Berger & Harwell, PA
Attorneys at Law
Building Futures One transaction at a Time
5950 Fairview Road, Suite 808
Charlotte, North Carolina 28210
Telephone: 704-553-7614
Facsimile: 704-553-7965
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Avoid PMI

You can get 100 percent financing to avoid PMI

By: Robert J. Bruss
Tribune Media Services

Q. As first-time buyers, we have been reading your articles for the past few months. You helped us avoid several mistakes. The biggest one was the dread private mortgage insurance (PMI) costs readers complain about.

We closed our home purchase in March. As you frequently suggest, our first home-buying step was to get pre-approved for a mortgage. Then we knew what price home we could afford.

Although we have excellent income and good credit, we didn't have much money for a down payment and closing costs. At first, we thought we wanted one of those Fannie Mae 97 percent mortgages you've mentioned, but our savvy loan officer suggested a better alternative to avoid PMI. She got us an 80 percent first mortgage at just over 8 percent interest, plus a 20 percent home equity loan at prime plus 1 percent (currently 10 percent interest) Both loans are from the same lender, but there's no PMI.

Just thought I would pass this along to other "first-timers".

A. Congratulations on buying your first home and on avoiding PMI costs and the inevitable fight that develops later with the lender about canceling PMI premiums.

Mortgage lenders are more eager than ever to make creative home loans. They are developing novel solutions, such as the one your lender offered.

Another benefit of your 80-20 loans is all the interest is tax deductible. If you instead took a 90, 95- or 97-percent PMI mortgage, your stiff PMI premiums would not be tax deductible.

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Berger Harwell
5950 Fairview Road, Suite 808
Charlotte, North Carolina 28210
Telephone: 704-553-7614