Mortgage Rates for Friday Morning
Rhonda Porter on 03 2, 2007
It’s Friday…and that means I’m posting mortgage interest rates as of 9:20 this morning. Mortgage bonds have improved by 0.125% over last week’s rates with the recent volatility in the stock market. Mortgage rates may change at any time…especially with our current market conditions.
Conforming Conventional (Single Family loan amounts up to $417,000). Rates are based on 30 day lock periods. The rates below are priced based on a loan amount of $350,000 with a 1% origination/discount with full documentation and a credit score of 680. For more details on how I price the rates, please refer to my first interest rate post.
30 Year Fixed: 5.75% (APR 5.899%). Payment per $1000 = $5.84
30 Year Fixed with 10 Year Interest Only option: 6.00% (APR 6.152%). Int. Only Payment per $1000 = $5.00. Payment per $1000 in 10 years with no payments towards principle during the interest only payment option = $7.16.
7/1 ARM: 5.50% (APR 5.647%). Payment per $1000 = $5.68
5/1 ARM: 5.375% (APR 5.521%). Payment per $1000 = $5.60
5/1 ARM with 10 Year Interest Only: 5.500% (APR 5.647%). Payment per $1000 = $4.58
And…for a few rates for loan amounts over $417,000 (JUMBO). The products above are also available for Jumbo loans.
30 Year Fixed: 6.00% (APR 6.113%). Payment per $1000 = $6.00
30 Year Fixed with 10 Year Interest Only: 6.125% (APR 6.222%). Payment per $1000 during first 10 years (interest only) = $5.00. Payment after interest only period (10 years) per $1000 = $7.24.
If you are obtaining rate quotes from lenders, please be sure to shop at the same time of day (as rates change constantly) and to obtain a Good Faith Estimate and Federal Truth in Lending from the Loan Originator. Lenders are required to provide this within 3 days of any rate quote. They DO NOT need to run your credit in order to quote a rate for you. And, the Good Faith Estimate is not a commitment to lend nor is it a guarantee of that interest rate. My last tip for rate shoppers (for now) is to also make sure that you have the loan originator provide you with the same lock period with their quotes (for example, a 30 or 45 day lock). If one lender is quoting you a 15 day lock, the rate will be better than a longer lock period. When selecting a lender to assist you with one of your largest investments in your lifetime, you want to make sure you’re comparing apples to apples. 
About the Author: Rhonda Porter
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Do you know if anybody is posting mortgage rates via RSS feeds, XML, or any other machine consumable format? I’d love to incorporate current rates into my MLS search tools without copying/pasting from web sites.
Robbie,
I don’t know of any other sites…sorry!
How are you approaching PMI being deductible now? Are you seeing more buyers go that route or sticking with the second mortgage? It would seem to make sense to me to go with PMI and then try to remove it when there’s enough equity, but no one seems to know for sure if lenders will allow that without a lot of grief.
Adrianna, you hit the nail right on the head. I know I personally was not able to have pmi removed from my home about 10 years ago (a few years before I was in lending). It was a major headache. I would rather structure the mortgage so you have more control. And, it’s my understanding that the PMI is only deductible in 2007 and there are income limitations (below $100,000).
I’ve also been using LPMI products where the pmi is essentially priced into the rate. At least then, the borrower can deduct the mortgage interest.
You would think lenders (and politicians) would realize most people consider this a major obstacle, and at least make the guidelines clear AND follow them. What’s the point of making it deductible if no one takes those loans?
I think it makes the politicians feel like they did something good. They can all pat each other on the back. It’s not the lender or pmi company who can make pmi tax deductable.
The LPMI product I referred to often provides a lower or equal payment to piggy back scenarios and loans with pmi.
Isn’t the nationwide trend leaning towards MORE pmi now that lenders have moved away from piggyback seconds? It was just a few weeks ago that subprime lenders like Fremont started dropping their 80/20 programs because the market for the 20’s evaporated.
The changes with lenders like Fremont (and other subprime lenders) are just starting to take effect…still to new to call anything a trend. Borrowers must qualify for PMI…subprime 80/20 type client would most likely not.
I’m expecting to see FHA and VA utilized more than it has been. These are still not subprime vehicles, either. These programs look more at credit history (recent late payments are frowned upon with FHA/VA) and less at credit score.
Here are a few more reasons why MI makes sense again:
1. How many loans does a client want? Well, just one.
2. Closing costs on only one loan instead of two
3. One set of documents instead of two
4. Many times it cash flows out better or equal to a combination first and second
5. One lien so you keep the option for a second lien position if you want a HELOC at a later date.
As far as having it removed, the general rule is 2 years seasoning, no late payments and you have to pay for an appraisal to prove value. Generally, it’s not 20% equity they want to see, but 25% equity or more. I’ve heard both good and bad when it comes to trying to have it removed. Unfortunately, Rhonda you got some of the bad.
Another alternative is Finance Premium similar to FHA where a lump sum is added to the loan (no monthly premiums). If you sell or refinance within the first 5 years you will receive a prorated refund of the premium. I’ve run the numbers and in many cases this is the best option from a cash flow perspective. I’ve had a few cases where the refund was actually realized upon sale or refiance (well within 30 days).
I’m guessing that the MI deduction will be extended beyond 2007. Hopefully.
Thanks, Chik. Reasons 1-5 is why I like LPMI.
The key word in your bottom line is “guessing” the MI deduction will be extended beyond 2007.
>Lenders are required to provide this within 3 days of any rate quote. They DO NOT need to run your credit in order to quote a rate for you
Why would a lender give a quote without running credit and getting income documentation? That’s like betting a horse without reading the Racing Form….
or showing a home without a pre-qual letter…
…well, you know what I mean.
Shoot Brian, if buyers are shopping, I’d rather they tell me what they believe their credit scores are before I run their credit again (if they’ve been to another lender first). With that said, ideally, it’s GREAT if I’m the LO who pulls the credit and I’m able to provide advice, guidance and the correct rate/program that applies to the borrower’s score. I just don’t like re-pulling credit until the borrower has decided to go with me.
I have probably put myself in the borrowers place too much…why would anybody divulge that much information to shop their butts around town that much?
I am probably too conservative…please help me!
Rhonda,
I’m with you. I ask a buyer if they know their score. Usually they do. If they tell me a number in the 720 to 800 range, we go look at property.
I don’t insist someone have a lender letter before I will show them a house, as Brian suggests. Some people want to see if there is anything worth buying before going the whole lender route.
So if you are conservative, so am I. I see no need to keep running credit scores during the home looking process, that can potentially hurt the buyer’s credit score.
Hopefully, your buyer-shopper has met with a lender you trust. You don’t need me to ask this…BUT where are their funds coming from, is their employment history neaty and tidy? There is more to credit score. (Again, I know you and RCG agents know this).
The premise of the “quote” is invalid. If I give a quote to the borrower but I guarantee it changes.
People should be shopping a mortgage consultant, not a mortgage program. Playing the “quote” game is treating you (and the consumer) like a commodity. I guess the best thing to do if someone insisted is to offer them the best (or worst) terms you can imagine, subject to verification.
>So if you are conservative, so am I. I see no need to keep running credit scores during the home looking process, that can potentially hurt the buyer’s credit score. (ardell)
From a Seattle paper:
http://seattletimes.nwsource.com/html/businesstechnology/2003555360_pfcreditmyths04.html
Rhonda, these rates seem like par rates. I’m guessing these are with an origination fee? We typically don’t see too many origination fees in California so our rate quotes may be higher.
Brian, I completely agree with you. Yes, these are priced with a 1% discount. Most of my loans are still priced that way. I provide quotes with and without the discount and let the client decide which rate/closing costs they prefer. I have a link back to my original Friday post which explains how and why I’ve priced the rates as I do.
I’m not a fan of posting the rates but RCG has asked me to do this on Fridays. Rates change, as you know, and everyone’s circumstance is completely different.
I just lost a “shopper” who said my rates were higher than the other lender…ugh. I hate that. How can one shop for a lender when the rate they’re judging us by isn’t even locked?
Anyhow…I did a post two months ago on shopping for lenders and not rates http://www.mortgageporter.com/reportingfromseattle/2007/01/how_to_pick_a_l.html
I’m right there with ya, Brian.
Brian, thanks for the link to the Seattle Times piece on credit scores. I still don’t like to run a shoppers credit until they’ve decided to work with me. 1) it cost the company a few bucks if they do not work with us. 2) I still feel like its invasive…again, if they do not select us for a lender.
>I just lost a “shopper” who said my rates were higher than the other lender
Impossible. I have no axe to grind as Rhonda is my competition but these are some of the best rates I’ve seen.
As a 13 year lender, I can tell you that the “discount strategy: she’s quoting makes complete sense for someone planning on staying 24 months or more.
Our industry spent so much time conditioning people to not pay points in the early part of the decade that we can’t get them to consider the right strategy. Good post, Rhonda…
You make “good points” (pun completely intended)
Thanks so much, Brian. If someone is intending on not staying in the home long enough to break even on the cost or if they are habitual “refi-ers”, then I encourage them to not pay points.
Chik (and Rohnda) -
Do you mean 25% equity TOTAL? As in, if we put down 10%, we need to gain 15% or more before we could get rid of the MI? In the Seattle area, that doesn’t seem too far-fetched over 2-3 years, especially if improvements are made.
BTW, a 30 year fixed rate with zero discount/orig. point is at 6.00% (apr 6.059). Payment per $1000 = $6.00.
Adrianna,
the catch I ran into with trying to get rid of my personal PMI years ago was arguing appreciation with the lender. They wanted me to pay down my mortgage 25% from the original balance. They did not care about my appraised value or appreciation. Maybe dealing with PMI is better now. But if your payment is the same with a “piggy back”, then why not maintain control of your finances and know that you can eliminate the second mortgage and retain the first?
Ah – that IS a different ball of wax, isn’t it. (Sorry for slaughtering your name the first time, BTW).
I guess the reason the MI seems more attractive is you could potentially be done with it sooner than the second mortgage. We’re looking at probably a $400K house, 10% down, with a 30 year fixed, 10 year interest only (credit at least 740). So anything I can do to free up more money to pay toward principal sounds good to me.
I would discuss with your Mortgage Planner (if you haven’t all ready) …how long you plan to stay in your new home and also consider if you refinance often. Have your Mortgage Planner show you scenarios with PMI, LPMI (lender paid), and piggy back and discuss the differences between each strategy.
No problem with my name…it all sounds the same!
We’ve have done, and the big unknown is how the MI is to be removed. She contacted the lender she uses, and her contact could find no information, even though I believe they are required by law to disclose it. I’d like to know that BEFORE we choose a loan though!
If you’re buying a home priced at $400,000, double check to make sure that your income is not too high to be able to deduct the PMI.
Also, before you go down that PMI road, remember the deduction is only for 2007. It may be extended…but it’s not a guarantee.
We’re under the income threshold, but yes, there are a lot of unknowns. We’ll have to weigh the pros and cons when the time comes I guess and hope for the best!
Brian,
I assume you are referring me to this section of the article.
“Myth: You will be penalized for checking your credit report.
Fact: People can check their credit report or score as many times as they want without hurting their credit rating. When shopping for a mortgage, your credit can be checked multiple times in a 30-day period without penalty.”
I think you proved our point. There is no way to know if the buyer will find the right house within 30 days, when you first meet them. Consequently it is in the best interest of the buyer client to wait until a home is identified before running the score. I find that 95% of the people are fairly accurate with regard to the score. When they say it is 800, I assume it is at least 780 and clearly good enough to get the best rates.
If they say their score is 620 or less, then it is off to the lender before looking at houses. If they have no idea what their score is, and want to know, then off to the lender first. But there is no way if someone is telling me their score is 800, that I am going to have a lender run their score before they go to see any houses Especially when I know there is nothing good for them on market at this time..
“the big unknown is how the MI is to be removed”.
Unfortunately there is no way to be accurate regarding the ability to remove MI before you take out a loan.
Prior to 1999, it was clear. The loan had to be paid down to 78% (2% variance for value fluctuations downward) for the MI to be removed. A new law passed in 1999 that required lenders to consider appreciation factors, but it also allowed the lender a lot of leeway. One of the parameters being “timely payments”.
The lender was given more latitude to refuse to remove the MI in cases where the borrower had been late on any payments in the previous 12 month period from the request for MI removal. Consequently there is no way for a lender on day one to know if you are in fact going to pay on time.
Also, it is my understanding that if the loan is sold, MI removal is subject to the policy of the lender who buys the loan in the secondary market. That makes it exceptionally difficult to predict the MI removal policy at the time the loan is placed.
Why do they even have MI in the first place? It seems there are alot more reasons NOT to get it than to get it.
Private mortgage insurance protects the lender in case of the buyer defaults on the mortgage. It does not protect the buyer.
Ardell,
I would still recommend pulling someone’s credit and getting preapproved before shopping for homes…even if they have an 800 credit score and especially if their credit score is anything below 700. Are preapproval letters expected when you present an offer?
“Why do they even have MI in the first place?”
The primary lender on the first mortgate only lends you 80% of value. This gives the lender 20% leeway. Using a ridiculous but easy to follow example. You buy a house for $100,000. Lender gives you $80,000 of that. He knows if you default he can probably net that $80,000 you owe him after costs if he has to sell it. From the time you stop paying to the time he gets to sell it is a long time. So interest during that period is a cost factor in addition to other at time of sale costs.
The “top 20%” is the issue. If you put 10% down on a straight conventional with MI, then the lender has insurance for the difference between the 80% loan and the 10% downpayment. That 10% of value is covered by insurance/MI. If you default, then the lender has the same 20% cushion for costs. 10% from you and 10% from the “mortgage insurer/MI” Company.
That’s why they “need it” in the first place. As Brian pointed out, it is only in the last decade that people have used high rate seconds vs. MI. FHA still uses MI, which is called MIP vs. PMI. “Mortgage Insurance Premeium” vs. “Private Mortgage Insurance”. Basically the same thing, though often if not always, MIP is paid part up front and part in the monthly.
Of course I am not a lender and never have been. But that is my understanding. Lenders, poke holes in that for me if there are any. It’s not my field of endeavor and it’s been years since we as agents have talked at length about MIP/PMI. What is the rate for PMI? Has that been shown somewhere? Did I miss it?
Ardell,
You know MI well; a perfect definition.
Okay…, for arguments sake, I ask this. If a buyer is not going to buy a home for 30 days or more…WHY is he/she rate shopping? The rates will have changed by then.
Rhonda, a definition on your rates example (orig vs no orig) of how an originator defines B/E would be helpful to a consumer.
The buyer should be shopping for a lender and not rates. They should be asking friends, family members and coworkers who they recommend for a LO. Interviewing LOs could take a little time.
And what if there are items that could be cleaned up on the credit that the buyer is not aware of? I still think a buyer should meet with a lender early on.
Brian, I’ll do another post on “breaking even”…but it may have to be a little later… I need to take my son soon to register for High School (I can’t believe it).
Brian asks: “Okay…, for arguments sake, I ask this. If a buyer is not going to buy a home for 30 days or more…WHY is he/she rate shopping? The rates will have changed by then.”
Brian, they are not “rate shopping”, they are gettin a pre-approval letter to use maybe three months from now. They need to know what price range to look in. I can qualify them, but most agents can’t and send them to a lender that early on.
You yourself said that many agents won’t show a house without the lender letter. I think that is insane and like saying “I want to know if I am wasting my time with you”. Very insulting. Buy a mortgage calculator. People shouldn’t need a lender letter to go see houses, but many agents require it.
Ardell, I have clients I’m working with right now who are very successful. He’s paid a salary and she’s commission. They want to go full doc. She told me she makes $90k annually. They proceed to make an offer on a $800k home and send me their tax returns afterwards. They can afford the house just fine. However, she deducts so much from her business, that the tax returns show $9k by the time it’s all said and done. What if the clients decide they don’t want to buy the home going NIV, or they don’t want to wait for their other house to sell but now with the income issue, the don’t qualify with both house payments? They should have started the preapproval process earlier in order to know what to expect. Of course, I’m biased!
Rhonda,
I know how to qualify salaried vs. hourly, or owns own business, for the purposes of looking at a few houses. Sometimes they want one they see right away, but more often we see houses and see if there is a basis for our client/agent relationship, before I would have them talk to a lender. I use rates based on what the buyer knows their score to be. Rarely does the buyer get that wrong to the point that it affects their rate. Happened once last year. But I ran the numbers on day one at the high end, so worked out.
What if they see houses with 4 agents before picking an agent? Should they have to have their credit run every time they meet a new agent? That would be absurd. I think they choose the buyer agent first, which involves seeing some houses together, and then once they select an agent, then they choose lender.
If during that initial process they happen to see a house right away that they want to make an offer on, and one of them has their own business or hourly wage for less than two years, they know that they are making the offer with the possibility of needing to go NIV, and I work up the payment based on NIV rates. Then if they can go full doc…Great! If not, they knew the payment from the getgo of the NIV based financing.
The rate can fluctuate as much during the looking process as it will from Full Doc to NIV, so doesn’t disrupt the house hunting process to base it on the higher rate. Gives a little room to breathe as well. Most of my clients are not buying at the max of their affordability.
Many come to me with a letter in hand. About half the time, that letter is not from the person they eventually use to do the loan. So credit has to be run again in excess of the 30 day timeframe. When someone is AT the breakpoint of 620 or other breakpoints, that could harm them. I’d rather not take that risk with a buyer’s credit score and interest rate…most of the time.
I can pinpoint red flags when I hear people talking while showing houses. One guy told the lender he made $60,000 and got a lender letter for $350,000. I could tell he was talking about lots of overtime (in the future not past), and a recent hourly wage hike, while we looked at houses. I stopped showing, took them to dinner, and quickly figured out they could not afford the $350,000 a lender had qualified them for based on his “stated income”. This was not just about NIV, this was about the fact he was never going to really earn $60,000 given the hours he had historically worked.
I am not discounting people visiting a lender first, but agents need to know a whole lot more about the lending process than just “passing the buck”. And lenders should be able to quote rates without running a credit check.
What happened to the days when the buyer was handed that credit score so they could use it to shop rate? They used to get their full credit report that they could fax to other lenders. Is that still possible?
Brian, would you quote rates if the buyer faxed you a recent credit report?
Ardell, I don’t doubt you one bit!
I quote rates (or actually, provide GFEs) without credit reports all the time, but I do let the buyer know it’s based on scores of xyz, full doc, etc.
Brian and Rhonda,
The reason consumers are shopping rates and programs is because they do not trust their mortgage sales person. Whatever you want to call yourselves is irrelevant: mortgage planner, mortgage loan officer, mortgage loan originator, mortgage banker, broker, certified mortgage specialist…..AHHHH. Enough!
Consumers have learned that mortgage sales people are not to be trusted. This is nobody’s fault but the industry itself.
It makes no difference whether they’ve been referred to you by a “trusted colleague.” It doesn’t matter how long you as an individual have been in the business, how many deals you’ve done, how many American dreams you’ve made come true, how many special designations you hold, how many blog posts you’ve authored.
A new consumer, who has not yet had the experience of doing business with you and getting to know you, does not trust mortgage sales people.
This is a retail deal for them. Arm’s length, every man out for himself. If there’s no trust, then the consumer looks at price.
I know you may have a radically different view of yourself, and I’m sure your past clients also have wonderful things to say about the quality of service you both provide. However, you are not your industry. Step back and look at the ENTIRE mortgage industry and you’ll see something very different.
That’s why it is so hard for a loan originator to obtain new referral business from real estate agents. Once a real estate agent establishes solid relationships with honest, ethical, hard-working loan originators, it is really difficult for an agent to take a gamble and try someone new.
I totally understand that Jillayne. However, I’m pretty sure Brian will agree, shopping for rates is risky business since there is no guarantee to the rates being offered. It comes back to the individual who is providing the quotes… are they ethical, hard working and have access to a wide assortment of mortgage products and are knowledgeable.
The person quoting the lowest rate may be none of the above and a liar. Plus, unless the buyer is locking rates the moment they’re shopping, the rate they are judging who will care for their financing is not the rate they’re receiving quotes on.
It’s frustrating.
It is frustrating for me, also.
What the consumer does, if they’re shopping for rates and the rate changes, is they leave and go someplace else. Without that trust, there’s no feelings of reciprocity. The reason here, is, of course, because the LOW RATE was what got the consumer in the door to begin with. “Rates change.” Yes, that’s true. But the consumer doesn’t know if he/she has been bait and switched or if rates just “change.”
rates
loan type
fees
lending entity
mortgage loan originator
So many different variables. I’d love to hear from consumers who had to venture into chosing a mortgage lender. Maybe they started by rate shopping and chose a lender solely by who had the lowest rates…..maybe they received a referral to a trusted lender.
Personally, going back up to comment #40 by Ardell, I think it’s a great idea for consumers to arm themselves with their own research including their credit score BEFORE talking with ANY lender.
At the very least, if a borrower is shopping rates, when talking to a lender they can at least get an idea of the LOs manners and knowledge. I all ready referenced the post I wrote a few months ago (hey…I think it was in response to a post YOU did on RCG regarding shopping lenders) with questions borrowers can ask LOs to get a better idea about who they are dealing with.
It’s sad that they shop rates because of lack of trust and then they may very well get burned because they chose the better salesman and probably not the better mortgage planner consultant orignator whatever.
[...] The rates that I quoted on Friday are based on paying a point (1% discount). As I mentioned on my first rate post, I’ve priced the rates this way because this is currently what most of my purchase clients have opted for. Points may make more sense on a purchase than a refinance as the points are tax deductible for the year it was paid with a purchase. With a refinance, the point tax deduction is spread over the term of the loan (unless the refinance is used to improve the home). As always, check with your tax advisor…. Bottom line, it’s important to know your options and to pick the pricing that works best for your financial goals. But hey, that’s just my opinion, right Brian? [...]
In the Seattle Times this morning, re MI… If you believe this, then it’s the loan to value ratio that counts, not how much you’ve paid down the loan.
http://seattletimes.nwsource.com/html/realestate/2003597995_realhowto04.html
Adrianna, call me a skeptic…I don’t believe everything I read.
Ask your LO if she/he can guarantee it will be removed if you provide an appraisal, pay down the equity…etc. I bet they can’t/won’t. Because it will be out of their control. You’ll be dealing with the big lender/bank pmi department at that time and not your LO.
Also, find out if there is a “seasoning” requirement to be met before the PMI can be removed…for example,meaning that you must have the PMI for 2 years before you can request that it be removed, even though your home may have appreciated well beyond the 20% equity mark and even though you have been paying down your mortgage like crazy.
Did you look at the first and second (piggy back) mortgage scenarios with your LO? I’m just curious how the payments compare and what made you select PMI. (Understanding how you made your selection will help me with my mortgage practice).
Rhonda,
It is my understanding that the removal of PMI is subject to the lender who holds the note’s policy, which can change if the lender sells the loan. Does that mean it is not spelled out in the original mortgage documents signed at closing?
Seems the only way to know up front is if you get a direct loan from a portfolio lender. Even then they could change the policy by the time someone wants to remove the MI.
The law from 1999 hasn’t been tested in a down market. Most of the Counry has been in an up market since 1998 until now. I would expect lending instituitions to tighten their PMI policies, if they expect a down market, or base their policy on what is happening in other markets if the lender is a National Company.
I’ll check with our PMI reps to see if I can get clear answers. When I had PMI, it was quite a few years ago…probably about 10, I called BOA to have it removed and I received the run around. My loan was never sold however, the person who I was talking to did not care at all how much my home appraised for or what my appreciation was. Even when I explained to them that I would just refinance the mortgage and be done with BOA…didn’t care.
Personally, I would wait and see if Congress is going to make the deduction allowable after 2007 before having a mortgage with PMI.
I completely agree with you on the PMI tightening. I believe all forms of underwriting will. When we use PMI, they are doing the underwriting of the mortgage along with our underwriter.
PMI seems more attractive because although the montly payments are higher, you have lower closing costs, and one loan at the lower rate, instead of a second at a higher rate. Also, being able to get rid of the PMI after 2-3 years instead of being stuck with the second loan is very appealing. Our mortgage broker also suggests the second mortgage, though, because of past trouble getting the PMI removed. We haven’t actually selected a loan – still trying to find a damn house! We’re hoping to get lucky Tuesday – $340 Mega Millions!
Good point Rhonda. I once had a buyer have no trouble getting through the primary lender underwriting, but not the PMI underwriter. Could cause a rejection at the last minute, though I did close that one without PMI. It wasn’t the borrower that didn’t pass the PMI underwriter. It was the house itself. I shifted to a “construction/perm” loan and the loan was meted out in installments during improvements. The property was not habitable “as is” and the PMI underwriter rejected the loan.
Adrianna and Ardell,
I just received this info from a PMI rep (MGIC):
“The Homeowner’s Protection Act of 1998 states that if your loan naturally amortizes to 78% of the original value, it automatically drops. If your loan naturally amortizes to 80% of the original value, you can request it to be dropped.
If appreciation is being used to drop MI, there are a few factors involved. Most investors will require an appraisal be ordered, at the borrower’s cost, and depending on the investor, the value will need to come in anywhere between 75%-80%. Most will also mandate no mortgage lates. This law applies to owner occupied, full doc loans only.
If the borrower makes a one time principal reduction that brings the LTV to 80%, the servicer should cancel the MI.
If you are dealing with a non-owner, stated, etc, it is best for you to contact your servicer (say Flagstar) to find out what their rules are.
I always recommend you check with the investors you are working with to see what their policy is. Each one has their own nuance, but they should be complying with the law. If they tell you the MI company won’t cancel, that is incorrect-we can’t cancel a premium, it’s not ours to cancel.”
She also added there is typically a 2 year seasoning requirement before PMI can be cancelled (this was the issue I personally ran into with my loan years ago…so I just refinanced it instead).
Hope this helps!
“I’d love to hear from consumers who had to venture into chosing a mortgage lender.”
I would guess I’m pretty typical, so I’ll share my experience from a few years ago.
I got a GFE from a broker recommended to me by my boss. She was smart and knowledgable, but not particularly personable.
I also got one from a guy who worked with my Realtor who called himelf a Home Mortgage Consultant on of Wells Fargo. Personable, but not that sharp.
I also called a few other brokers off the net and paper – straight APR shopping.
The first broker, the one recommended, had the best rate. Because I liked my Realtor, I gave the WF guy a shot to match her rate, which he did.
He made numerous mistakes, and I was forced to go over my docs repeatedly with a fine tooth comb to make sure they were correct.
In retrospect I should have gone with the recommended broker, though perhaps not, given that she was angry with me and showed it.
In the end, however, I am going to go with the reputable person who gives me the lowest rate in an apples-to-apples comparison. A quarter point could mean 10s of thousands of dollars over the life of a loan. That’s going to trump loyalty every time, and you are fooling yourself if you think otherwise.
Why was she angry with you?
[...] It’s Friday…Mortgage Rates are unchanged (for now) March 9, 2007 Rates are unchanged from last Friday. The rates are based on a purchase price of $500,000 with 20% down and a credit score of 680 or better and are priced with a 1% discount. [...]
“Why was she angry with you?”
Because she spent time educating me, running numbers, preparing 3 GFEs, gave me the best rate, and I didn’t go with her.
Her final response was “Why would you go with someone who didn’t quote you the best rate initially, but only after you asked for it?”
I didn’t have a response to that. She was right.
Bingo. That’s the danger with rate shopping. You’re selecting the person who is going to help you select your mortgage, guide you through the transaction and hopefully be around for years to come in case you ever need mortgage advice in the future.
And unless you’re locking in the rate the moment you’re shopping, you don’t have the rate.
I’m not sure I follow, Rhonda. What’s the danger of rate shopping? How else would I have even known she was giving me the best rate?
As a consumer, you don’t know if you’re receiving the best rate until the loan is locked. The danger is your making a decision based on rate and not on the person who is assisting you with the mortgage who would have probably provided you with the best rate anyhow.
If you call three lenders and one quotes the lowest rate on the phone. That quote means nothing until the loan is locked since rates change constantly.
[...] Friday’s Rates March 23, 2007 Rates have been hanging steady all month and there are no significant changes as of yet. With that said, I am only going to post new rates on Friday, when I have new rates to report. So next Friday, if you don’t here from me, rates are the same. Happy Friday. [...]
Rhonda hits the nail on the head. If a rate shopper really wants the lowest quote, give it to him. Better yet, offer him a “best terms guarantee”. he should shop, get three GFE’s from a broker, lender, and bank, and you’ll do it for $500 less than the best quote.
Does it sound sleazy? It is. Sometimes you have to play with the game with the consumer the way they’ve been taught. Now THAT is consumer-centric !
Bili’s experience defines it.