Possible to only put 10% down?
Is it still possible to get a mortgage with only 10% down? We recently had a deal for the sale of our co-op apartment fall apart because our buyer could not get PMI (she was only putting down 10%). We were advised that in this economic climate, banks are very reluctant to finance 90%. We’ve…
Is it still possible to get a mortgage with only 10% down? We recently had a deal for the sale of our co-op apartment fall apart because our buyer could not get PMI (she was only putting down 10%). We were advised that in this economic climate, banks are very reluctant to finance 90%. We’ve put our co-op back on the market with a 20% down payment requirement, but I’m seeing other apartments listed that only require 10%. Are we losing a lot of prospective buyers by requiring 20%? (By the way, our apartment is priced at $409K, so even with 10% down, a buyer would still be getting a conforming loan.)
Thanks for any advice/experiences/thoughts!
Actually, mopar, the Times already wrote an article about it. They didn’t interview us, but wrote about many, many of the things that happened to us, about a month after they happened.
http://www.nytimes.com/2009/02/01/realestate/01loans.html
Then, I think, two weekends ago, there was an article about how buyers aren’t able to get PMI either. We’ve had the unfortunate luck of hitting every change in bank policy just as it was happening.
You will probably not get a loan now. It is not the percentage amount but the amount that is an issue. Banks are deleverging and banks will not give 90% financing on 400,000 dollars when they know the value is 200,000 dollars. The banks know that 400,000 dollars is a ballooned price. It is not an easy thing to tell homeowners that bought in the last 5 years or so, sorry you were taken as a fool by the real estate market and now deal with it. People have been sold into slavery and don’t even know it. Wait for prices to come down another 50% and then start to look.
Oh my god, jxc187, that is absolutely out of control. You should tell your story to the NYT real estate section (or something). That is a nightmare.
mopar — that’s exactly what happened to us with our first buyer. She was pre-approved, the bank closed the loan file, and then she was unable to get PMI. (not to say that there weren’t many, many other issues along the way. the bank made crazy demands on our building like increasing fidelity bond coverage, completely changing the building’s insurance carrier, etc, etc. After months of drama, the deal collapsed because of PMI.)
Christopher, if the buyer has 20 percent down, the buyer doesn’t need private mortgage insurance.
What has been happening recently is that lenders are sometimes willing to give out mortgages with 90 percent financing, and the buyers get commitment letters, but sometimes the insurance companies won’t insure the mortgages, so then the lender waits for the insurance that never comes, and the deal can’t close.
“Other posters, the issue is not the lender. The issue is the insurance company. Two different things.
Posted by: mopar at March 11, 2009 12:21 PM”
True, but aren’t they related? I’m sure it would be easier all around, in this climate, for a buyer with 20% down to get all the proper financing and insurance. One follows the other, right?
Other posters, the issue is not the lender. The issue is the insurance company. Two different things.
My mortgage broker says the rules are constantly changing and uncertain and there is no way to know right now whether or not a buyer will be able to get PMI ahead of time. It depends on so many things: The credit score of the buyer, the type of property and its condition, the location of the property, the whim of the insurance company. There is no hard-and-fast rule at the moment.
Even banks who will do 90% financing for a single family home are much less likely to do it for a co-op.
Co-ops are very specific to the NYC market (and maybe Cali) and the banks are largely nationalized now (fewer local banks), so they are not looking to write mortgages outside the “norm” on two different metrics (lower down payment and uncommon type of residence).