Outsmart PMI

7 Replies

My wife and I are purchasing a second home and can only afford to put 10% down on a 345k house. Is there any other way to bypass PMI without taking a second loan?

You could use a private money loan that isn't a lien on that property, so probably would have to be from a friend or family. Though you'll probably be paying interest on that loan so at the end of the day you would like be saving very little depending on the interest rate. Another option may be to see if the owner will carry the second 10%, but the above still applies.

That is a good idea, perhaps we could take out a low interest loan from my parents...

I wrote about this extensively in another post, but if you have to go the PMI route, ask the lender to give you LPMI (lender paid mi) and then buy the rate back down to where it was without PMI with discount points.

Rather than paying 100-200 per month, you'll make a single payment of a couple thousand at closing. 

Let me know if you'd like to hear more details.

We've done what Eddy Dumire is talking about. The upfront cost was about 4 years of PMI vs. paying it for 10-11 years until the balance would have been paid down to 80% via the amortization schedule. Like any upfront cost, it all depends on how long you will keep this loan.

I had totally forgot about lender paid PMI. My lender totally failed to mention it as well. Thanks!

@EddyD Genius idea, but they must have caught on to it.  To buy back with points is nearly $10,000.

You're in Littleton... Buy the house, wait 6 months, and reappraise! Property will likely be 40% higher value by then  ;)

Or, you know, not.

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