PMI just suck. I thought about not putting down 20% on my current house since it was little more than I wanted to spend. My monthly mortgage was just about the same for me putting down 20% or 15% since for 15%, I would have to pay $150+ a month on PMI.
House Sold
- Thread starter Bobber
- Start date
Plain and simple, the PMI companies not taking in enough in premiums, and paying out more in losses, and losses being paid from the PMI companies reserve funds. Simple example - you pay $50/month for car insurance, you have an accident and total your $20,000 car 6 months after buying it, you've paid $300 in premium, but the insurance company pays $20,000 for the car. You repeat this cycle over and over again, and eventually you run out of money and reserves.
What happens then is - the PMI company goes through the loan in default and examines it to make sure the lender met the qualifications of the PMI company. If the qualifications weren't met, the PMI company refuses to pay and pushes the loan back to the lender, if they are met the PMI company pays the lender.
Because of all this - PMI companies have tightened their guidelines to lenders. To a borrower this means higher credit scores, having to put more money down, have more cash reserves, etc.
Other issues were poor underwriting guidelines, a lot of state income/stated asset loans needing no documentation, appraisal waivers, and lots of other things caused the mess.
Not necessarily.
There are mortgages out there that if you are late on ONE mortgage payment then the PMI stays on for the life of the mortgage (unless you refi that is). No lie.
Also, anyone else notice that if you want to pay half your monthly mortgage every two weeks (absolutely the smartest thing to do) that the large banks won't allow you to? You have to go through a 3rd party, which charges you a couple hundred dollars to set it up. It's a racket.
If any of you are paying the full monthly amount each month you should REALLY consider paying half the monthly amount twice a month. It could shave about 4-7 years off your mortgage.
If any of you are paying the full monthly amount each month you should REALLY consider paying half the monthly amount twice a month. It could shave about 4-7 years off your mortgage.
This is true. Also, if you get a 30 year FHA loan, even in you're at 81% LTV when you start the loan you're going to be paying MIP for a minimum of 60 months before you're even eligible to have it removed.
WFHM will draft the payments from your bank account on a bi-weekly basis for free. And on a 30 year loan, it does cut off around 7 years of the amortization if you start bi-weekly payments right away. People get hung up on the fact that the first half of the payment is held in suspense until the second half of the payment is received and both are applied to the loan.
That is correct. Most homeowners don't have the discipline to make that extra payment on their own, and the bi-weekly drafting makes it easier as you can line it up with your pay schedule.
We do that through Wells Fargo. As noted a couple weeks ago, though, they didn't set it up properly, and started applying payments to principal when we got too far ahead, and then started collection calls even though we were two months ahead.
I think it's straightened up now, and we don't get charged extra for it.
I almost wish we would have gone with WF. However, WF was offering us 4.65% fixed... we got 4.0% fixed. So, it may have cost me a couple hundred to setup the 3rd party payment deal, but the difference in the interest rate makes it worth it. Our mortgage was brokered by Community Choice C.U. (excellent bank!) but then it was transferred to US Bank (to which being a customer of US Bank gives me a discount on my home/auto insurance! - Bonus!). I really hate that US Bank simply doesn't have its own way of drafting twice a month. I'm sure it has something to do with the escrow account, but it really shouldn't be that difficult. My guess is they have ownership in the 3rd party they recommend.
I wasn't aware there was a set # of months minimum. There's also an issue if the value of your home goes up you may end up paying PMI longer, in accordance with the LTV you mention. I don't know the specifics of that... I should research it.
Yeah, its BS, I got jacked by that rule.
Removal of MIP From FHA Loans
The minimum amount of MIP payments doesn't apply for a 15 year FHA loan.
Also, the LTV is affected if your property value goes down. This jacked a lot of people starting in 2008 when property values began to take a nose dive. We dealt with a lot of ****** off homeowners calling in to have their MIP canceled, only to find out that they were going to be continuing to pay it indefinitely because their property values declined so much and took the LTV back way up over 80%.
You have twice as many transactions for you and the bank that way. Why make it that complicated? I simply make an extra principal payment when I make my monthly payment.
I've always paid things off early when I had the exta money. I remember one year paying $10,000 down early on in my 30 year note. I wiped off almost 15 years of payments and it saved me nearly $100,000 in interest payments. I was amazed when I calculated it.
One of the best pieces of advice I ever got was from an old acccountant who told me to not get too wrapped up in the "tax deduction" for mortage interest. He told me yeah you reduce your interest expense with the deduction, but it's still an expense that's going out and costing you.
Me and three other families I know have had horrible experiences getting things to work through Wells Fargo over the past 6 months. They dragged their feet, never returned calls or emails, couldn't explain why things weren't going through, and after about 6 weeks they finally told us that we couldn't be approved because the banker didn't complete our loan application. We went to someone else and had approval in less than two days. The other people I've talked to had almost identical experiences.
We sold our house in Gladbrook, listed in my sig. We're moving to north Ames around the end of February. We're still waiting for the people buying our placed to get formal loan approval from, who else, Wells Fargo. Needless to say we're trying to not get too excited about moving until their loan is formally approved...
Our place was on the market for six months about a year ago. We had one person look at it. We decided to try adding on since we have about 3 acres, but surprise surprise Wells Fargo wouldn't give us a loan unless we had $50k in cash. If we had $50k cash, we wouldn't have needed the loan! So, we went back on the market in July. We had four showings in the first month, and an open house that no one attended. We had another showing a few days before Christmas, and that family made us an offer for $14k less than list. We countered right in the middle and they accepted.
We've been in the house for about 7 years, and our selling price was $21k more than what we paid. However, we figured we put close to $60k (new septic, major electrical work, roof, flooring, windows, finished basement...) into it since we moved in so we're still coming out behind.
We sold our house in Gladbrook, listed in my sig. We're moving to north Ames around the end of February. We're still waiting for the people buying our placed to get formal loan approval from, who else, Wells Fargo. Needless to say we're trying to not get too excited about moving until their loan is formally approved...
Our place was on the market for six months about a year ago. We had one person look at it. We decided to try adding on since we have about 3 acres, but surprise surprise Wells Fargo wouldn't give us a loan unless we had $50k in cash. If we had $50k cash, we wouldn't have needed the loan! So, we went back on the market in July. We had four showings in the first month, and an open house that no one attended. We had another showing a few days before Christmas, and that family made us an offer for $14k less than list. We countered right in the middle and they accepted.
We've been in the house for about 7 years, and our selling price was $21k more than what we paid. However, we figured we put close to $60k (new septic, major electrical work, roof, flooring, windows, finished basement...) into it since we moved in so we're still coming out behind.
Congratulations! Sounds like par for the course according to my original post. You actually didn't do too bad for owning it only 7 years. Got to deduct that darn realtor fee too...
Last edited:
I'm worried what kind of price we'll get for our house when we try to put it on the market later this year. I've been it 7 years, just re-finished the basement last summer and have done a lot of cosmetic type work over the years to make it look more modern. But recent sales around me worry me. There is a foreclosure house behind us that has dropped the price 15K since it went on the market about 3 months ago and the neighbor across the street is trying for the 2nd time to sell and not getting a lot of looks at a price I hope we could list ours for. Definitely a rough market right now trying to sell and I just hope we are able to sell in a decent turn time once it goes on the market to take advantage of the rates before they go back up.
It all goes back to how reasonable you start out with your listing price. Hire a good and aggressive real estate agent and listen to what they say. I had watched houses sell around my neighborhood for years and realized some sold really slow while others not so much.
Our "assesed" value was about $10,000 more then we listed it for. Even though we had more stuck in it than we listed it for, we knew that's where we had to be after visiting with several real estate agents and knowing what the local market was saying.
So in the end, we got less than we wanted; but it's sold and got it done relatively quickly.
This must be a nationwide deal with them, as I tried talking to a Wells Fargo lender and couldn't get her to return calls or emails. I was talking to another local bank and got a pre-approval and all my information within a couple days after getting her my information...
I have very good results with the local Credit Union. Cheaper rate, prompt response, and no hassles. They all sell these loans off anyway, so why not just shop around and find the best rate and best people? Wells Fargo is a huge bank that is run fairly well from a financial standpoint, but they are big and bigger isn't always better.
