I was informed by Stacey Taylor of Countrywide Home Loans this morning that they are no longer doing any 100% LTV consumer home mortgage loans. Of course, this has been true for the real estate investor for about a year now. And this seemed inevitable.
My question is, how much tighter will loan standards become even for qualified buyers? (By qualified I mean credit scores of 680 and above with solid income and employment history.) We may be headed too far in the wrong direction on this issue. Now, I was never a big proponent of 100% loans. But in certain cases….
This is not to say that you cannot find a 100% LTV home loan anywhere on the market. It is just to say that it looks like you’ll have to scratch Countrywide off your list.
BBQ Capital | Kansas City Real Estate Investing 
Chris,
Is it still possible to get 100% purchase price financing from the lenders as long as the property appraises for more than the purchase price?
I am referring to scenarios where you acquire a property below its assessed value. I would suppose in theory if you got the property at a 20% discount to appraisal, you could get 100% financing on the price and avoid PMI as this would be an 80% LTV.
I’m no expert, but am curious if this type of scenario is still a possiblity in the current lending environment.
Your thoughts?
Thanks
Jeff
That was never a legitimate loan scenario. It just doesn’t work that way. Though at times I thought it should. 🙂
You can do something like that with construction or rehab loans but that is a whole other bag of cats.
Now, I know of many cases where numbers were manipulated to do exactly as you say. In every case I’ve seen loan fraud was part of the equation.
Wow, that surprises me. I guess that shows my inexperience.
When I purchased my home I had 100% LTV (with no PMI). A couple years later I refinanced to get a lower interest rate with a different lender that required 80% LTV to avoid PMI. My appraisal came in high enough that the re-fi was below 80% LTV and I was able to avoid the PMI.
Maybe there’s a difference with a re-fi versus a new loan.
Absolutely. There is a huge difference between purchase and re-finance.
You took out a probable 80/20 loan to achieve your 100 or possibly a sub-prime 100 loan. (That’s not the evil people think.) That’s how you have to do it on the purchase.
But on a re-fi you can certainly use your equity.