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PMI used to insure up to 95% of a mortgage loan. Now they will only insure up to 90% of mortgage loans in “Distressed Markets” like Arizona. That means buyers in Arizona, using certain types of loans, have to put 10% down instead of 5% down. That’s a huge difference for buyers and it prevents some from being able to buy a home.
I’m not an expert on mortgage financing. If you are, what do you think?
- When do you think PMI will remove the “Distressed Market” tag from Phoenix?
- What impact will removing the “Distressed Market” tag have on the real estate market in Phoenix?
I believe, however, that PMI usually makes their decisions on a county by county basis. That hurts metro Phoenix because the zip codes with rising prices can’t benefit from the lower down payments they really deserve until the entire huge county is removed from the “Distressed Markets” list. Maricopa County is bigger than several states.
On the other hand, loans insured with private mortgage insurance may have become such a small part of the market that even the ability to only put 5% down won’t make much of a difference.