How to avoid Mortgage Insurance | Part 3
No we are not back to the 100% financing days but these are great options to avoiding the mortgage 
insurance premium that is not tax deductable.
Loan Option with 10% Down Payment
Exploring this option for no mortgage insurance is good news that lending requirements seem to be lightening up a bit. We will never and should never go back to the loose lending in the 2000’s that caused the housing industry to crash, however having more options to buying your home in Charlotte is music to our ears!
By having two loans and the primary loan being at 80% or less, you can avoid the monthly Mortgage Insurance (MI). The issues wioth this program would be that the second loan is:
a. Interest only loan- any extra payment into this loan goes directly to the principle.
b. Interest rate is a fluctuating rate based on “Prime” interest rate. Rate will be prime (+1 for example).
c. No pre-payment penalty.
d. The second loan is done outside of Starkey and the Underwriting is completely out of our control. We have absolutely no input into Underwriting approval on this second loan.
e. Must apply for the second loan separate from Starkey Mortgage. I will supply documentation to the lender for the second mortgage. The application is not nearly as intense because they can use most of our paperwork and documentation for underwriting purposes. Must qualify through banks Underwriting. The same appraisal and documentation can be used for this loan.
f. Quite often it is required for the borrower to open a checking/savings account with this lender.
g. Opening a checking account and establishing an automatic draft will save on interest rate. Usually in the range of 0.5%.
h. Your borrower will have two monthly payments to maintain. Essentially this is a “home equity” line of credit you would want to pay off quickly.
i. Cannot go higher than a 90% CLTV (combined loan to value)
j. NO MORTGAGE INSURANCE EVER.
Terry Sutts with WR Starkey provided this information. Contact Terry at 704.661.4885 for more info and to see if he can save you THOUSANDS! After your pre-approved be sure to let us find your dream home since now you can buy a bigger home in Charlotte!!
Related Posts:
How to avoid mortgage insurance part 1
How to avoid mortgage insurance part 2
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Tags: Insurance, Insurance Part
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