Question: ello Group, We are currently in the process of trying to move to a new city. It appears that we will not have quite enough cash to reach a full 20% down on the new home. Thus we will be required to pay PMI. I have read a few old posts discussing a 80/10/10 mortgage. 80% first 10% second and 10% down. Has anyone done such a mortgage to avoid PMI. Secondly, why don’t banks remove this based upon bast experience as a customer? We have been with this bank for well over 10 years and have a perfect history with this company. Can this factor not be used to help determine the need for PMI? Wishful thinking!:)

Answer: About PMI – I called our lender and the rep I talked to there said that the bank by law MUST stop collecting PMI as soon as you have 22% equity in the house (and you can start requesting they stop at 20%). He said a law was recently passed because so many people were getting ripped off and paying PMI for the life of their loan.

In addition to searching around on the net for conventional mortgages, try searching your state’s website (www.state.XX.us) in their housing section. Most have first time homebuyer programs or special programs to help out with closing costs, etc. if you meet certain income levels. Note this does not mean you have to be poor. My wife and I got hooked up with a state program at 6.25% (locked in 30 years) and the income limit was 67k/year. The best program they had was the state would pay your 20% down at 0% interest and you wouldn’t have to pay that off until you made your last mortgage payment (30 years later!) or sold the property. Looking back I should’ve bought a house when I was in college making very little money, then got married.

Also note that “first time homebuyer” doesn’t literally mean the very first house you’ve ever bought in your life. It just means you haven’t owned a home in 2 or 3 years (depending on your state). Many ppl. use this and get first time homebuyer assistance on all of their houses

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