ForeclosuresMass - ForeclosuresMass Monthly - Financing for Investors - PMI

Four score and seven years ago . . . buying a house meant coming up with some serious coin. If you had any shot of buying a house, you had to show the bank that you had a minimum of 20% down before they would even talk with you. Then, just like the economy, things changed. Lenders, with the approval of the powerful Government Sponsored Enterprises (GSE) Fannie Mae and Freddie Mac, loosened their historically rigid lending guidelines and aimed to boost the national homeownership rate. Was the change good? Absolutely.

Although the last several years has seen many consumers benefit from programs such as 85%, 90%, 95% and even 100% financing, a small percentage who were qualified shouldn't have been. The result was a mortgage market that once again changed and subsequently reconfigured lenders' loose lending guidelines, which now resemble a combination of the old days of 20% down and current market needs.

Today's lenders will no longer entertain 100% financing options and some aren't even offering 95%. But, the market hasn't entirely shut off new would-be homeowners. In fact, lenders, as usual, have come up with a way to beat the street. Generally, lenders require private mortgage insurance (PMI) when a consumer has less than 20% to put down as a deposit or is looking to borrow more than 80% of the value of the home. When the lending guideline meets a loan to value (LTV) of more than 80%, PMI becomes necessary in order to protect the lender and its future investors in the case of foreclosure and potential loss of equity. With PMI, the lender is protected for the loan balance exceeding the 80%.

One common way to bypass PMI during the go-go days was to do an 80/20 combination, which included an 80% first mortgage and remaining 20% second mortgage or even an 80/15/5. Doing this, however, sometimes resulted in additional fees and caused more complexity than doing just a single loan.

* Next 37 17 investors only!

Recently, lenders came up with what's called single MI where the borrower has only one mortgage -- saving them any closing costs associated with doing a second (or third) loan. Now, although PMI and MI are interchangeable in meaning, what it ultimately means to the lender is risk. And, where there is risk, there is cost to take on that risk. So, while the lender agrees to take on the risk (some as high as 90% LTV), the borrower must take on the cost - in the form of a higher rate.

How do you know if qualify for this or similar programs? Plan a meeting with your mortgage professional and discuss what's new in the mortgage industry and how to structure various projects. I always recommend quarterly meetings to my clients. Don't be shy about picking up the phone and asking questions. It pays to get educated and profit from your broker's experience.

Jeffrey Chalmers is a 20-year veteran of the real estate, finance and title industries. His company, Real Solutions LLC, offers consumers a one-stop real estate service at www.ClicknCompare.com and also free dynamic web marketing for ForeclosuresMass investors. He can be reached at (800) 434-4127 x901 or at jchalmers@clickncompare.com.

Did you like this article? You May Also Like:

	Feature Article: How Effective Networking Helps You Close More Deals Susan LaPlante-Dube Motivated buyers. Motivated sellers. Real estate investors. Home improvement specialists. Home inspectors. Electricians. Appraisers. Bankers. Mortgage Brokers. Real estate attorneys. The list of people you need to run a successful...
	Interview with the Expert: Real Estate Savvy Financial Planners Can Save You Big Bucks! Eileen Schwartz, Real Estate Investor Let's say you want to pay off your mortgage and buy the retirement home of your dreams by selling one or two of your investment properties. What most people don't consider, explains financial planner and real estate investor Eileen Schwartz, are the tax implications of these real estate transactions. In this interview, Eileen discusses why working with a financial planner who also understands real estate (including 1031 exchanges!) can literally save you big dollars - now and in the future.
	Feature Article: Financing Your Foreclosure Investment Deborah Siegel "I'm looking for a good deal!" I hear this sentence several times a week. Unfortunately, you're not the only one looking for a great deal on a house, but you can separate yourself from the rest...
	Feature Article: Four Marketing Secrets Turn Connections into Gold Ken Lizotte, CMC Beyond the usual blah-blah marketing advice of putting up a website, printing out a stack of business cards and designing a lavish four-color brochure, exists four powerful marketing techniques that are so little-used, they can for all practical purposes be labeled "secret." Read on as Ken Lizotte tells all...
	Nothing Succeeds Like Success: Accountant Turned Real Estate Investor Closes 10 Deals First Year Out Paul Deltorio, CPA After twenty-five years as a CPA, Paul Deltorio was ready for a change. With coaching from real estate investor Jim Gage, Paul launched a successful real estate business, closing ten deals in twelve months. In this interview, Paul explains how Jim taught him to approach homeowners experiencing foreclosure, identify great deals, and stay focused on his goals. One year out, Paul is considering giving up accounting to pursue real estate full time!
	Technology: Leveraging Technology To Maximize Success Jay Case Consumers are doing more and more business through Internet sites and e-mail. They also are more plugged in to mobile devices, relying on their cell phones, pagers, PDAs and other gadgets to keep them connected business associates...
	Interview with the Expert: Look at Deals with an Appraiser's Perspective Mark Jackson Do you truly know your market and how to determine the value of a property? If not, you may not be making as much money as you could. Why? You're not seeing properties from a trained appraiser's perspective and could be buying duds. In this interview, expert appraiser and real estate investor Mark Jackson explains why you need more than the MLS and comps to determine a property's value - you need comprehensive market demographics.
	Feature Article: 4 Things You Probably Don't Know About Credit Deborah Siegel Credit is the starting point from which lenders of all types and sizes will decide whether or not you are a good risk. But it's not as obvious or as straight-forward a process as you may think. Read on as Debbie Siegel explains what really goes on behind-the-scenes.
	Feature Article: Maximizing Your Success at an Auction: Do's & Don'ts for Before & During Auctions Dale Schaetzke Are you intrigued by the opportunity to buy property at auction but unsure about how to navigate the system? Knowledge is power before and during an auction, so take the time to educate yourself about the process before jumping in...
	Interview With The Expert: Managing "Bad" Credit Marty Eerhart, Senior Loan officer, Assured Mortgage Getting the approval needed for an investment loan is heavily dependent on your credit score. Unfortunately, if you have "bad" credit, it can get in the way of making a purchase. Marty Eerhart talks about what you can (and can not) do to improve your credit score.