? About Quicken Loans new product.....

[happyhome40]

I bought a house this time last year and used Quicken Loans as my mortgage company. When I pay my mortgage I put $100 extra to the principal. Doing ths I've brought my balance down about amost 3600. They called me last week and said they have a new loan product out that I qualify for that wipes out my pmi. My interest rate on my loan is 4.75, however with my pmi it's actually at 6 something. Of course I didn't know that when I originally obtained the loan, I thought it was 4.75 with the pmi. So with ths new loan, it supposedly wipes out the pmi and my rate would be 4.5. They said it would not be added to the back of the loan or anything like that. Has anyone heard of this? I'm leary because I know they have to make money somehow. 

Any thoughts are greatly appreciated,

Thanks in advance,

Happymom

[StartingOver10]

PMI is mortgage insurance.

Your LTV must have been over 80% when you took out the mortgage with them last year. It is probably still over 80% but the best way to find out for sure is to compare your actual loan balance with the current market value of your home.

If your LTV is lower than 80%, then refinace with someone other than Quicken. Since Quicken originated your loan last year it is highly unlikely that you are going to get an appraisal from them showing your current loan balance less than 80% unless you made large principal payments. Quicken has a vested interest in getting you to apply again (they make money on the application, the appraisal and the loan closing costs - even if those costs are rolled into the new loan).

Before you start down this road, contact your Realtor and get an idea of the actual value of your home.

[happyhome40]

Thing is, it's not. My LTV is nowhere near 80%. That's why I'm so curious about this.  They say that they'll pay all closing costs and costs involved and none of these will be rolled into the loan. I'm just  extremely skeptical that's why I haven't called them back.

[StartingOver10]

Weird that you would be paying PMI with a conventional loan under 80%. That is reason enough to check out another lender.

It is a good thing you are skeptical about the 'no cost' refinance. It doesn't sound right to me either unless they pay all your costs by giving you a higher rate. That's one possible way to cover the costs. Higher than the current market rate.

Hopefully Dallas or Shane will be able to pop in and give an explanation.

[Anonymous]

Probably trying to sell you on a LPMI (lender paid mortgage insurance)  You trade a higher rate to buy out mortgage insurance.   As rates are higher these companies who don't have referral business are getting more creative.  I would avoid them at all cost and check with someone that you are referred to by someone else.