I am looking for loopholes to avoid PMI as the cost would put me over where I would like my monthly mortgage. Unfortunately my income is only at 25k and my scores are now in the mid 600's. Fortunately I have a 10% down payment and I am a first time home buyer with no debt except for revolving CC's with under 20% utilization and monthly payment average is only 25$. I am looking for a house in the 120's if possible but I do not want my monthly payment to be over $700... I would really like it in the $500 dollar range but that appears impossible so I guess I have to keep throwing my money away on rent!
Even If i got the 20% down my scores are not feasable for a conventional loan im sure. Thanks for your answer
I realize this is not what you are asking but it may help. With a 660 score and a DTI no greater than 45% you can get a 80\10\10. In case you are unaware it is a loan where 10% is put down and there are two seperate loans, one for 80% and the other for 10%. The smaller loan is basically unsecured and will carry a higher interest rate, but does not typically last 30 years. This allows you to avoid PMI. This is conventional only, not FHA. The payments will be about the same as if you were paying PMI, but however the money is going toward equity. At some point, generally way earlier than 30 years, you will pay off the 10% and essentially be left with a smaller payment so it is good in that regard.
Again, not what you were asking but, based on your scores and trying to avoid PMI, I am familiar with this approach and thought it could help. Of course I am assuming this is available to you in your area, I have spoken to several lenders who offer this in Texas.
Wow thanks Henders, Ive never heard of this. This gives me a little more hope. I could also look into foreclosures and find HUD lendors and maybe get more bang for my buck. Thank you all for the contributions
Good point, I forgot about Fannie Mae homepath. AS low as 3% down (700 score) 5% with 660 score and no PMI required. You just need to use a lender who does homepath loans. Also an appraisal is not required. Only problem with homepath is the good homes have the likelhood of a multiple offer bidding war and the inventory can be a mess.