I'm buying a new home. I have a few questions concerning if I should
do PMI or Piggyback. My mortgage person has been "unavailable" to
answer these questions for me. The house price is 257000. This is
considerably less then some of the other home prices in the
neighborhood. About (30-50K). I think we got a great deal. My wife and
I looked at the same house with all the same amenities, That seller
was asking 295,000 The person selling their home to us is in a "must
sell" as they are relocated to a different state next month. They sold
the home to us FSBO.

Here are my questions. I've read a lot about PMI and piggyback? In our
case, which is better? We are putting down 5%. I've heard that if our
home appraisal is for a lot more then selling price we may not have to
pay PMI. Is this true? In that case we should have a lot of equity
already. What drives the appraisal? The home behind us sold for 280k
last month which was a smaller home. Our lock in rate for 30 years is
5.37. The broker said that if we do a piggyback the second mortgage
would be at a rate of 7.25. Does that seem right?

Any feedback?

On 6 Apr 2004 09:45:37 -0700, (Jim Williams) wrote:

I'm buying a new home. I have a few questions concerning if I should
do PMI or Piggyback. My mortgage person has been "unavailable" to
answer these questions for me. The house price is 257000. This is
considerably less then some of the other home prices in the
neighborhood. About (30-50K). I think we got a great deal. My wife and
I looked at the same house with all the same amenities, That seller
was asking 295,000 The person selling their home to us is in a "must
sell" as they are relocated to a different state next month. They sold
the home to us FSBO.

Here are my questions. I've read a lot about PMI and piggyback? In our
case, which is better? We are putting down 5%. I've heard that if our
home appraisal is for a lot more then selling price we may not have to
pay PMI. Is this true? In that case we should have a lot of equity
already. What drives the appraisal? The home behind us sold for 280k
last month which was a smaller home. Our lock in rate for 30 years is
5.37. The broker said that if we do a piggyback the second mortgage
would be at a rate of 7.25. Does that seem right?

Any feedback?

If your mortgage person is "unavailable" to you, then take your business
elsewhere. I bet you looked at a lot of houses before you decided on one
to buy. You should do the same with financing. Check your options. You
shouldn't be asking us "does that rate seem right?" as you should know
from checking with brokers/banks/online.

As for which is best, you have been told what PMI will cost, right? It is
a simple matter to run the numbers and figure out what the options cost.
Then you can decide what is best for you. There are mortgage and loan
calculators all over the internet that will help you figure the costs.

Good luck!

In article ,
(Jim Williams) wrote:

The home behind us sold for 280k
last month which was a smaller home. Our lock in rate for 30 years is
5.37. The broker said that if we do a piggyback the second mortgage
would be at a rate of 7.25. Does that seem right?

Any feedback?

No opinion about your current guess at what the appraised value will be.

PMI vs Piggyback

The PMI can be lifted if the loan to value is less than 80%. This may or
may not be achieved rapidly.

The piggyback will never be lifted (unless you pay the loan off rapidly).
Brokers sell the piggyback as being "better" because the intrest on the
piggyback is tax deductible, unlike PMI. A spreadsheet to calculate
this would have to know your tax bracket, likely range of appreciation in
your area etc., intrest rates offered etc. to give you a guestimate of
which scenario may be more profitable to you.


The higher intrest rate for the smaller loan of the piggyback is normal.

The mortgage professor website has addressed every question regarding PMI
you can imagine and adresses several issues I have not explicitely stated:

http://www.mtgprofessor.com/mortgage_insurance.htm


Roland

My experience has been, the appraiser will value the house at exactly
the purchase price. I was in a similar situation and what I did what
bit the bullet on PMI and then refinanced a couple years later and was
able to get the house appraised much higher. When buying a house, it's
hard to justify that the house is woth any more than what you're
paying for it (market).


(Jim Williams) wrote in message . com...
I'm buying a new home. I have a few questions concerning if I should
do PMI or Piggyback. My mortgage person has been "unavailable" to
answer these questions for me. The house price is 257000. This is
considerably less then some of the other home prices in the
neighborhood. About (30-50K). I think we got a great deal. My wife and
I looked at the same house with all the same amenities, That seller
was asking 295,000 The person selling their home to us is in a "must
sell" as they are relocated to a different state next month. They sold
the home to us FSBO.

Here are my questions. I've read a lot about PMI and piggyback? In our
case, which is better? We are putting down 5%. I've heard that if our
home appraisal is for a lot more then selling price we may not have to
pay PMI. Is this true? In that case we should have a lot of equity
already. What drives the appraisal? The home behind us sold for 280k
last month which was a smaller home. Our lock in rate for 30 years is
5.37. The broker said that if we do a piggyback the second mortgage
would be at a rate of 7.25. Does that seem right?

Any feedback?

Jim,

your mortgage advisor should be able to answer all these questions.
Numbers need to be crunch based on time you plan to keep the mortgage,
rates, tax brackets, etc.

Regards,

Rui Teixeira, LMB
Florida

"Jim Williams" wrote in message
om...
I'm buying a new home. I have a few questions concerning if I should
do PMI or Piggyback. My mortgage person has been "unavailable" to
answer these questions for me. The house price is 257000. This is
considerably less then some of the other home prices in the
neighborhood. About (30-50K). I think we got a great deal. My wife and
I looked at the same house with all the same amenities, That seller
was asking 295,000 The person selling their home to us is in a "must
sell" as they are relocated to a different state next month. They sold
the home to us FSBO.

Here are my questions. I've read a lot about PMI and piggyback? In our
case, which is better? We are putting down 5%. I've heard that if our
home appraisal is for a lot more then selling price we may not have to
pay PMI. Is this true? In that case we should have a lot of equity
already. What drives the appraisal? The home behind us sold for 280k
last month which was a smaller home. Our lock in rate for 30 years is
5.37. The broker said that if we do a piggyback the second mortgage
would be at a rate of 7.25. Does that seem right?

Any feedback?

Thanks for all the feedback. One last question. I spoke with my
mortgage person and talked to him about the things discussed in the
group. He informed me that because of my low rate and the hike in
rates in my area that he won't be able to change the loan from
piggyback to PMI. THe rates are now around 5.75 from 5.36. Is this
true? Also with the second mortagage can I refinance it next year or
two with no problems.


"Rui Teixeira" wrote in message .com...
Jim,

your mortgage advisor should be able to answer all these questions.
Numbers need to be crunch based on time you plan to keep the mortgage,
rates, tax brackets, etc.

Regards,

Rui Teixeira, LMB
Florida

"Jim Williams" wrote in message
om...
I'm buying a new home. I have a few questions concerning if I should
do PMI or Piggyback. My mortgage person has been "unavailable" to
answer these questions for me. The house price is 257000. This is
considerably less then some of the other home prices in the
neighborhood. About (30-50K). I think we got a great deal. My wife and
I looked at the same house with all the same amenities, That seller
was asking 295,000 The person selling their home to us is in a "must
sell" as they are relocated to a different state next month. They sold
the home to us FSBO.

Here are my questions. I've read a lot about PMI and piggyback? In our
case, which is better? We are putting down 5%. I've heard that if our
home appraisal is for a lot more then selling price we may not have to
pay PMI. Is this true? In that case we should have a lot of equity
already. What drives the appraisal? The home behind us sold for 280k
last month which was a smaller home. Our lock in rate for 30 years is
5.37. The broker said that if we do a piggyback the second mortgage
would be at a rate of 7.25. Does that seem right?

Any feedback?

(Jim Williams) wrote in
om:

I'm buying a new home. I have a few questions concerning if I
should do PMI or Piggyback. My mortgage person has been

snip

One note of caution. My som and his wife just purchased a home using
piggyback. They were elated over the "lower" ocombined payments until
I pointed out to them the piggyback payment was interest only and that
after the maturity date of the loan, they would have tot come up
withtht e principal, unless the paid above the minimum. After some
calculations it was determined that extra piggyback payments would get
them to where they need to be.

JUST BE CAUTIOUS and especially since your broker is "unavailable" to
you that you get yourself a closing attorney to review the papers
before you close. You should always have an attorney review the
documents prior to closing, whether your broker is available or not.

I would tell him that if he wants your business, he make himself
available to you at your concenience, or there are others who will.
Theie business is at this point a borrower's market, and there are
many who are willing to do what ever needs to be done to get your
business. Make sure he understands that.