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I am about to go sign Loan App tomorrow for a house...

I am purchasing a home for 156,000 and putting 5% down. When I look at PMI Calcuation charts, it shows that the typical PMI is at .78%/12 which should be $96.33/month.

On my GFE, it shows $128 which is at 1.04%/12. I feel this is a real high number!

Another question is in regards to a lump sum payment I will be making next Feb. I plan on paying an additional 15% to rid of PMI. When I read over the HPA of 1998, there seems to be some gray areas.

I tried to get an 85/15/5 but they said I couldn't due to......... liquid assets. So now I am stuck w/ PMI and they claim they will rework my payment once I do a lump sum of $24,000 next Feb (but will they eliminate PMI as well??)

Is there anyway they can hold me to the PMI once I pay down the loan to 80% or the original value? My worry is that something will come up in regards to my payment history being to short to rid of it.

I appreciate any reponse to my questions. Hopefully, I will still have hair by tomorrow Surprised

)

And what is the "Commission Fee" = JUNK!

gmakerley · Posted: Thu Feb 26, 2009 7:34 am Post subject:

i don't have a specific definition of "commission fee" but it certainly would seem to be some sort of compensation for the loan officer who worked on your file. junk? don't you get paid when you do some work? shouldn't loan officers be compensated for their time, energy and diligence?

maybe i will start refusing to pay service workers because it's just junk; won't that be a wonderful way to treat people?

the mortgage insurance calculations are, nowadays, more based on credit score than just a simple calculation as they used to be. you didn't mention your score, but that may be the culprit.

the reworking of your payment...have you asked the lender if that will impact your mortgage insurance at all?

Posted: Thu Feb 26, 2009 7:43 am Post subject:

Thx for your response, George.

I terribly misworded it, "Committment Fee" Sorry! or... is that the same thing?

My understanding is the they collect on the origination fee? And please correct me if I'm wrong. My credit score is 713 and I have had a mortgage through this company before until I sold my house last year and was never last on a payment.

I appologize for the miswording but everywhere I read about "commitment fee" says something a little different but many call it junk and this company didn't charge this to me last time.

gmakerley · Posted: Thu Feb 26, 2009 9:58 am Post subject:

yes, they are called "junk" fees because they, in some cases, have no bearing on real costs. these are fees that are often shared with a loan officer, and which can occasionally be waived (to save a deal, for instance); but generally, since loan officers are commissioned, they're ways in which a loan officer can eke out a living.

eric1 · Posted: Sat Feb 28, 2009 5:36 pm Post subject:

If you are working with a broker, then he/she may charge an origination fee. However, the commitment fee is often generated by the bank.

jveenstra · Posted: Mon Mar 02, 2009 3:17 pm Post subject: PMI

Typical PMI with 5% down is 30% covereage and on your loan that would be $116.09. Because we do not know your credit scores or much else besides your loan amount, we can not say that $128 is not a correct number. I can say that $96.33 is not a correct number. It may have been several months ago before whatever PMI company changed their guidelines. There are 5 or 6 major PMI companies and they are all very similar, although not exactly the same.

The amount of PMI coverage required is dictated by the automated underwriting systems for the Agency loans.

Pay down and get rid of PMI: Better get whatever they tell you in writing. It is very common that some lenders require that you kep PMI a minimum of 12 months and sometimes 14 months before you can get rid of it. Even if they agree, if the house value drops over the next bunch of months, the lump sum payment to do that may be larger than you plan on right now.

gmakerley · Posted: Tue Mar 03, 2009 8:11 am Post subject:

mind you, this is just speculation, john; but i think lenders are going to be requiring a lot more than 12-14 months before mi can be eliminated. in this environment, with home values still dropping (and financial institutions dropping like flies), how can any lender justify removing the mortgage insurance?

i know if i was in charge, i'd scramble to obtain more insurance coverage, and for a longer period of time, rather than less and shorter.

just my thoughts on the matter, of course.

Guest

My LTV is less than 78% but when I pressured Bank of America to cancel my PMI (as required by 1998 Homebuyers Protection Act) they claimed some mythical 2001 HUD ruling modified the act and that I am required to make 5 payments (5 years) of PMI regardless of my LTV ratio. So, the 12-14 months you guys are talking about is now 5 years according to BAC. I have been a model borrower and meet ALL criteria that I can find published anywhere about qualifying for cancellation of PMI. I never missed a payment, made extra payments, have good credit, do not have an FHA loan, and cannot be considered high risk since I bought a $82,500 home and have a household income of $75,000. Even my original loan officer at a local bank said he has never heard of this 5-year rule and he doesn't know how they get away with not cancelling it when you reach 78/22. Has ANYONE heard of being required to pay PMI for 5 years regardless of LTV ratio?

gmakerley · Posted: Wed Feb 10, 2010 2:20 pm Post subject:

well, my thoughts are still pretty much the same regarding that 12-14 month window. i do recall seeing documentation through the years that alludes to a 5-year period, but that's not been anything etched in stone that i'm aware of.

since you noted that the lender brought up a hud ruling, i have to presume that yours is an fha loan. it ought to be easy to determine the truth of the matter, as "mortgagee letters" are regularly published on the fha website, and going back to 2001 ought not to be the most difficult of chores. i'm skeptical also, but how about if you ask b of a to provide the specific documentation; else you can certainly go to their supervisory agency and rain hellfire on them.

jburke · Posted: Wed Mar 10, 2010 9:00 am Post subject:

To responsible borrower,

What BofA is referring to is the mortgage insurance on FHA mortgages and does not apply to private mortgage insurance on conventional mortgages.

If you have a conventional mortgage, call them back and educate them.

If you're in an FHA loan your only options to drop the monthly mortgage insurance would be,
1) Refinance from FHA to conventional
2) Refinance to an FHA 15 year fixed, as long as your loan to value is 89.999% or less FHA doesn't require monthly mi on their 15 year fixed loans.

Guest

I'm looking to refinance, my good will commitment from this company claims that I have to pay PMI for 5 yrs and at closing I have to pay close to 8000.00 for a HUD fee being that is an FHA loan. Is this accurate??? Please advise.

jburke · Posted: Mon Oct 18, 2010 11:03 am Post subject:

Hi Filipa,

Yes, on an FHA loan you will pay mortgage insurance for at least 5 years unless you do a 15 year fixed and have at least 10% equity. The $8,000 HUD fee is the FHA upfront mortgage insurance premium and is charged on every FHA loan.

The strange thing here is that the upfront fee should be less for you if your FHA case number was pulled after October 4th. It should be 1% of your loan amount which is down from 2.25%.

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