and have it appraised by the bank at less than the asking price in which case they'll have to come down to actual market value (because your lender will not write a 100% loan in that case).

[RevJim 0]

That sounds about right. My home, in '03, appraised for about 15,000 less than purchace price. The market around here didn't skyrocket like alot of other areas in the country. Value rise has been low, to moderate at best. My small rise in appraised value, combined with my actually making my payments ahead of time (I usually sit about 6 months paid for in advance, I have no pre-payment penalties) and an extensive remodel job which I took a 2nd mortgage out for has me sitting right now with a loan that has a pay off value about 35,000 less than the house is worth, in a realistic market, and that's figuring amounts for both mortgages. Not bad considering the median home value around here is about 135,000 (I'm a bit below that, 95-ish, until the next walk through appraisal happens, then I'll be well over it. )

p.s. I posted about this before on other threads and my paperwork isn't right in front of me, so the numbers might be a bit off, but you get the idea.

It's your life, live it!
Karma
RB#684 "Corcho", ASK#60, Muff#3520, NCB#398, NHDZ#4, C-33989, DG#1

[tetra316 0]

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I have no money down. But was told the home appraises for quite a bit more than they are asking. It's a condo type unit in a development that the builders are tying to sell.

When I was in the market for a home a few years ago, I was shown an assortment of condos, townhouses, and standalone houses, by developers/builders in a large development area on the South side of Denver. EVERY one of them told me that same thing.

No offence Tetra, but with all the press these BS no money down mortgages have been getting lately, you are STILL looking into one?

Yes I am. It's a FHA loan/state bond assistance program. It's actually a 97% loan, with the state paying 3%. It does have 1.5 points and income limits but still a much better deal interest wise than a conventional loan.

[Jayruss 0]

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With simple numbers: If my house appraises at $10 and my loan is only for $8 does that mean I have my 20% equity and can forgo the mortgage insurance? I'm trying to talk my purchase amount down just a bit more to get to the 80% level.

Yes I will ask my lender, but I can't till tomorrow.

One advantage is that starting 1/1/07 your PMI is tax deductible

__________________________________________________
"Beware how you take away hope from another human being."
-Oliver Wendell Holmes

[joelofland 0]

Yes I am. It's a FHA loan/state bond assistance program. It's actually a 97% loan, with the state paying 3%. It does have 1.5 points and income limits but still a much better deal interest wise than a conventional loan.

FHA is the way to go if you don't have a big down payment.....I bought my house with a FHA loan and then did a refi two years later to get rid of the PMI. You should e-mail me the information on the property and maybe I could help you out.....I'm an appraiser working around PDX you know Oh and it was awesome doing those six way rollout exits with you last weekend

[lawrocket 3]

By the way, just yesterday, the FHA increased its loan limits.

My wife is hotter than your wife.

[tetra316 0]

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By the way, just yesterday, the FHA increased its loan limits.

I saw that, but it seems they also increased the interest rates too but different websites are announcing different rates

[tetra316 0]

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Yes I am. It's a FHA loan/state bond assistance program. It's actually a 97% loan, with the state paying 3%. It does have 1.5 points and income limits but still a much better deal interest wise than a conventional loan.

FHA is the way to go if you don't have a big down payment.....I bought my house with a FHA loan and then did a refi two years later to get rid of the PMI. You should e-mail me the information on the property and maybe I could help you out.....I'm an appraiser working around PDX you know Oh and it was awesome doing those six way rollout exits with you last weekend

I might just take you up on that. By the way they said there's no way to avoid PMI when signing but I can get an appraisal in a year or two, refinance and possibly remove it.