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how can I refinance to a 90% LTV loan with no PMI?

  • July 27 2013 - South Los Angeles
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Answers (7)

Best Answer

There are a number of ways to get a 90% LTV loan without PMI. 

1.) An 80/10/10 loan. This is an 80% first mortgage with a 10% second mortgage behind it. These were very common in the 90's and 2000's but all but disappeared around 2007. They are back however you'll hear some lenders say they don't exist because (a. they just don't know about them, or b.) they can't do them at their company.

2.) If you are a veteran a VA loan allows for 90% (and higher) LTV. However VA loans do have a funding fee in addition to the regular closing costs. But this can be financed into the loan and has a nearly negligible effect on your loan both short and long term.

3.) There are a handful of portfolio lenders and community banks out there that still offer 90% conventional loans (however they are not conforming loans, there is a difference) with no MI.

4.) USDA or FHA. Yes, these loans have insurance that keeps the programs solvent and makes it so they can be offered to many people but it is NOT PMI as the P in PMI stands for PRIVATE and these are government programs. There is still a monthly MI payment though. Semantics I guess, but still not PMI.

5.) Lender paid mortgage insurance (LPMI) or lump sum mortgage insurance. Both options technically have PMI, but no monthly PMI payment.

LPMI typically buys out the monthly MI payments up front for a slightly higher interest rate. At 90% this can be a great deal. However, even though the payments might be less, long term this can be more expensive than just paying the monthly MI as eventually the monthly MI payment can be removed after a number of years but with LPMI your rate will typically stay the same forever. It really depends on how long you stay in the loan/house.

Lump sum is similar to LPMI in that there is no monthly MI payment and it is taken care of up front. However with lump sum you can pay with with cash at closing and and not have to include it in the interest rate. Buying the MI out up front can be a much better deal than monthly MI long term as you get the lower rate from day one, no monthly MI payments, and once your monthly savings have added up to the amount you initially paid to buy out the MI the savings real and true for the rest of the loan as there is no MI.

Hope that explains it a little bit.

Sincerely,
Greg

Senior Mortgage Planner
Partners Mortgage
  • July 27 2013
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Hello, we are a lender that allows for loans up to 90% with no PMI.  Depending on your loan amount will depend on whether or not it's in your best interest to do one loan at 90% or take an 80% 1st and a 10% second as someone mentioned previously.  Please contact me through my profile if you are interested in the 90% one loan scenario.
  • September 19 2013
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There are loans available with no PMI in California up to $625,500 loan amount (depending on the county the property is located in) and up to 95%. Here is an article I wrote about a loan with no PMI.   (hotlink deleted by Zillow moderator. Please see our Good Neighbor Policy for posting guidelines)
  • September 15 2013
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Thank you for the responses.  Is Lender Paid mortgage insurance available if I already have a second mortgage?
  • July 31 2013
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You could consider a loan with lender paid mortgage insurance where you wouldn't have monthly private mortgage insurance payments.

Rates and closing costs are impacted by this type of loan, as compared to traditional borrower paid mortgage insurance, so it's best to look at your short and long term goals when evaluating what is best for your situation.

Check out my profile for my contact info, should you have any more questions don't hesitate to reach out via email or phone.
  • July 29 2013
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In addition to Lender Paid Mortgage Insurance, in which the lender buys out the cost of the insurance up front to a slightly higher interest rate, we have an option that will allow us to split your loan into 2 loans to avoid paying mortgage insurance. The first loan would be 80% of the value and the second loan would be 10% of the value. The combination loan will allow you to avoid paying mortgage insurance and can be used on both purchase and refinance transactions.
  • July 27 2013
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Technically, you can't. I'm sure people will tell you that you can but that's not the full story. What you can do is avoid the monthly payment of PMI by either opting for a slightly higher rate and getting lender paid MI, by paying a fee up front, or by including it in the loan amount. Your specific situation will dictate what works best for you. 
  • July 27 2013
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