Posted by KKinNoCal on 11/3/07 3:52pm
Msg #219585

PMI Surprise?

I have had two closings this week where the BO were surprised that PMI was being required. I would guess this is a sign of the times- that lenders are requiring this insurance. One couple freaked, the other one handled it better. Are any of you experiencing similiar??

Reply by Teresa/FL on 11/3/07 4:00pm
Msg #219587

PMI will become more common as it is a requirement on FHI loans when the borrowers have less than 20% equity in the property. I'm seeing many more FHA loans lately.

Reply by CF on 11/3/07 4:27pm
Msg #219588

I have been seeing a lot of PMI- all over the board too some for $200+ per month and some for $45 per month. Does not make sense to me when I look at the LTV and some with a like 85% are paying high rates????Never understood how this was configured and how there is a difference in price that people pay with different companies.

To note: I did a CW that had the PMI rolled into a higher interest rate- so they could write it off. Seeing that a lot too- cant remember what the disclosure is accuratley called- but usually they will charge about 3/4 of point higher to cover the PMI and roll it into the payment. Really confusing to most borrowers....had to do a resign b/c we could not get in touch with the LO and have them explain the program and no UPL for me. I am sure that is around to stay!

Reply by Philip Johnson on 11/3/07 5:19pm
Msg #219592

PMI this year is being written off

this year regardless if it is rolled into the rate. Next year who knows?

Reply by Therese on 11/3/07 4:57pm
Msg #219590

Very common in the 80's. Saw a lot of this
with first time home buyer programs.

Reply by JamesLee/VA on 11/4/07 12:08pm
Msg #219653

I am a loan officer as well, and can tell you why PMI is on the rise. First off it is now tax deductible for households with incomes less than $100,000. Secondly, with the tightening on lending guidelines, it is now harder for people to get lenders to go in second position. With the de valuation of properties and foreclosures on the rise,more borrowers do not qaulify for secondary financing. lastly its good sense when you are at 85% LTV (Loan to value) on your home, being that when you reach that magical 80%, you can have your home re appraised for $350 and request the PMI to be dropped as opposed to having to pay thousands of dollars to refinance your home just to roll a second loan into a first. JMHO

Reply by CF on 11/4/07 5:52pm
Msg #219673

James- I have a question I see PMI charges all over the board. Sometimes I see a LTV at 85% and the PMI charge is like $150.00+. Then I see a home at like 90% LTV and the PMI charge is $75.00 how is this configured? If that "really" true that a person can really get out of their PMI with an new appraisal- wont the lenders make you "jump through hopps" sort to speak. I remember on our first house we had PMI- $49.00 per month I think that we were at 86%- the market went up and we call and they said we would have to pay some big fees in addition to being able to get out of it. Just curious.. Thanks for your information.

Reply by JamesLee/VA on 11/4/07 11:28pm
Msg #219715

PMI is underwritten almost the same way a loan is underwritten. When determining how much PMI to charge , there are several factors involved. Take stated loans..eventhough the LTV is 85% it is still has more risk than a 90% full doc. PMI coverage may be 35% as opposed to a full doc loan at 12%. That why you will see the higher payment on the lower LTV sometimes. As far as the cancelling mortgage insurance, its really not that difficult, and if they are a reputable lender, they should not give you any problems. Granted they like to see you pay on the insurance for a year because typically banks will not accept the new appraised value until after 12 months of ownership. Some will do 6 months, but most of them are gone now. Victims of fraud.

Brenda as far as LPMI is concerned..I wouldnt take it. Basically you are getting a higher rate so that the lender can pay for the insurance. The lender does not purchase a monthly policy either. They will purchase an up front paid policy. Just because you take PMI it does not mean you have to take a monthly policy. You can purchase the policy upfront. I recently had a client that had an 800 credit score that was full doc that wanted LPMI on an $265,000 with 84% LTV. The policy would run him approx. 1.75% of the loan amount which came to about $4550. Now on the loan I would have to give him a rate that would cover that amount which would have been at least .500 higher than without.

Personally I would never take an LPMI if my LTV was between 90 and 80.01% Its a waste of your money.

I think you will see a lot more loans with PMI since a lot of your second loan lenders are no longer doing stand alone seconds. Most lenders that will do 2nds now also want to be in first position. The bank holding the 2nd almost never gets paid if the house forecloses with all of the values dropping.

I hope this sheds some light on the PMI mystery.

JLee

Reply by BrendaTx on 11/4/07 7:44pm
Msg #219686

Lender paid mortgage insurance premium

While we are on the subject, I have seen loans lately where the lender is paying the premium. I found that interesting.

Reply by MonicaFL on 11/4/07 7:42pm
Msg #219685

A few years ago I had PMI on my mortgage but I kept track of it and surprisingly enough, when I got to where I needed to be, I called the Lender and told them I was there and no longer needed PMI and THEY QUIT CHARGING ME FOR IT. How about those apples! Times have really changed, haven't they?