PMI, the private mortgage insurer which homebuyers pay monthly premiums to if they purchase a home with less than 20% downpayment lost $659 million in 2009.
SFBT:
PMI said it had 150,925 primary loans in default on Dec. 31, up from 109,580 a year earlier.
The insurer has a virtual monopoly, guaranteeing the remainder of the 20% equity stake banks require for conventional primary loans.
The 2000s brought “piggy back loans” in which 100% (and sometimes even a total of 125% of the house price) enabled home buyers to purchase with no money down and even cash back at closing.
Piggy back loans were typically home equity lines of credit which filled the shortfall of the 20% requirement.
If no money was put down, the amount would be 20% of the home price.
If 5% was the downpayment, the amount would be 15% etc.
Piggy back loans, or 2nd trusts have virtually disappeared as an option for most home buyers. NoVa continues to be red flagged by many banks as a declining market with data based on county wide stats.
Numerous neighborhoods have had significant price increases recently defying the declining designation.
If a home buyer requires financing to purchase a home, it is strongly advisable buyers get those ducks in line before searching for a particular house.
Today’s financing market is much, much different than just a few years ago.
Various strategies still enable very high credit scoring homebuyers to purchase without FHA financing or 20% down.
Cash, however, has become very important to banks eliminating 100% financing.
