Two part question...PMI and refinance

icanbethatdumb · Joined: 11 Jun 2009 Posts: 3

We bought our (1st) house in 2003. We had terrible credit then. We were able to take a loan out for $122k with a 7.37 interest rate for 30 yr fixed . And the PMI. I didn't think much of it then because we had such bad credit and were just happy to buy a house. Everything going great for the past 6 yrs. No late payments at all. We worked on our credit and it's much better now.

Last month, 5/3 called us and assured us we could refinance with them at 5.25 percent interest and no pmi. When he found out we were paying $300 per month for PMI, he said he never heard of anyone paying that much. Me either, but I never compared it with anyone else. Three hundred bucks for PMI a month is outrageous!

Hubby's credit score is at 679 now and mine is 697. Fifth third turned us down. They only said something about collateral and that we'd be getting a letter explaining it. We never got that letter. They also never informed us we were turned down, I only found out because I called and asked what was up.

We'd like to try to get refinanced again, this time through VA. Hubby is a retired army vet. We'd like some advice on how to go about this. Yep, stupid people need to learn the hard way sometimes, but we really need a break here. This $300 pmi each month is killing us. Our credit scores aren't that bad. What do we need to do to get a decent interest rate with no pmi?

So glad I found this board and I hope to get some good advice.....and yeah, go ahead and tell us how stupid we are/were....we know it...but we're trying to get smart. :D

m2c · Joined: 03 Aug 2005 Posts: 937

$300 per month for MI is hard to compute on a $125K mortgage. Are you sure you have this amount right.

VA is not a bad alternative for refinancing – you’d avoid LLPAs (read that as higher cost) for your FICO scores. Your scores have improved but with conventional standards and costs have been raised. Biggest downside with VA funding fee. This is a bit of a stealth cost since it is 100% financed but still it’s a cost. Google “26-7” and you can read more details of eligibility, underwriting, etc. VA has a strange site name and maybe I’ll be able to post the address here www.warms.vba.va.gov/pam26_7.html . Don’t think it will be deleted.

Before you do anything, get some details in writing from 5/3rd including a copy of your appraisal. Since there was an indication that collateral was an issue, you may be “upside down” which would make any refinance extremely difficult to impossible.

Be aware that 5.25% with no points is just a fond memory right now. Rates have really shot up.

icanbethatdumb · Joined: 11 Jun 2009 Posts: 3

Quote: $300 per month for MI is hard to compute on a $125K mortgage. Are you sure you have this amount right.

Unfortunately, I'm positive. :( We pay $298.90 per month for PMI. Our yearly PMI for 2008 was

Private Mortgage Insurance Paid: $3,586.80

No one ever came out to do an appraisal. We have done a lot of work on this house, and it was appraised at 139 k when we bought it. We owe 114k on in now. Our mortgate is through WaMu, which Chase just bought them out.

Thanks for the VA site. The biggest thing for us is getting rid of the PMI. You may be right--we may be upside down, which would REALLY suck!

Our total monthy payment is $1369.00. We are at 82% LTV. If I calculated right ( which I probably didn't) if we paid $2500 towards the principal, we would be at 80% LTV, which we were told before that WaMu will drop the PMI at 80% LTV.

Is that right?

btw, thanks for replying

ps. edited to say: 5/3 over the phone compared houses that sold on my street to get a estimate of what our house was worth. My street is very diverse....some homes selling as high as $600k, and some as low as 99k.
Like I said, no one ever came out for an appraisal. So, I don't know how they would know what our house is worth never even coming to look at it.

m2c · Joined: 03 Aug 2005 Posts: 937

I’ve got to assume your loan was an EA I, II, or III or subprime … probably not the latter but if it is, make sure your are aware of any lingering prepayment penalty. We avoided EAs like the plague so I don’t have access to historic MI rates for EAs. To give you a comparison, the conforming MI at, say, 95% LTV would have been $79.30 per month. You’ve paid your dues; now it the time to get rid of this MI.

Your note rate is probably 7.375%. This would yield the $114K current balance if you closed late in 2003. This rate would tend to confirm the EA assumption since rates then were roughly 20 basis points higher based on FNMA net yields. In other words a standard conforming deal would have been around 6.125% and the higher rate indicates an EA level.

A VA loan is probably your best way out of this situation BUT this time, go the a broker you trust … not a bank. Talking from a biased position I’ve got to say many so-called loan officers at banks don’t have a clue. Get quotes from a couple brokers, Contrary to the fanatical press stories, most brokers aren’t out to rape but “trust but verify”. The variance in home prices on your street is interesting but in that situation it’s better to be at the low end of the range. VA has a unique appraisal assignment system but you may get some sympathy on the vet status.

Good luck.

intelemark · Joined: 12 Jun 2009 Posts: 1

given that we are still in a market with much uncertainty, I think I would still recommend you ave your funds outside of your home until such a time as you can refinance.

Depending on your credit and income, perhaps you can refinance now since rates are so low, but in order to eliminate the PMI you would need to be able to split the outstanding balance so the first mortgage is below 80% loan-to-value.

Best of luck to you and please contact me again should you need anything further.

downrollings · Joined: 16 Jun 2009 Posts: 2

PMI's modification of the existing insurance allows coverage to be extended to
the new refinanced loan -- even though the property value may be lower than
when the original loan was insured and may not be eligible for mortgage
insurance coverage today. In addition, allowing modification of the insurance
on a borrower's loan, regardless of investor or servicer, represents a truly
consolidated approach to facilitate refinances for more homeowners caught in
the housing crisis.

To be eligible, the borrower must be current on their existing loan and the
new loan should improve the borrower's financial position by at least one of
the following: a reduction in the mortgage payment, interest rate or principal
balance; an extension of the ARM fixed-payment period; an extension of the
loan or amortization term; or a more stable payment product. Borrowers will
need to work closely with their servicers to ensure they meet required
qualifications and the Lenders/Servicers must meet program eligibility
requirements. Additional requirements may apply depending on whether the
existing or new lender/servicer is requesting the coverage modification.

"PMI is working closely with mortgage servicers and the GSEs to keep borrowers
in their homes supporting numerous housing and foreclosure prevention
initiatives. Providing consistent solutions across all of our insured loans
helps investors accelerate refinancing to lower monthly payments, or otherwise
improve the position, of all borrowers who have PMI insured loans," said Chris
Hovey, PMI's Vice President of Servicing Operations.

PMI has also implemented other initiatives to support borrowers, lenders and
servicers in their efforts to avoid unnecessary foreclosures. These
initiatives include a new website section "Home to Stay" at www.pmi-us.com -
providing lenders, servicers and homeowners useful information on recent
support initiatives, such as Treasury's Home Affordable (HARP and HAMP)
programs and, a nationwide radio public service announcement - providing
solutions to foreclosure and directing borrowers to HUD-qualified resources
for help, as well as a range of other programs targeted to keeping families in
their homes.

Sahmama24 · Joined: 19 Jan 2010 Posts: 26 Location: Delaware

icanbethatdumb wrote: Quote: $300 per month for MI is hard to compute on a $125K mortgage. Are you sure you have this amount right.

Unfortunately, I'm positive. :( We pay $298.90 per month for PMI. Our yearly PMI for 2008 was

Private Mortgage Insurance Paid: $3,586.80

No one ever came out to do an appraisal. We have done a lot of work on this house, and it was appraised at 139 k when we bought it. We owe 114k on in now. Our mortgate is through WaMu, which Chase just bought them out.

Thanks for the VA site. The biggest thing for us is getting rid of the PMI. You may be right--we may be upside down, which would REALLY suck!

Our total monthy payment is $1369.00. We are at 82% LTV. If I calculated right ( which I probably didn't) if we paid $2500 towards the principal, we would be at 80% LTV, which we were told before that WaMu will drop the PMI at 80% LTV.

Is that right?

btw, thanks for replying

ps. edited to say: 5/3 over the phone compared houses that sold on my street to get a estimate of what our house was worth. My street is very diverse....some homes selling as high as $600k, and some as low as 99k.
Like I said, no one ever came out for an appraisal. So, I don't know how they would know what our house is worth never even coming to look at it.

I understand and agree that $300 PMI is high. We pay $310 a month and you are the first person who pays close to what we do! Oh and by the way our home is $196,000.

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