Profile picture for ctown44

Mortgage Preapproval

I went to a bank to get pre-approved for a loan, asking for $375,000, and the bank only approved me for $290,000.  Our combined income is approximately $175,000, both of our transunion credit scores are 780+, and we have zero debt.  The reason we were given for the lower amount is that our "PMI funds were insufficient".  Can anyone tell me what that means?  Thanks in advance!
  • May 07 2009 - Cleveland
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Answers (14)

Get your bank (lender rep.) to elaborate.  PMI, in our industry, refers to "private mortgage insurance".  Insufficent PMI funds in a pre-approval is nonsensical.
  • May 07 2009
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Profile picture for The Mortgage Link
Hi Marcelo,

PMI is based on downpayment, credit score, and overall debt ratio.  In essence, it is an insurance policy for the lender.  Insufficient PMI funds does not make any sense.  I recommend getting a 2nd opinion - a pre-approval from another lender.  You will also find variances from lender to lender with pre-approvals.  For example, one lender may allow a higher debt to income ratio than another lender.  But, PMI guidelines are fairly consistent across the board as there are only a handful of companies that issue mortgage insurance.
  • May 08 2009
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What is the purchase price?
  • May 08 2009
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If you are making a small down payment and not doing an FHA loan, it could be that they are trying to keep your loan to value at a percentage where MI is available. Ask about FHA financing or increase your down payment.
  • May 08 2009
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Profile picture for ctown44
Thanks for all the feedback, everyone.  I spoke with the lender again, and it turns out the underwriters didn't have any information for our other assets.  So, as far as they knew, we were dedicating every bit of our net worth to the house.  I cleared that up with them, and they pre-approved us for the amount I requested.
  • May 25 2009
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Congrats!
  • May 25 2009
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Profile picture for ACI Broker
Ask for FHA financing and you should be ok!
  • May 25 2009
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Why FHA?
  • May 25 2009
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Profile picture for ACI Broker
Based on his fico and loan amount he shouldnt have a "PMI" issue at all. In all acutality the whole PMI thing makes no sense to start but at least going FHA this will be a SHOULD be a non issue
  • May 25 2009
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PMI primarily comes from LTV and scores.   Unless we know LTV, we do not know what program is best for OP.

And, they mention PMI, which is for conventional loans......not FHA.   FHA has MIP.
  • May 25 2009
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Hi Bob Lowery !
2 friends want to buy the house, and they want 1 name on the mortgage only. Is possible take the title as tenants in common, and (one) the friend is sole signed on the mortgage ?
http://www.zillow.com/advice-thread/If-not-married-do-I-have-to-sign-on-a-home-loan-with-boyfriend-who-has-the-credit/238750/
  • May 25 2009
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You can't have one name on title and have joint tenants.
  • May 25 2009
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Thank you !
I will post your answer to another thread.
  • May 25 2009
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And, with my company, underwriters/closers still want same name on mortgage loans and deed for FHA loans.
  • May 25 2009
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