I got notice late yesterday that beginning March 1st, loans above 97.01% will no longer be eligible for PMI.
3% down payment may be the name of the game going forward.... and FHA Loans have never looked so sexy!!
Monthly PMI on Gov't loans is 1/2 of what you are charged on conventional loans. Yet, many consumers have opted for 100% financing because they do not have money for the down payment. Not to be confused with the client who 'elected' 100% Financing, these people who are paying twice as much for PMI are doing so for a reason. They simply cannot put any of their own money down on a real estate transaction. And that lack of cash reserves equates to more people walking away from their mortgage obligations when times get tough.
See the full text letter from PMI Mortgage Insurance Company.
http://www.pmi-us.com/guidelinechanges/media/pmi_miguidelinechangesltr.pdf
Is this the end? The good old days are over? Well, that remains to be seen..... but it looks like the PMI companies are tired of paying off when homeowners simply walk away from their obligations.
Other changes include reduced Loan-to-Value (LTV) for reduced documentation loans and loans for homes in Declining Markets.
Stay tuned for future developments!!!
Tom Burris
DallasLoanGuy.com
Dallas, TX
"A Home Loan for Every Texan"
http://www.dallasloanguy.com/
Texas Home Loans
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