Mortgages with Loan-To-Value (LTV) higher than 80% are considered high LTV mortgages. Most lenders generally require mortgage insurance when LTV is over 80% due to a higher risk. Private Mortgage Insurance (PMI) is provided by a private mortgage insurance companies which protect lenders against loss if a borrower defaults. Recently PMI became tax deductible.

There are few ways PMI is paid:
1)  Borrowers will pay mortgage insurance premium in addition to a regular payment (principal, interest, real estate tax, hazard and flood insurance if required).
2)  LPMI – lenders will pay borrower’s mortgage insurance for them.  With LPMI, the lender pays a borrower’s mortgage insurance by rolling the cost into the interest rate or by adjusting the fee. It means your rate on the mortgage will increase from 0.375% to 0.675%.
3)  Lenders do not require a mortgage insurance premium. From our knowledge and experience though the lender doesn’t require PMI, they will still increase your interest rate. 
High LTV loans are still available up to 90-95%.

Before the financial crisis there was a technique to cover LTV over 80% to obtain a second mortgage or a home equity line of credit (HELOC) that cost was less than PMI. These days 2nd mortgages or HELOC for high LTV loans are not longer available due to a high risk.

Unfortunately, on today’s market high LTV programs described above are not available for borrowers who require stated documentation programs (no income verification). For those who need a loan based on stated income, another option exists. There are lenders on the market who will permit 90% CLTV (combined 1st and 2nd LTVs). They will give you the 1st mortgage  up to 60% LTV and allow the seller’s second mortgage  up to 30% LTV with a reasonable interest rate. Many sellers agree to give you a mortgage in order to sell their houses on today’s market.

Posted in High Loan-To-Value Mortgages   Tagged: financial crisis, financial meltdown, first time buyer, global financial crisis, HELOC, high LTV, high LTV loan, home equity line, home equity loans, home loans, home mortgage, home refinance, low documentation programs, LPMI, mortgage, mortgage industry, mortgage program, mortgage programs, mortgage refinance, mortgages, no income verification loan, no PMI programs, PMI, Private Mortgage Insurance, second mortgage, second mortgages, stated income mortgage