HELP - 2 appraisals - which lender to refinance mortgage

[ChicAndFabulous]

I was shopping lenders to refinance my mortgage. Everything really relied on how the appraisal came back for the LTV and how much MI I could be paying. One lender quickly told me that because so much relied on the appraisal, to go ahead and order it and if it came back too low and it didn't make sense to refinance, he would eat the cost. I agreed. It came back to $371,000. I'm seeking a loan of around $311. I know I would still have a bit of MI to pay, around $80/mo, but I'm currently paying $300/mo of MI, so I was happy about lowering that. My current interest rate is 4.75%, and this lender was offering me 3.875%

But then, another lender offered me 3.675%, but we just got appraisal back and it came in super low at $350,000. That puts my LTV at 88.8%! Obviously, I will be paying much more MI, but lender is trying to go back to appraiser and get it adjusted a bit. Not sure if the appraisal will change much. Lender is also saying that he will do as much as he can to keep me from going to another lender. Not sure how. Didn't completely understand my options because I was so deflated with the news. Something about the mortgage company paying the MI up front for a year or something?!

Has anyone had experience with this? Should I take the slightly higher rate with a higher appraisal value and pay only $80/mo of MI? Or take the lower rate of 3.675% of MI and pay higher MI every month? I do NOT want to bring cash to closing to get my LTV to 80% or 85% in either situation. I'm stressed and confused. Which way to go makes more sense? I'm so overwhelmed that I can barely process this! Help! Any feedback is appreciated. The good news is my MI and my interest rate will drop significantly in both situations. Thanks in advance

[VALoanMaster]

Did you ask the first lender if they could match the rate?

[ChicAndFabulous]

Yes I did, but the rates had increased and were only going higher. And he had already had me soft-locked.

[Anonymous]

Ok I busted out the calculator on this one. I may be slightly off, but you will get the idea. Remember, interest is tax deductible - PMI is not.

If you go with the 3.875 you will be done with PMI in July 2018ish. 

If you go with the 3.675 you will be done with PMI in December 2021ish.

That's a gap of 41 months - about.

If you went 3.875 you would have spent an additional  2,050 on interest, but saved 3,280 on PMI. To make up that difference, you would have to hold the 3.675 loan for another 5 years 6 months. You wouldn't break even on the savings in interest until 2026.

[Anonymous]

FWIW - Interest difference between 3.675 and 3.875 on a 311k loan is about $50 a month.

[ChicAndFabulous]

Great point about interest being tax deductible!!! I wasn't even considering that. And all of this info is SUPER helpful!! Thank you, thank you!!! Definitely helps me figure out what I want to do. Thanks for taking the time to calculate it out! Appreciate it