The Return of PMI
Posted On: March 23rd, 2010 by James Posted In: FHA Mortgage • Mortgage Insurance • Mortgage Programs • Portland Real Estate
OK, so this is kind of exciting for all mortgage, real estate and general economic nerds. There are now not one but TWO private mortgage insurance (also known as PMI) companies who have taken Portland off their “declining markets” list!! The companies are PMI, and MGIC…. “James”, you ask… “why should I care about that?”. Well, I’m glad you asked. What it means is that buying real estate with less than 10% down just got a little more interesting.
Borrowers with top credit will now have options to buy with only a 5% down payment, and private mortgage insurance. This has not really been an option in the last 18 months, and these borrowers were all being pointed to FHA loans. And come April 5th, FHA loans are about to get more expensive as that FHA mortgage insurance is scheduled to INCREASE.
Along with the PMI options is something really cool called LPMI (lender paid mortgage insurance) – where the full mortgage insurance premium is absorbed in the lender rebate, and the borrower never has to even mess with it.
Keep in mind that the risk based price adjustments for credit score are still in effect here, and basically if you are below 720 in the credit score department, you will likely find that FHA is where you’ll end up anyways.
3 Responses
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That is a good point Brian. This is certainly an indicator that things are approaching or rebounding from a market bottom. With regards to prices when rates go up… I think that the same inflationary pressures that push rates up will also push prices up as the value of the dollar decreases. Additionally, the government will likely not allow rates to increase without a sturdy job environment (just my opinion). Thanks for commenting.
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That is a good point Brian. This is certainly an indicator that things are approaching or rebounding from a market bottom. With regards to prices when rates go up… I think that the same inflationary pressures that push rates up will also push prices up as the value of the dollar decreases. Additionally, the government will likely not allow rates to increase without a sturdy job environment (just my opinion). Thanks for commenting.
This is great news! If the PMI companies are taking Portland off of their declining market lists, then they believe that the Portland real estate market is at or close to a bottom. For the past two or three years, their has been a lot of downward pressure on this market, so this kink of news is very encouraging. I track portland real estate trends on my website http://www.brianporter.com and I think the market is showing a lot of positive signs. My only concern is how the market will be affected if and when interest rates go up.