Loan OK with lender, not OK with PMI provider?

[Wonderyears]

It's been awhile, thanks to everyone on this forum about six months ago, I made it to this point. Our new build walk through is scheduled for Monday - was hoping to have a clear to close by then...

I am scheduled to close July 29th. Everything seemed to be going ok, was approved depending on the appraisal which came in ok today.

Today my LO mentioned there were complications with PMI approval. Is this something that should have been approved before moving forward with the original commitment? I am pushing the dti limit of 45% and that seems to be an issue with the PMI provider.
I am in the process of obtaining a 30 year fixed conventional loan. Scores are 722,722, and 769 and I am putting 5% down.

I wasn't told it wouldn't be insured, but my LO seemed to be stressing over it.

Anyone have experience with this?

[StartingOver10]

The mortgage insurance co has a separate approval process from the lender. They are the ones on the hook if you default. Your file is not submitted to the mortgage insurance company for approval until you have a loan commitment from your lender. After all, why would they submit a file if the lender wasn't going to provide the loan.

The lender probably has issued a loan commitment to you and in that commitment is a list of conditions that you need to satisfy. I am fairly certain one of the conditions is that your lender is able to obtain mortgage insuirance on your loan (normal condition if you are financing more than 80% of the purchase). There are very few mortgage insurance companies. Find out if they can submit your file to another PMI co for approval. Some lenders have the ability to portfolio a loan for a certain time period until you can qualify for the Mi company criteria. But you can see why this would be a last resort for most lenders and not even possible for some lenders.

Is your LO certain the the 45% DTI is what is causing the MI co to hesitate? Do you have access to other funds to pay down some of your debt or is this 45% mainly due to the new purchase?

[Wonderyears]

Thanks StartingOver!

I will speak to my LO today, but it did seem he targeted the issue as my dti. Maybe because the entire 45% will be housing expense; I have no other debt. The reason it is so high is because I am solo on the loan, if my wife was included, this would put us back-end at about 20%.

Bummer, hope this doesn't derail this process. I did receive a loan commitment for the builder to begin building, would that have been enough for the lender to begin PMI shopping?

[Sunshine85]

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@Wonderyears wrote:

Thanks StartingOver!

I will speak to my LO today, but it did seem he targeted the issue as my dti. Maybe because the entire 45% will be housing expense; I have no other debt. The reason it is so high is because I am solo on the loan, if my wife was included, this would put us back-end at about 20%.

Bummer, hope this doesn't derail this process. I did receive a loan commitment for the builder to begin building, would that have been enough for the lender to begin PMI shopping?

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No, a conditional commitment is not sufficient. The loan must receive approval from underwriting before the lender can order MI. 

[203bravo]

I did a 3% conv loan 2 years ago and had the exact same problem.The PMI company that they were expecting to insure the loan wouldn't write it and the mortgage company had to shop my loan around to several different PMI companys but found one that would write it in less than 2 days.

Best of luck.

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[Wonderyears]

Thanks Sunshine, 203bravo.

203bravo, if you do not mind me asking, was your issue obtaining PMI dti as well? Glad to hear it worked out. I'll keep my hopes up!