GA Private Mortgage Insurance (PMI) Pitfalls

If you are considering a conventional loan and putting down less than 20%, then chances are you will have mortgage insurance.  Not long ago, that was not a big deal.  Your lender clears your loan, sets up the mortgage insurance and you’re ready to close.  Not anymore…  Now the underwriter clears the loan and sends your file to the mortgage insurance to underwrite again!  So your mortgage company says you are ok to close, but the mortgage insurance company turns you down!  And guess what, they are extremely picky.  They are declining loans left and right.  From my experience, 2 out of 5 are declined.  It seems most are declined based on the appraisal.  They use excuses like:  “The home is too improved for the area”, or “Too many foreclosures nearby”, or how about “We don’t like the comps the appraiser used.”  It has gotten out of control and typically we don’t find this out until a day or two before closing. 
So what are your options?

Switch to FHA 
FHA’s mortgage insurance does not have to be underwritten by mortgage insurance companies.  The negatives are:

• Your rate may be slightly higher than a conventional loan
• You may have to get a new appraisal or have a supplement added to your appraisal
• It will take more time for the lender to convert your loan

Get a 2nd Mortgage
Most lenders do not have this option anymore, but at Academy Mortgage we have secured some 2nd mortgage money for A credit borrowers.  The negatives are:

• High standards to qualify for this loan
• The delay in closing to set up the 2nd mortgage
• Rates on 2nd mortgages are comparatively high

If you need assistance recognizing and avoiding the pitfalls of the current mortgage industry, please contact me so we can work together to meet your mortgage financing needs.

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