No PMI Mortgage options other than NFCU

[rsxrhart]

We are looking to purchase a new home in California for $900-950k in the coming months.  We will be putting down around 100k with great credit.  We are members of NFCU and aware of their programs but would like to understand what other banks have no-PMI products.  Any advice on other programs out there is greatly appreciated!

-Anna       

[CreditCuriosity]

Without 20% down I can not think of any unless you work for various employers that have deals with banks aka high earners such as friend is partner at deloitte built a new custom built house and only had to do 10% down with Key Bank and they didnt require PMI believe he could of used HSBC as well and avoided PMI due to wealth management arrangements with said employer.  Other ones can exist, but only NFCU is I can think of, but they make up for it in the higher rate imho.  Could be others but other scenario i mentioned is another "exception"

[rsxrhart]

@CreditCuriosity Thank you! i haven't considered "private cliant".  But, i noticed "key bank" has a "Combination Mortgage" that has a 80% loan-to-value first mortgage, 10% LTV second-lien home equity loan with 10% down, which doesn't require PMI. Any thoughts?    

[sxa001]

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@rsxrhart wrote:

@CreditCuriosityThank you! i haven't considered "private cliant".  But, i noticed "key bank" has a "Combination Mortgage" that has a 80% loan-to-value first mortgage, 10% LTV second-lien home equity loan with 10% down, which doesn't require PMI. Any thoughts?    

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You may already know some of this, so if I am repeating stuff you know I apologize.  What you are referring to is the piggyback loan and the dilemma you face is one that many home buyers, especially first time buyers (including myself) face.  While in the perfect world we would all have 20% ready to go, that just isn't the case for a lot of us.  

In the end, it is going to come down to your market.  I don't know what part of California you are in, I know some areas I have read are a buyers market and housing prices are not appreciating as much as before.  If you don't think the house will appreciate enough in order to get your LTV down and avoid paying PMI after 3-5 years then the piggyback loan seems like a decent option.  If you think the house will appreciate, paying PMI may not be all that bad.  With 10% down you may be surprised at how little the PMI is in the grand scheme of things. 

[rsxrhart]

@sxa001 thank you for the info.  I am in Southers California, homes are pretty pricey if you want to live in a nicer area with good schools.  We are upgrading from our starter condo.  So, this will mostlikely be our forever home.  Ideally, I would like to get into a home witout worrying about getting to 20% equity in a year or two.  We wan't our payment as low as possible lol.  i have never heard of this "piggy back" loan until this post.  Do you know if this loan type is harder to qual. for?  

[sxa001]

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@rsxrhart wrote:

@sxa001 thank you for the info.  I am in Southers California, homes are pretty pricey if you want to live in a nicer area with good schools.  We are upgrading from our starter condo.  So, this will mostlikely be our forever home.  Ideally, I would like to get into a home witout worrying about getting to 20% equity in a year or two.  We wan't our payment as low as possible lol.  i have never heard of this "piggy back" loan until this post.  Do you know if this loan type is harder to qual. for?  

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I have no experience, so the answer is based only on what I have read.  From what I have read for the piggyback loans you would need a good score (680 or higher).  Much of what I have read also makes the piggyback loans out to be not so good, as I have read they are harder to refinance later to convert to a single loan.  But again I have no experience here just copious amounts of research.  If you Google piggyback loans you will likely find much of what I have read to help make your decision.  

Personally, I still think PMI just seems easier than the piggyback loans but I guess when you are talking about an 800K loan PMI can be a lot.  

[CreditFun]

bottom line is there is no free lunch

- no pmi loans have higher rates that will follow you for the life of the loan

- 2nd mortgage rate is higher and if you ever refinance (beofre paying off the 2nd mortgage), there will be a bump in the rate

it's can be mathematically better to have a loan with PMI if you have great credit, depending on what rate you can lock and how long you plan to live in the home.

[rsxrhart]

Happy Holidays! 

Just wanted to update my post.  We ended up going with NFCU for our new purchase.  Everything has gone well with NFCU since our offer was accepted.  COE is 12/28/20.  All have read the nighmare stories about NFCU on here, but, i haven't experienced any of this here is Southern California!  

[newmomnewme]

Congrats @rsxrhart !!! Can you provide DPs for us? What product? Mid Mortgage Score? Purchase Price? Down Payment? 

Thanks in advance, I want to know if I should go for pre approval now or wait a couple months to see if my scores go up. 

[rsxrhart]

Purchase Price:  930k

DP:  10%

680 score (my husband had some baddies a couple years ago, but no lates in 13 months, i my score was 785).  Before we applied they told us they look for the lowest middle score to be at least a 680!

4.075% 

I hope this helps