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Quick mortgage insurance lesson anyone?

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Regular Contributor

Quick mortgage insurance lesson anyone?

So just got a very bad email from the LO today and I am hoping someone can help make sense of this for me, here is the LO's exact words.

 

Loan officer says that she has been battling mortgage Ins. Companies on my file and cannot seem to find one that will issue the certificate at a reasonable price. She says that they are wanting to increase the MI amount a lot due to derogatory entries on my credit. With that being said we need to flip your file back to FHA.

 

First - my mid mortgage credit score is 724, with no baddies on my file currently andits been that way since may 2015! I have had issues in the past, but have worked hard to clear all the ugly off my report since 2015

 

Second I thought that mortgage insurance pricing was based off of the LTV of the loan and credit score? Are there any other factors that I am unaware of? I am less than 15 days from closing and LO just now springs this on me.... mind you GFE were in the high 100's to low 200's

 

my deal: conventional with 5% down and purchase price of 319k - income 90k / yr. all mortgage scores in 720's... all input valued and welcomed..

 

Began my personal credit Renaissance April 2014 with scores I the 590's, thanks to all your experiences myfico - all mortgage scores in the 730's.
15 REPLIES 15
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Moderator Emerita

Re: Quick mortgage insurance lesson anyone?

That really sucks.  I know they underwrite for PMI and have seen some other borrowers turned down for PMI over the years when the mortgage co actually approved the loan. So they do have their own qualifying guidelines.  I don't know what they are at all. I spent a moment googling PMI guidelines and rates to see what comes up and here are a couple of links (lengthy - so get your glass of wine and relax a bit):

 

http://www.radian.biz/page?name=RatesAndGuidelinesNew

 

https://mortgageinsurance.genworth.com/RatesAndGuidelines/RateCards.aspx  (guidelines are in the left column)

 

https://www.essent.us/rates-guidelines

 

Or you can ask your LO to check with the u/w to see if there is anything you can do to compensate - higher downpayment, etc.  Just throwing that out there. 

 

Hopefully Shane or Dallas or one of the others can jump in with another solution.

 

If you do end up with FHA (and that is not a bad option especially since there has been that new reduction in MIP beginning Jan 27.). look at the bright side - lower payment and FHA is an automatic approval for MIP - not one that you qualify for separately like PMI. 

Message 2 of 16
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Regular Contributor

Re: Quick mortgage insurance lesson anyone?

Thanks StartingOver10, I just can't believe this is happening, this late in the game. Really makes me the LO dropped the ball or is playing games. I cannot do FHA, and don't want PMI permanently on my loan.  I may ask the builder to move out the closing to see what can be done.

Began my personal credit Renaissance April 2014 with scores I the 590's, thanks to all your experiences myfico - all mortgage scores in the 730's.
Message 3 of 16
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Moderator Emerita

Re: Quick mortgage insurance lesson anyone?

It is completely out of the LO's control.  I noticed in at least one of those links that the guidelines were updated 12/19/16 - I don't know if any of the updates impacted your PMI approval or not.  The u/w will know more. 

Message 4 of 16
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Valued Contributor

Re: Quick mortgage insurance lesson anyone?


@Sylvrbak wrote:

Thanks StartingOver10, I just can't believe this is happening, this late in the game. Really makes me the LO dropped the ball or is playing games. I cannot do FHA, and don't want PMI permanently on my loan.  I may ask the builder to move out the closing to see what can be done.


Why can't you do FHA? This is totally out of the LO's control. I've had borrowers get flat out denied for PMI by the insurance companies even after we had approved the mortgage.

 

What derogatory hits do you have on your credit?

 

How much money are you putting down? The FHA MI is going down starting 1/27/2017 so you may end up with an overall lower monthly payment. In addition, if you're putting 10% or more down, FHA only requires the MI for 11 years.

 

 

 

 

 

 

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 5 of 16
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Community Leader
Super Contributor

Re: Quick mortgage insurance lesson anyone?

The comments from the LO seem a bit odd.  First, if the PMI company had issues with your file then they would've said what the issues were.  You and the LO could come up with a game plan to address them.  Second, I've had boderline credit files in the past for conventional, all have been approved for PMI, but not one was "countered" back at higher PMI rates for them to insure... so I find it hard to believe that was the case.  If it was the case, then what is the new PMI rate?  The LO should've told you "instead of a .73 PMI rate it'll instead be ____".  Perhaps there was an issue with the DTI or something else that not only doesn't qualify you for PMI, but doesn't allow you to qualify for conventional.  Definitely more information is needed from your LO.

Helping people with mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Orange County, CA and lending in all 50 states
Message 6 of 16
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Regular Contributor

Re: Quick mortgage insurance lesson anyone?

I have nothing derogatory on my file, which is why I am confused. Initially when I began the build, I applied FHA with a 684 mid score, then worked to get my score into the 700's to go conventional after reaching those goals I asked her to work the deal on a conventional 5% down with 95% LTV, at that time PMI was quoted 200-210. We also looked at one time PMI which was quoted at around 8700.00. At this time there were no issues explained from her to move the file to conventional. As we set the closing date, she called me to tell me that AUS came back refer with caution and she stated that there was a dispute comment on one of my credit cards and she had me sign a doc so that she could get it removed. I signed the doc and once that was taken care of, the file was approved no issues. What makes me concerned is that I thought if agency approvals were approved no issue, the mortgage insurance company would abide by those guidelines. I have set up a meeting to discuss in detail because it all seems really funky. The underwriter did not apply any conditions and approved me last week, my income is strong my debt is relatively low.... DTI with house payment is 40-41% car and home and Amex bill. I can easily afford this home on my own at 319k, together me and the misses could easily own a 600k home just not needed. 

 

I am really hoping she made some kind of mistake and it can be fixed in the next 15 days. Although she wants me to flip to FHA, I feel like I have worked hard to have excellent credit and there should be nothing stopping this transaction at least in the way she is describing. 

Began my personal credit Renaissance April 2014 with scores I the 590's, thanks to all your experiences myfico - all mortgage scores in the 730's.
Message 7 of 16
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Community Leader
Super Contributor

Re: Quick mortgage insurance lesson anyone?


@Sylvrbak wrote:

I have nothing derogatory on my file, which is why I am confused. Initially when I began the build, I applied FHA with a 684 mid score, then worked to get my score into the 700's to go conventional after reaching those goals I asked her to work the deal on a conventional 5% down with 95% LTV, at that time PMI was quoted 200-210. We also looked at one time PMI which was quoted at around 8700.00. At this time there were no issues explained from her to move the file to conventional. As we set the closing date, she called me to tell me that AUS came back refer with caution and she stated that there was a dispute comment on one of my credit cards and she had me sign a doc so that she could get it removed. I signed the doc and once that was taken care of, the file was approved no issues. What makes me concerned is that I thought if agency approvals were approved no issue, the mortgage insurance company would abide by those guidelines. I have set up a meeting to discuss in detail because it all seems really funky. The underwriter did not apply any conditions and approved me last week, my income is strong my debt is relatively low.... DTI with house payment is 40-41% car and home and Amex bill. I can easily afford this home on my own at 319k, together me and the misses could easily own a 600k home just not needed. 

 

I am really hoping she made some kind of mistake and it can be fixed in the next 15 days. Although she wants me to flip to FHA, I feel like I have worked hard to have excellent credit and there should be nothing stopping this transaction at least in the way she is describing. 


Yes, that is typically the case.  I've spoken to several PMI companies who tell me they have no overlays, meaning if Fannie/Freddie's automated underwriting approves it, then they will too.  Hopefully you get some answers during your meeting.

Helping people with mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Orange County, CA and lending in all 50 states
Message 8 of 16
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Regular Contributor

Re: Quick mortgage insurance lesson anyone?

Thanks Shane, I am not a loan person, so even though I think it's not right it helps to get you all perspective. During my rant I forgot to share the updated PMI costs. Which went from 200-210 to 360-500. You would think I was going conventional with a 640 score and 3% conventional... lol

 

i will try and maintain my calm and review every document available so as to think my way through this, hopefully all will be well. Thanks everyone for your input, it is much appreciated.

Began my personal credit Renaissance April 2014 with scores I the 590's, thanks to all your experiences myfico - all mortgage scores in the 730's.
Message 9 of 16
Regular Contributor

Re: Quick mortgage insurance lesson anyone?

Sorry did not see the comment earlier VALoanMaster, it's not that I cant do FHA, it is that I do not wish to throw away 5300.00 at UFMIP and then be stuck with PMI for the life of the loan, especially if the mortgage rates continue to rise, refinancing to conventional is a dangerous bet at this point. If I'm in a conventional at closing, I just need to pay down principal and appreciate. In the community since I singed the contract back in May/June, values have all ready increased 30k and this is phase 1.

Began my personal credit Renaissance April 2014 with scores I the 590's, thanks to all your experiences myfico - all mortgage scores in the 730's.
Message 10 of 16
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