Buying A Bank Foreclosure

by Jennifer in Decatur, Alabama USA

Ask Kate about buying a bank foreclosure and PMI approval: Hi Kate, My fiance and I just recently put in an offer on a foreclosure house. It has been about a week and a half now. The seller finally sent the listing agent an e-mail saying they were waiting on a PMI approval. Does this mean that they accepted our offer? How long does it take to get a PMI approval?

Kate Answers: Buying A Bank Foreclosure

Ask Kate at
Dear Jennifer,

If only I could wave a magic wand over the process of buying a bank foreclosure for you.

Waiting on the bank to accept the offer creates anxiety. Then throwing PMI approval into the mix tops it off.

So I applaud you for seeking answers to better understand the process.

When a home buyer has less than a 20 percent downpayment, private mortgage insurance is required. To obtain coverage, the home buyer needs to be approved by the PMI provider.

Has the bank accepted your offer pending PMI approval?

Oh... I really don't know. Banks are hard to predict because they do not have the emotions driving their actions like a private seller does. Generally when the bank says they are waiting on a PMI certificate, it means until you can demonstrate the approval, they won't commit.

This is part of the process I referred to earlier if you are buying a bank foreclosure.

How long does it take to get PMI approval?

I have seen PMI approvals take merely minutes and others up to a few weeks. Some of that depends on the home buyer's credit package but the time frame is also dependent upon the volume of PMI applications.

I wish you the very best in your pursuit of buying a bank foreclosure. I have also included my Guide to Private Mortgage Insurance at the bottom of this page. Be sure to check it out. You'll feel like you hit a gold mine!

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Best Wishes,

Ask Kate

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If you still have questions regarding buying a bank foreclosure or PMI approval, write me at Ask Kate where every question is a good question.

Return to Get-Your-Best-Mortgage-Rate from Buying a Bank Foreclosure

Finally! PMI Answers You Need

What Is PMI - Could private mortgage insurance be your solution to equity and down payment problems? 2013 Update: Deductible mortgage insurance premiums.

Updates on HARP 2.0 Refinance with Borrower and Lender Paid Mortgage Insurance - PMI and LPMI.

Could you be entitled to a mortgage insurance refund from FHA?

How do lenders calculate PMI? Credit history, amount of down payment or equity, occupancy status, and loan type factors.

How Do I Cancel PMI Will refinancing or a new appraisal be required?

What to do if PMI Decision Making is getting in the way of refinancing or buying a house.

My name is Kate and I will be your guide - PMI Questions and Answers

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Comments for Buying A Bank Foreclosure.

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Buying a Bank Foreclosure
by: Korene Clopine-Seaman

Banks selling a property do not care about PMI. PMI is only a big deal to the bank loaning on the new mortgage.

MI Company Negotiations
by: Sarie

Clearly, no one understood the question. I am in the same situation as Jennifer. The bank says my offer on the foreclosure is pending the MI company's approval... the MI company on the foreclosed property, not MY lender. I am paying cash for the home, and therefore, do not have a lender. Why is the foreclosed MI company involved? I understand they will have to fill the claim but that's why insurance exists. Not for them to negotiate.

Hi Sarie, Kate here. Thanks for your comment. Simply put, private mortgage insurance companies are involved in the negotiations in an attempt to limit their losses. (What insurance company would just roll over and pay out huge sums with only a cursory look, right?) We've seen them taking big hits due to the foreclosures. Some folks (other than stock holders) are not feeling too sad over this as MI companies ruled the roost for many years.

Buying a Bank Foreclosure
by: Vikki

Dear Jennifer,

As Kate has already mentioned to you, it would not appear that you have received an excepted offer at this time. The PMI approval will determine if the offer is accepted or declined. Unfortunately, the timeframe can vary in that process depending on various conditions, from lender overload to verifying all information in regard to the information you have provided in your offer.

The lender is requiring PMI approval first in order to loan you the money you need to buy the house. So until you receive the PMI stamp of approval, your loan approval is still pending.

To explain, PMI helps homeowners in several ways, mostly in the instance of those with less than 20% equity. It assists refinances after the loss of equity, especially in today?s market environment. Mortgage insurance is also valuable to home buyers with less than 20% for a down payment. PMI insures mortgage lenders against losses incurred when borrowers are unable or unwilling to make their monthly house payments. One very important point to remember, PMI does not insure homeowners. This is solely to protect the lenders investment in the property.

As we have seen in more recent times, real estate values can and do drop from time to time and homes lose value. Homeowners can end up with insufficient equity to refinance. However, with mortgage insurance, lenders can approve refinancing with less than 20% equity.

Jennifer, if you wish, contact the listing agent and remind him/her that you are still waiting on an approval. This may motivate them enough to check with the lender more often, perhaps moving the process along. Also, keep in mind that most lenders now have more property in inventory than they have had in years and may also be seeing more files, such as your own cross their desk these days. So expect some delays.

Best of Luck! Vikki

Excellent help! Vikki if you are a lender and would like to include a contact phone number next time you comment, please feel free. Thanks, Kate!

A back up idea
by: Charles Clark

The "PMI" companies, (PMI Being a brand name) are very cautious for the past 3 years as they have experienced many losses.

I would suggest looking at going with an FHA loan. FHA has their own type of "mortgage insurance" and if you qualify for the FHA loan, you automatically qualify for the Mortgage insurance part of the loan.

Charles Clark
Toll Free: 888.888.charles (2427)

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