LTV, Credit lines and PMI...limits?

Question

I am considering buying a house with 20% down, which will likely allow me to avoid PMI Insurance and give me as much equity. I am wondering, however, whether: 1-Upon purchase, are there time limitations before one can request a line of credit on equity? 2-If I draw from the 20% equity in the form of a line of credit, could the lender required that I start paying PMI Ins? Thanks!

Answer 1

LTV=Loan to Value.

If you want to draw on the home equity side there are usually some covenants in the mortgage note which relates to that, so that really has to be reviewed with your legal adviser. PMI is an issue that really does not really affect the matter of the home loan, what does affect it is Life insurance. have you got any life cover ?

Answer 2

Very good question I must say. To answer your question 1) Depending on which bank you go through there may be a time limit but there are plenty of banks (atleast that my company has connections with) that will allow you to take the equity of the home. 2) No the 80% lender could not make you pay PMI. Actually what alot of people are doing is seperating the loan into what is called an 80/20 its a 100% ltv but they it is broken down to eliminate the pmi. Now let me ask you a question. Because it seems like if you put this 20% down you want to use the equity right away. What if we got you 100% financing and allowed you to do what you needed to do with the money. It can happen and it does all the time. Feel free to log onto http://www.justgetaloan.net you can use our tools and get a fast free- prequalification for great loan programs and low rates. For additional assistance you can contact me at 866 530 7300 ext 7305 or by email at [e-mail]

Answer 3

You can go out and get a line of credit the day after you close, if you wish. Just know that at closing, you will sign an affidavit that you have no other pending loans on this property, so do NOT apply for the line until after you close.

There is no possibility they can impose PMI afterwards. This is no different than if you bought the home using an 80/20 loan structure, where the first mortgage is under 80% and you use a 20% line of credit or loan for your down payment.

And never, ever, ever purchase credit life policies that would pay off your mortgage if you died. They are ridiculously expensive compared to a simple term policy, and their payout shrinks every time you make a payment! Whoever mentioned that in a prior answer, please ignore that part. If you want your home paid off if you die, get a normal term life policy.

Answer 4

Great questions.

Some lenders will allow a line of credit (HELOC) immediately after closing;however, if that is the intent then really the lender for the first should be made aware of it, as they are basing their underwriting decision based upon risk, which includes all obligations against a home. But, what you do after closing can not change their initial approval and their requirement for PMI.

You also can consider a 80% first, and a second for whatever remaining amount you want to purchase the home in the first place. In this case, PMI is still not required. Also, take into consideration that Lines of Credit for a second mortgage is not usually the least costly in today's market.

I suggest that you get with a good broker to assist you with the nuances of your financing and not make the decisions yourself until you know all of your available options. If you do, you will likely pay more than you need to in the long run.

Some info can be gained from my web site at www.fnmshome.com

Answer 5

Those questions would best be answered by the mortgage documents you will receive at closing. There is a very strong possiblity that a clause exist in the contract (mortgage documents) that if the outstanding balance ever exceeds a set percent of value (the 20%) then the mortgage company has the right to demand a 'balloon payment' to bring the balance down or add the PMI cost to the monthly bill until such time the balance does drop below the percentage point. I can understand why you don't want to raise this question prior to getting the loan. I would suggest you ask your real estate agent or mortgage loan officer for a preliminary copy of the mortgage agreement that you can review prior to closing. This is not an unusual request as most forward thinking people will want to review the massive amount of paper prior to signing their name to it.

As for time limit on line of credit or home equity loan, there really isn't. However, time in the home will certainly be a factor when it comes to your credit score and the second mortgage companies decision to grant the loan. However, there are lots of unscrupulous financial institutions out there that would LOVE to get you hooked into a loan that could force a default, espcially if they feel the value of the home could offset the cost to forclose.

Becareful and be aware.

Good luck and I hope this helps.

Answer 6

If you are putting 20% down on a purchase, you will have instant equity in your home.

No, if you opened a HELOC after closing on your first 80% mortgage, you would not be required to pay PMI on the 20%. It is a seperate loan with maybe even a seperate lender so you will have a combined or CLTV of 100% but no PMI required.

You have only been on title for a short time, so a new appraisal will not be allowed. They will use the purchase price as value, but you have the equity from the get-go.

Hope this helps.

Answer 7

first of all, i can get you the same loan but with no mortgage insurance, (1 loan, not a pigyback 1st and 2nd)and next, you should be able to close a concurant 1st and 2nd, the 2nd lien being the equity line of credit(HELOC). so what you should do, is 95 or 100 percent financing, keep you cash on hand for investment into the house after financing , (more equity) and then have the heloc close at the same time.i'm pretty good at this stuff, and you should give me a call, i can really help you.
call 203-410-4427 or 203-729-8900, ask for david powell, and i will set you up right. if the purchase price is lower then the appraised value, then you cannot access that extra equity for 1 year(called seasoning of property)

Answer 8

the quantity does not be counted. credit limits are not stated as "approximately $3,000," they are what they are. they'll charge a cost no be counted what quantity over that decrease you flow, and every time you do it, such as you went over $a hundred, have been given a cost, and then yet another $20 mutually as nonetheless over, so yet another fee. in specific circumstances, in case you haven't any longer executed it until now, they'll waive the fee in case you call and ask properly. yet do no longer anticipate it.