Private Mortgage Insurance helps lead the way in the Housing Recovery

Private Mortgage Insurers leading the way in housing recovery

Here's a link to Ricardo Cobos's mobile tool kit for mortgages: http://raleigh.mortgagemapp.com/mobile
Example of how PMI stretches your home-buying dollar.

 

One of the earliest indicators of the housing meltdown which began in 2007 was that issuers of Private Mortgage Insurance (PMI) began to contract their underwriting guidelines for issuing PMI policies.  In fact, so bad was the meltdown that many PMI companies either stopped issuing policies altogether while some were even forced file for bankruptcy protection.

PMI is required by  Fannie Mae and Freddie Mac, Government Sponsored Enterprises (GSE) who are  the largest insurers of conventional/conforming loans to insure loans that have a loan to value ratio that exceed 80%.

By contrast, it took Fannie Mae until well into 2009 before it  dialed in their underwriting engines. Without 20% equity, most would-be homebuyers found themselves with very few loan options. Therefore, some 53%  of new loan originations during this period shifted to the Federal Housing Administration (FHA) loans.

Fast forward to 2013; FHA Up Front PMI and monthly PMI both increased and monthly PMI payments are now required for the life of the loan, no longer until the principal loan balance is reduced to 78%. PMI companies see a clear and present opportunity to capture back the market share which was lost to both market conditions and the FHA. One way that PMI companies have shown their commitments are by reducing the required minimum credit scores or by opening up access to loan types such as cash out refinances, second homes as well as investment properties with loan to value ratios in some cases that are up to 95%.

Here's a link to Ricardo Cobos's mobile tool kit for mortgages:  http://raleigh.mortgagemapp.com/mobile
Here’s a link to Ricardo Cobos’s mobile tool kit for mortgages:
http://raleigh.mortgagemapp.com/mobile

Improving job fronts and improving consumer sentiment combined with historically low interest rates have helped to contribute to the rising real estate markets here in Raleigh-Cary-Durham as well as many other major markets across the USA. PMI companies have begun to loosen their own underwriting guidelines and that is a good thing. Although standards are still too high, they are at least beginning to move in a more positive direction.

In short, easement of the PMI guidelines will allow more people to qualify for conventional mortgage loans who otherwise may have been shut out or forced into more expensive FHA loans while being capped at lesser FHA Loan Limits which in Wake County North Carolina are  $295,000 for  single family residence compared to a conventional loan which is  $417,000.

Minimum Credit Score Requirements for PMI Loans Effective June 10, 2013

Fixed-Rate Mortgages and ARMs Five Years or Greater

NEW

PRIOR

Occupancy

Transaction Type

Property Type

Maximum LTV/CLTV

Maximum Loan Amount

Minimum
Credit Score

Maximum
DTI

Minimum
Credit Score

Primary Residence

Purchase & R/T Refinance

1-Unit, SFD/SFA,
Co-ops, Non-FL Condos

97%

$417,000

680

45%

680

95%

$625,500

660

660
(eligible to $417,000)

90%

$625,501 -$850,000

680

Ineligible

FL Condos

90%

$625,500

740

Ineligible

2-Units

95%

$625,500

700

Ineligible

3-4 Units

90%

$625,500

720

Ineligible

Cash-out Refinance

1-Unit, SFD/SFA, Co-ops, Non-FL Condos

95%

$625,500

720

Ineligible

Second Home

Purchase & R/T Refinance

1-Unit, SFD/SFA, Co-ops, Non-FL Condos

90%

$417,000

720

Ineligible

Investment

Purchase & R/T Refinance
(negative)

1-Unit, SFD/SFA, Co-ops, Non-FL Condos

85%

$417,000

720

Ineligi

Ricardo Cobos is a licensed mortgage loan officer  in Raleigh-Cary-Durham North Carolina who has been helping families achieve financial security through responsible home-ownership since 1998. (919) 526-0183