During the Halcyon days of the real estate market, it was extremely easy to get financing to say the least. A client of mine financed his condo at 100% with zero down. His rate was at 7.25%. Now the rates are ridiculously low and his original lender approached him to see if he’d like to refinance. They dangled a rate of 5.25% in front of him and while it isn’t as low as some rates, he reasoned that it was still pretty good since he borrowed 100% of the value of the property and it is an investment property. He even went so far as to ask several times if the loan was even possible under those conditions. He was assured that it was. At that point he paid for the appraisal ($460!) and moved forward with his lender on the underwriting process. All was moving swimmingly towards a close when at the last moment he was informed that no mortgage insurance company would insure a 100% LTV investor loan. He was not too happy about this and even went so far as to research whether or not he could find an independent source or company that would provide mortgage insurance for his loan. He did not find anyone and was basically told by his lender, Oops–sorry man. He is trying (unsuccessfully so far) to be reimbursed for the appraisal he has paid for already out of his own pocket. Personally, I think this could have been avoided if the mortgage professional had known what they were doing. From his research, one must put down 20% on an investor loan to receive mortgage insurance. Are there any lenders or insurance agents out there that would like to comment on this? Is this true?
Don’t be Average! Sell your condo
by Matt Baggett So you've read the latest article in a national publication that gushes about how Nashville is "Red Hott!!!!" Everyone in...
Matt –
Private mortgage insurance companies haven’t been insuring investment property loans at any loan to value for several years now. They stopped insuring those around the same time they stopped insuring 100% financing on primary residences which was around March-April, 2008… Loans under 80% don’t require mortgage insurance, hence the need for 20% down.
Based on what you’ve shared here, your assessment of the originator sounds accurate and your client has a legitimate case for getting reimbursed for the appraisal. If he can’t get satisfaction from the lender you can send him here to file a complaint: http://state.tn.us/tdfi/crd/index.html
Matt –
Private mortgage insurance companies haven’t been insuring investment property loans at any loan to value for several years now. They stopped insuring those around the same time they stopped insuring 100% financing on primary residences which was around March-April, 2008… Loans under 80% don’t require mortgage insurance, hence the need for 20% down.
Based on what you’ve shared here, your assessment of the originator sounds accurate and your client has a legitimate case for getting reimbursed for the appraisal. If he can’t get satisfaction from the lender you can send him here to file a complaint: http://state.tn.us/tdfi/crd/index.html