Hey everyone I am just starting out and I've been searching for a multi family. But I don't have enough money saved up to put 20% down. Which means I have to pay PMI. Does anyone know away around this? Help would be greatly appreciated.
Thanks Chris Verissimo
Unless you use a VA loan and than there is a funding fee. I like conventional because the funding fee drops off when you reach 78% LTV. I truly don't mind the funding fee. I feel like it is small price to use someone else's cash.
If under 20% down there will likely be PMI but you do not have to go the more common rout of FHA putting 3.5% down. Speak with a lender but as short as a last march you could put 5% down conventionally and reduce the PMI in more then half. For me it was the difference of just under $300 extra/month with FHA slashed down to a about $125 conventionally/month. Also with the FHA PMI does not go away until you refi out, conventional it goes away once you pay a certain amount.
Additionally I have heard of some banks offering classes on money management that can reduce and/or remove PMI. This is just word of month, I do not have any definitive confirmation.
It use to be that you could eliminate PMI by doing 2 mortgages. An 80% first, your down payment and the balance in a second. It used to be called an 80/15/5 or an 80/20/0. They may not do these since the housing crisis but things are loosening up so I am sure something like this will be available again; especially if you have good credit.
Thank you everyone great tips. I'll be sure to look into that!
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing