Last year, I purchased a home for 100,000 with an interest rate of 6.75% My PMI is $348.33. It seems like I am paying too much for PMI because I only pay $69 per month on a new house purchased for $171,000 @ 5.5%. If I am paying too much, can I get this changed?
Well, we would need to know the amount of your loan, first. Generally, I've seen PMI around 0.5% of the original loan amount, annually (it varies based on the LTV ratio). So, if you borrowed $90,000 on that $100,000 home purchase, I would have expected a PMI payment of $450, annually. The $69 per month sounds reasonable on the $171,000 house, assuming a 90% loan.
The original loan amount was 100,000. Is it at all possible for me to call the bank and see if this can be changed. Are there any laws on how much a bank can charge you for PMI. It seems like the amount they charged me is a rip off amount.
Even if you financed 100% I don't think you're PMI would get anywhere close to $348. I bought my house for $105,000 and financed $91,000 (86% LTV) and my PMI was $50/mo. before I refinanced.
Sometimes you can get your house reappraised and if the appraisal value comes in high enough, the bank will lower or drop your PMI. The last bank I had my home loan through told me they would only use the purchase price, so I paid the $1000 and refinanced elsewhere. I planned to stay there a few more years so the refinance paid off.
You say your PMI is $348.33. Is that annual? If so you're paying $29 per month for PMI. Don't feel too bad. I've got a $100K mortgage note and I'm paying $79/mo. Was the PMI not disclosed in your mortgage papers? Mine was in nice big letters on the papers I got prior to closing.
i PAY $348.3 a month!!!! This was in my closing papers but I thought they charged me this because of my credit. But as I researched online, it is not based on how good or bad your credit is. Can anyone tell me whether this is illegal to charge someone this hight amount for PMI?
Not illegal to my knowledge. Call your loan officer and get an explanation. Right, wrong or indifferent, he or she will be able to tell you why you're getting charged so much. That PMI payment seems huge though unless there are some extenuating circumstances.
Yeah, that PMI sounds incredibly high if it is monthly - are you certain that you are paying it every month, that you aren't misinterpreting your statement?
I don't know of any limitations on PMI, however, if you're actually paying that, your APR would have been pretty massive - you might check that they included PMI premiums as a finance charge on your TIL disclosures. You might also ask the bank how it calculated your PMI payment and for documentation from the provider that the premium is actually $348/mo.
For what it's worth, on a 100% LTV (no down-payment) loan, our premium comes out at just under 1% annually, which would be about $80/mo. on a $100,000 loan (for a $100,000 purchase).
This is exactly how it is on my payment letter and this is the total amount I pay every month. This is a rental property and I have to pay the additional few hundred dollars to the mortgage.
We don't normally do secondary market loans for rental property, so I don't know if it is significantly different for that type of property, but an annual PMI premium that is higher than 4% of the loan balance sounds outrageous. I do not know of any legal restrictions, but I would certainly think that you could find cheaper financing. Again, I would ask the bank how the premium is calculated and for documentation that the policy costs that much.
Call the lender. Tell them they need to come down on that or you'll either sell or refinance through someone else. No way you're going to get ahead renting out that property with that ridiculous barnacle of an expense slowing you down.
I would call the lender. Is it possible that they switched your monthly taxes and PMI around? $79.42 seems awfully low for a monthly tax bill where $384 would seem much more likely for montly taxes and $79 more likely to be your PMI. Just a thought.
Quote: I would call the lender. Is it possible that they switched your monthly taxes and PMI around? $79.42 seems awfully low for a monthly tax bill where $384 would seem much more likely for montly taxes and $79 more likely to be your PMI. Just a thought.
Well, that depends a lot on where you are - I would guess that is a typical tax bill nationwide on a $100,000 home.
But where can you find taxes for $79.42/mo on a $100,000 property....that comes to $953.04 annually. Not to mention his property is worth $100,000 and is probably assessed a lot lower. Something doesn't make sense.
Wow, my taxes are $320/mo in Milwaukee and my house is assessed at $130,000. I would love to only pay $950/year. If TIEJ1 lived california where RE taxes run higher, it's possible his taxes could be $384. Again, I reserve the right to be wrong, but it's my only explanation for the situation.
Some places use property taxes to pay for EVERYTHING. Some places prefer to use more sales tax... some use state income tax. I have a $100K house in Akron assessed for I think $85K or so. I pay $111 per month in tax escrow. That comes out to around $1330/yr.
And, in some places, the government just collects more revenue than in others. But, my state does have an income tax and a sales tax. I was thinking that the national average for property tax is between 1 and 1.5% of market value.
This does seem quite high for PMI. The lender should be able to tell you what the PMI factor is on the loan. For instance, at BofA, the PMI factor for a 90% (LTV) fixed rate loan was .52% and the factor for a 90% ARM was .61%
So you would take the loan amount $100,000 x .0052 = $520. Then you would take the $520/12 months and your PMI payment would be $43.34 a month.
Quote: I would call the lender. Is it possible that they switched your monthly taxes and PMI around? $79.42 seems awfully low for a monthly tax bill where $384 would seem much more likely for montly taxes and $79 more likely to be your PMI. Just a thought.
This sounds like the most likely explanation to me right here. I can't say how your servicer's system works, but it seems to me that upon input of your loan, some clerk could have easily put the wrong figures on the wrong lines. Ultimately the money all goes to the same place (your escrow account), but could result in your bill reporting the breakdown wrong. Definitely call the lender/servicer.
_________________________ My opinions are my own and do not necessarily reflect the opinions of my employer.
I spoke with someone who is a State Certified General Appraiser and he told me that I was definitely paying too much for PMI. He told me that I should contact my bank and ask them who my PMI provider is. He said first see if they have a website and to see if they have the mortgage calculator where it calculates PMI. He said print screen the calculation and save it so that I can have a paper trail. He then told me to contact the PMI provider and ask them to explain to me why they are charging me so much and let them know that I went on there site and the amount I am paying is different from what they say the calculation is on their site. He said if they don't do anything about it, then I should contact one or more of the following people... He said they would have to give me a refund of the difference from the time I started paying the PMI
Consumer Fraud Affair State Attorney General
Thank you guys for all of your input. I will get this settled soon. Oh and guys I am a gal. I saw one person say he.
Quote: I should contact my bank and ask them who my PMI provider is. He said first see if they have a website and to see if they have the mortgage calculator where it calculates PMI. He said print screen the calculation and save it so that I can have a paper trail. He then told me to contact the PMI provider and ask them to explain to me why they are charging me so much and let them know that I went on there site and the amount I am paying is different from what they say the calculation is on their site.
Sounds like good advice. I would only add that it is possible that they charge different rates for owner-occupied vs. investment property (again, I don't know that, but it is possible). Even if they do, as I said before, a PMI premium that is 4% of the loan balance seems outrageous, and I would bet you could find cheaper financing somewhere.
I found out who my PMI provider was and emailed them and ask them to explain how PMI works and how it is calculated. Then I ask them to give me the PMI on a 100,000 house @ 6.75% for 30yrs. This is the price of my house I bought and he replied back.....see below. Now if that is on a loan with an ltv 90% with average credit, they definetly charged me way too much because my loan was over 90% ltv with a fair credit score, not the best but no 348.33. I emailed him back to ask him what was the worst case scenario for someone who had a credit score in the mid 500s with the same calculations of my house. I am still waiting for him to respond....
Your understanding of private mortgage insurance is correct. In response to your question of cost, the answer it depends on a number of variables including credit score, debt to income ratio, loan to value and amount of documentation. An average loan with a 90% loan to value, with average credit etc... would have an annual cost of 52 basis point per year or approximately $43 per month.
You are going through an investor relations contact that you have probably obtained on their website. This person is not going to be involved in enough detail to be able to answer your question himself - you might ask him for a contact in a customer service department.
Also, he might appreciate it if you edited your post to remove his name & number.
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