What is the purpose of PMI (private mortgage insurance?)?

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We've got a long way to go — so quick in loans and second largest originators — FHA mortgages the fourth largest VA loan provider you say the home affordable refinance program or harp. Is also critical tool in today's mortgage landscape. Your — for …
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For example, pharmacy online a government initiative called the Home Affordable Refinance Program, or HARP, has been a major driver of mortgage activity for bank and nonbank servicers alike, allowing borrowers who owe more than their homes are worth to refinance into …
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Question by juneau601: what does this mean: 1.To use HARP, pills you must have less than 20% equity in your home ?
I have no clue what this means, Can you please help ? 1.To use HARP, you must have less than 20% equity in your home.

Thank you again.

Best answer:

Answer by Hugh G
HARP, Home Affordable Refinance Program, is the federal government’s mortgage bailout program. To be eligible for a new loan with lower interest rate that is guaranteed by the U.S. government, a homeowner must have no more than 20% equity in their house. That means that their mortgage balance must exceed 80% of their home’s market value.

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Question by Jay T: If my wife has excellent credit and I have OK credit, more about but make more how do home lenders decide the intrest?
My wife has excellent credit, pilule and I have OK credit, patient but I make more then her. We both need each others income to afford our new home. How do lenders decide what intrest rate to give us?

Best answer:

Answer by Steve D
They will look at the overall risk involved – they each persons credit score to decide whether to make the loan (if yours is below the bank’s lower limit, you will not get the loan) and then the underwriter will work some magic to determine the overall risk. Expect that if you qualify, you will not get the best rate.

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Question by Nick V: Is it even possible for her to get out of debt?
My grandma is 79, and can’t work due to congestive heart failure, cost has roughly $ 800/month in retirement income. She owns her house with no mortgage or refinancing. She managed to get herself into over $ 10k in cc debt, most of it due to higher interest fees than minimum payments. Each month adds around $ 200 in interest on each card, which she can’t afford to pay. She has tried to get a home equity loan to pay things off a few times, but: Her credit score is too low, and/or she doesn’t have enough income. What is she to do being pushed further into debt. We live in Michigan, if bankruptcy is an option that would help, I’m pretty sure laws are different for each state. Is there anything she can do? Even if she wanted to sell her house, the real estate market here is so bad, I heard a few months ago over 80% of the city is for sale.
Her house is worth approximately $ 27k SEV or $ 59400 Market Value, if this would help in determining bankruptcy status.

Best answer:

Answer by Beez
The first thing to determine is whether she can keep her home, by law. The worst thing she could do is get home equity loan. Declaring bankruptcy is the only way out, as I see it. She will have to hire a bankruptcy lawyer to file for her and obtain certain paperwork from the creditors. After she files in Bankruptcy Court, she will have a hearing in which she will be asked questions. Maybe you and other relatives can help her with this process.

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Question by romulusnr: How can I find out how big of a home loan I can qualify for?
Based on my income, thumb credit rating, etc., price how can I estimate how much I’ll qualify for? What if there’s two people? I don’t want to be hounded by loan salespeople, it would just be nice to know what I’ll qualify for so we know what we should plan to look for.

Best answer:

Answer by Real Estate Dawn
This website has some good advice. Most lenders will tell you that a 36% or lower debt to income ratio is good. http://financialplan.about.com/od/creditanddebt/a/DebtIncomeRatio.htm
Here is a good mortgage calculator http://www.bankrate.com/brm/mortgage-calculator.asp
If you are a first time home buyer without a lot of money to put down on the home, I recommend you go FHA. The debt to income ratio is a little stricter, but that means you actually have some cash at the end of the month.

If there are two people, banks usually prefer that the people be related (they prefer married although that is changing). They like to consider the person who makes the most money as the primary borrower. This person’s mid score needs to be good, or you get stuck with a worse interest rate. The coborrower, or second person’s income counts and their score shouldn’t be bad, but doesn’t have to be as high.

You will need to have been in your jobs, or at least your profession, for more than two years. You will need to have tax returns to prove you make the amount of money you say you do. You will need to be able to provide check stubs to show you are still employed.

If your credit is outstanding, they will waive several of the other items, and you can get loans that have no ratios or loans that require little documentation. These loans are rare, because the rates are higher. They are good for self-employed people, but even they have to have their accountant say that they have been in business for a couple years and that the accountant has been doing their taxes.

Good luck with your house buying experience. If you are well prepared it can be a lot of fun, if not it gets a little scarey.

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I probably wouldn’t shop my loan. Every time you go to a new broker to shop your loan, they pull your credit. Every time someone pulls your credit, it deducts points from you score. Therefore if you are hovering between good credit and great credit, those 5 to 15 points may throw you into a higher interest rate. Go with someone who has a great reputation. Also, before they pull your credit you can shop fees. The other thing that is really important is to go with a mortgage banker (not broker) that is local. I don’t know how many times we have had a buyer who wanted to get their loan online and ended up not having money at closing, because the state the lender is in has different laws than the state they are purchasing in. Then the buyer ends up paying a daily fee for not closing on time.

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Question by sandraplay1: Is there a negative side affect from the affordable home mortgage modification program by Obama and how does?
this program actually work?

Best answer:

Answer by teran_realtor
HUGE negative side effect. Poor people will become poorer and the rich will become richer….. sadly, nurse that is the opposite of what these liberal programs say they will do.

It used to be that lenders would only lend to people who had three things – decent credit, find some money saved up and not to much debt already. In the late 90’s, buy groups like Acorn convinced the government to interfere with what the lenders were doing and get them to drop one or two of those requirements. The lenders did it to make more money, while having their losses (they KNEW there would be losses) covered by the government.

This is why we’re in the housing mess we’re in now. Fast forward to 2008 and 2009, and the government steps in to stir the pot even more. Sad, but in about five years, so many of the people who have gotten into houses without any money saved up will be foreclosed upon and be renters again – but now with no money saved, AND bad credit too.

Acorn wanted the rich landlords to no longer have all the houses. In five years, the rich landlords will be buying houses for pennies on the dollar – and renting them to people who should not have been buying yet.

Bush was stupid for allowing this to start on his watch. The mistakes he made on the economy have to do with allowing things to get too liberal.

Our country was SUPER stupid to think that the “fix” for our economy was to go from a little liberal to off the charts socialist.

We’re in for a long, hard ride. People are buying houses with no savings and living paycheck to paycheck. Meanwhile, our current administration is promoting an agenda that causes business owners to NOT invest money in growth – that means when people get laid off, there are no new jobs for them.

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Question by Mom58: What is the purpose of PMI (private mortgage insurance?)?
I have a question. All conventional mortgage loans where the buyer has put down less then 20% as a downpayment are required to purchase PMI (Private Mortgage Insurance) which is supposed to “protect” the lender against any losses should the borrower default. In the case of an FHA loan, stuff these are insured by the Federal Government. Given this why aren’t the lending instituitions collecting their losses from the insurance companies? Is the government not backing the FHA loans? Please help me understand why buyers must have the PMI but now the lenders are asking us for help???

Best answer:

Answer by mbrcatz
Well, generic they ARE collecting, when PMI is in place. The PROBLEM is, with these substandard loans, the mortgage brokers were convincing people to “avoid” pmi costs, by taking TWO mortgages – the second would be for 20%, the first for 80%. So many, many of these loans, have no PMI coverage!

Plus, before the lending institutions can collect, they have to foreclose and auction off the property – and that costs money, for EACH property.

The lenders are asking for help, because of Sarbanes/Oxley – SOX. The LAW says, the lenders have to report the “value” of the loans. Well, when no one wants to buy the loan, the “value” is zero!! So that makes it look, on paper, like their assets have dropped dramatically. They can’t convert that zero into the property value, until after they foreclose and auction off the property

It’s not TRUE, in reality, that the loan has dropped to a zero value, because the PROPERTY is still worth something – it’s just no one wants to buy the mortgage on the property.

SO, the PMI doesn’t apply. The mortgage doesn’t even have to be in default! It just has to go to “not sellable”, for the lender to not be able to use it as an asset. And with all the subprime market fallout, well, no one is buying mortgages, especially the higher risk ones.

Hope that helps.

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