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In today’s market, jumbo loans with no down payments are not commonplace. Nor are loans with a very small percentage down. More risk for the borrower requires more down payment. More specifically, a lender will be looking for about 5% down to mitigate their risk. With a jumbo loan, your PMI is going to be inherently higher as you are dealing with a larger dollar amount. However, there are techniques that can be used to finance the property with two loans, as is done with loans of lesser value, namely, taking out one loan to cover the down payment, and another to cover the remaining value of the purchase. If you want to save money on the PMI, this is a strategy worth considering. When considering saving money on PMI with two loan amounts, a lender may mention something known as Lender Paid Mortgage Insurance. This is basically injecting your insurance into your core interest rate. This isn’t really an unscrupulous practice, because it is known to be insurance that you are paying, however, while PMI usually disappears after twenty percent equity is obtained by the buyer, this lender paid mortgage insurance that is a percentage of your rate, may never really disappear. So, in the long run, you may end up paying more than if you had just paid PMI. Make sure that you consider both payment options when you are offered the ability to pay no PMI with a simple increase in your interest rate. Another recent offer of lenders of jumbo loans is to have Arm loan that has a fixed rate for five or seven years and then adjusts annually. However, these loans have rather low rates in these fixed periods and then the loans can fluctuate to higher levels. Due diligence is required as usual. Article Source: http://www.articlewheel.com
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