PMI more than doubles-HARP refi (home loan, interest rate, premium, credit)
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Not only have the closing costs increased, which I can maybe deal with, but is there any reason why PMI will be $84.75 a month with the new loan, and it's only $39 a month in the present loan? Is this normal when they transfer the PMI?
Previously; Upfront mortgage insurance borrowers paid a premium of 1.00% of the home loan, example: $300,000 loan x 1.00% = $3,000. This sum was paid upfront at closing as part of the settlement charges or was rolled into the mortgage.
The monthly PMI charge was based on a borrower's loan-to-value (LTV) ratio and length of loan. The two different Annual MIP values were 0.85% and 0.90%. If the LTV was less than or equal to 95 percent, a borrower paid 0.50%. For LTVs above 95 percent, annual premiums were 0.90%........
Effective this year upfront PMI has risen to 1.75% of the loan amount. As a 2nd Wammie!!! In monthly PMI has risen to 1.25%
Think about this? - stay where you are and save up enough money to put down 20% for a conventional loan. That way you avoid the PMI. You spend less over the life time of the loan because your loan amount is smaller, with better terms.
Trying to rush into a riskier loan with a higher payment, it is understandable over the lifetime - you will pay more...
Previously; Upfront mortgage insurance borrowers paid a premium of 1.00% of the home loan, example: $300,000 loan x 1.00% = $3,000. This sum was paid upfront at closing as part of the settlement charges or was rolled into the mortgage.
The monthly PMI charge was based on a borrower's loan-to-value (LTV) ratio and length of loan. The two different Annual MIP values were 0.85% and 0.90%. If the LTV was less than or equal to 95 percent, a borrower paid 0.50%. For LTVs above 95 percent, annual premiums were 0.90%........
Effective this year upfront PMI has risen to 1.75% of the loan amount. As a 2nd Wammie!!! In monthly PMI has risen to 1.25%
Think about this? - stay where you are and save up enough money to put down 20% for a conventional loan. That way you avoid the PMI. You spend less over the life time of the loan because your loan amount is smaller, with better terms.
Trying to rush into a riskier loan with a higher payment, it is understandable over the lifetime - you will pay more...
OP is talking about PMI - Private Mortgage Insurance.
MS is talking about MIP - Mortgage Insurance Premium, which is specific to FHA loans.
OP: The "mortgage meltdown" raised rates on PMI. What I'm not 100% able to tell you (and hopefully a Loan Officer or Broker will chime in here), is if the numbers you quote can be correct for a HARP refi. I know that the original MI cert is modified and attached to the new loan, but can't remember right now how the new monthly MI payment is calculated. That sounds like a really big jump, I think you are right to question it. I know it's calculated based on the original (not current MI company rate sheet) factor. The main downside to HARP with PMI is that you are signing up for many more years of paying monthly MI than if you didn't refinance. Of course, the refi is still justified if the interest rate/P&I payment decrease is large enough.
OP is talking about PMI - Private Mortgage Insurance.
MS is talking about MIP - Mortgage Insurance Premium, which is specific to FHA loans.
You are correct Debsi- there is a difference between PMI and MI.
Almost every day I speak to default borrowers in FHA loans. Over the years, out of the 10,000's+ borrowers cannot remember that last time actually discussed a conventional loan with PMI.
In my opinion it would be unrealistic - refinancing into a conventional loan having an LTV above 80%, and/or bad credit, resulting in a high interest rate (8%, 9%. 10%, 12%+) with PMI. The payment would be through the roof!
Especially over that last few years, it has been easy to get into FHA loan having lower credit or a smaller deposit, interest rate around 6.5% with MI. The payment is more realistic.
I understand if the borrower had a sub-prime loan, where priviate mortgage insurance is added. If that is the case, PMI carriers are a dime a dozen, there is no standard to calculate the difference.
It would be interesting to hear how the OP got into her situation.
Almost every day I speak to default borrowers in FHA loans. Over the years, out of the 10,000's+ borrowers cannot remember that last time actually discussed a conventional loan with PMI.
In my opinion it would be unrealistic - refinancing into a conventional loan having an LTV above 80%, and/or bad credit, resulting in a high interest rate (8%, 9%. 10%, 12%+) with PMI. The payment would be through the roof!
I understand if the borrower had a sub-prime loan, where priviate mortgage insurance is added. If that is the case, PMI carriers are a dime a dozen, there is no standard to calculate the difference.
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Your opinions on FHA loans being better doesn't have bearing for the OP. She is working on a conventional HARP refi and asking questions about that.
Your quote above about rates on a conventional 80%+ LTV loan does not reflect the current marketplace for OP. The kind of refi she is getting comes with a very low interest rate and lower than market rate monthly PMI payments.
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