Home Buying in Philadelphia>Question Details

Kathryn Lesc…, Home Buyer in Montgomery County, PA

I'm pre-approved for a jumbo 30-yr conv, at lowest prevailing rate at lock-in, 5% down. FICO 810. Found Bucks twnhs $300k. Lender charging .94% PMI!

Asked by Kathryn Leschner, Montgomery County, PA Thu May 31, 2012

That seems awfully high. What PMI rate range should I expect to pay, as a top-tier, low-risk buyer (no debt, not even auto loan, plenty of cash to close, high FICO etc, 95% LTV)? My research shows .56-.67 for a good borrower like me.

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Answers

11
Hello Kathryn,

That does seem high but the Mortgage insurance company determines the reate and not the lender.
Why not do lender paid mortgage insurance which is a one time up front fee or financed into the rate. Not all lenders offer them so you might not have been provided with this option. I do these all the time and it works out to be significantly cheaper than the Monthly MI. I'd be happy to give you a quote over the phone.

Regards,
Alan Openshaw
Cornerstone Lending Inc
Southampton Pa 18966
215 953 0800
cell 267 992 7276
VOTED BEST IN BUCKS 2010
NMLS ID 143960
0 votes Thank Flag Link Thu May 31, 2012
Just a thought what did the GFE state or was this before you found the house. I would think the first thing to do is ask the lender why is the rate so high and then tell your agent that you want to shop the loan. Please keep in mind that you have time lines and you need to observe so the contract remains in force so the deposit is not lost.If I can be of any help Please feel free to call me at 215-725-5700 X49

Philip j. Cunningham Sr
V.I.P. Realty Corporation
7942 Bustleton Ave
Philadelphia,PA 19152
Web Reference: http://www.GreatPaRE.com
0 votes Thank Flag Link Thu May 31, 2012
Thank you for the advice, however I'm not at the GFE stage yet. I wanted to be armed with the pre-approval before heading out with a buyer's rep. So I'm not under contract yet but I'm aware of all the critical dates once I am. Guess I'll just have to wait it out till the flurry of closings has passed and my prospective lender can return my call. I'm just anxious to start looking at my chosen listings before I lose any more to other buyers, and so that I can lock in asap. Thanks again!
Flag Thu May 31, 2012
One on the issues that can increase the PMI cost is if the Townhouse you are looking at is a Condominium vs Homeowners Assoc or Fee simple.

Very few lender are doing 80/15/5's that I know of. There are a few that are doing 80/10/10's (this means-80% 1st Mtg (no PMI), 15% second Mtg and 5% downpayment) You pay market rate on the 1st Mtg, a higher rate and usually shorter term on the second Mtg and no PMI- it is cheaper than paying PMI.

I would also calculate a purchase price with your 5% down with PMI at your quoted rate then the same house at a 5% higher purchase price with 5% assist and 10% down. You are financing the same amount basically but with lower PMI cost.

Also, The amount of PMI coverage (insured benefit the lender receives should you default) can vary from lender to lender. So you may wish to shop arouind a bit.

Let me know if I can help as we have offices serving your area of interest.



Bob Weiss, ABR, CRS, GRI, CHMS.
Broker/Owner
Coldwell Banker Hearthside Realtors,
215-379-2002
215-776-1212 -Cell
0 votes Thank Flag Link Thu May 31, 2012
Thank you for all your answers.

Seems I muddied the waters by saying I was pre-approved for jumbo, but that was only to give you an idea of my excellent creditworthiness.

As for only 5% down, I was going to wait another year but since I'm able to buy in the range I'm looking at ($300-325k) at such low interest rates *now*, I'd prefer to stay at 5%, sending in add'l principal pmts each month, while balancing that with continued savings and living life. But I'd have MUCH more purchasing power (and more commission for the agents!) if the PMI rate were really lower than that outrageous .0094. So I'm hoping it was just a boilerplate rate estimate from whichever source they use. But, while waiting for my lender to get back to me, I had to post here to get an idea if I SHOULD expect it to be lower for a low-risk A+ borrower like me, since I'm running search queries for houses online now. I need to know my real purchasing power, or close to it, and the MI rate is a significant factor. I'm a numbers-cruncher, and I'm estimating my total payments (PITI/HOA/MI) with Excel formulas. (Hmmm, today being the last day of the month, I imagine my lender is swamped with closings today and tomorrow.)
0 votes Thank Flag Link Thu May 31, 2012
Hi, I am in NE Pa....wish I were in Philly to help you.
I was a lender (retired now) and to my knowledge....any mortgage with less than 20% down needs to pay for PMI ins....Great FICO but that doesn't carry the weight with PMI...PMI is to cover the 20% down minus your down money..Some will do 80/20 for you to try to eliminate the PMI. .I'm not sure they can still do that...check with your lender.
Good Luck
0 votes Thank Flag Link Thu May 31, 2012
Thank you, Andrea. However, I wasn't questioning the need for PMI. I understand what it is and how to avoid it. I was questioning the high rate I was being charged in light of my creditworthiness. I already asked about a piggyback (80/15) but they don't even offer 80/10 any more. Appreciate the response though!
Flag Thu May 31, 2012
If you wish to lower your PMI cost you can make an offer financing 90% and have the seller give you seller assist of 5% of the purchase price. That way your PMI cost is based on a 90 LTV not a 95 LTV. As stated previously, you should look at the possibility of a single payment PMI. This can also be done with seller assist.

Additionally, at $300,000 purchase price-it is NOT a Jumbo loan therefore you should be getting a better rate (Non-Jumbo-conforming).

You may wish to have your lender review your package again and let you know where you can save.

Good Luck!

Bob Weiss, ABR, CRS, GRI, CHMS.
Broker/Owner
Coldwell Banker Hearthside Realtors,
215-379-2002
215-776-1212 -Cell
0 votes Thank Flag Link Thu May 31, 2012
It really depends.

Most lenders use standard PMI factors, but it depends on the type of loan and bank. As stated already in the answer below, this should be a Conforming loan; not a Jumbo.

The 5% down is what's killing you. If you put more down, the PMI will be lower. Since you said that you have plenty of cash to close, you may even want to consider putting your closing cost money toward your down payment and asking the seller to pay for your closing costs.

That will lower your PMI factor and also lessen the amount of your mortgage. Thus, lowering your overall monthly payment.

Please let me know if you have any more questions.

Best,
Tim

Timothy M. Garrity | REALTOR®
U S Spaces, Inc. | #RS314897
267-879-2716 - Call & Text
PhillyUrbanLiving@gmail.com
PhillyUrbanLiving.com
0 votes Thank Flag Link Thu May 31, 2012
I think you are accurate in your monthy MI research. That is high for jumbo. But you are looking at a $300,000 home? That is below jumbo, which would be approx. .59, or .79 above $417,000.

Have you considered a single premium? this video explains it a bit. Feel free to call me to discuss. Best of luck to you!

http://realestatemarbles.com/jscordova/2011/05/07/can-mi-sel…

Joseph S. Cordova NMLS# 146855
jcordova@eveshammortgage.com
Evesham Mortgage, LLC
22 South Maple Avenue
Marlton, NJ 08053
office: (856) 985-9944 ext. 103
direct fax: (206) 333-0946
cell: (856) 304-2381
Web Reference: http://www.joecordova.com
0 votes Thank Flag Link Thu May 31, 2012
Hi Kathryn,

I'll defer to the mortgage lenders that will answer this question, but just point out that I have and have had buyers that are able to pay another $5k(ballpark) to waive the PMI for the life of the loan. Well worth the extra closing costs. Any questions or need a lender to speak to, give me a call.

Warmest Regards,

Kristoffer Lehman, ABR
Keller Williams Real Estate
Licensed in PA - #RS299648
Office # 215-646-2900
Cell # 267-254-4755
Fax: 800-686-7534 or 267-419-2974
Email: klehman@kw.com
Web: http://www.KrisLehmanHomes.com
FOCUS + INTENSITY = RESULTS
Referrals are the heart of my business.

A personal referral is the best compliment you can give me. Have friends or family outside PA? I can find them a great agent. Thank you!

Each office is independently owned and operated.
0 votes Thank Flag Link Thu May 31, 2012
Lenders can't charge you a PMI if you put a down payment of 20% down. Is that the case with you?

Karen Palmer
Keller Williams
215-828-2729
0 votes Thank Flag Link Thu May 31, 2012
You are correct. MI Factor should be in that .56-.67 range. One other question. Why a jumbo loan when the sales price is only $300k. I would be happy to provide a second opinion to make sure you are getting a good deal

Joe Cafiero
VP of Mortgage Lending
Guaranteed Rate Inc
547 Pottstown Pike
Chester Springs, PA 19425
email: joe.cafiero@guaranteedrate.com
ph: 610 594-6611
cell: 914 456-0677
0 votes Thank Flag Link Thu May 31, 2012
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