Home appraisal and home insurance

[thepurplethorn]

Thank you all for the replies!
Yes I spoke to the mortgage company and you are right we need to insure the house for the new cost of replacement (stated in the appraisal) , which is about 50% more from the old number. I realize we will get our escrow back
We were supposed to close today , but we cannot come up with another $2000 for the additional insurance until next Friday so we cannot close . The rate lock will expire early next week. I am not sure why we were not notified well in advance to budget for all that.

SmartMoney I know only P & I should be compared (old rate is 5.4 new rate is 3.6) , but I cannot help and think about taxes and insurance since that will be a bigger expense if we refi .... I am not sure it's worth it ... maybe In a very long run

[davebarnes]

Originally Posted by thepurplethorn

we cannot come up with another $2000 for the additional insurance

Additional $2K for HOMEOWNER's insurance?

[TimtheGuy]

Do you have mortgage insurance on your loan or do you have 20% equity in the property? If you don't have mortgage insurance you can waive the escrows and pay the taxes and insurance on your own. You won't have to bring that money to closing then. You could also just waive the insurance escrow and continue to escrow for just taxes.

[thepurplethorn]

Dave: the new premium that the insurance company is quoting us is 2000$/yr more than the old premium. The lender is requesting 11 months of escrow (insurance and taxes) at the time of closing , so we need to come up with another 2000$ at closing to cover the difference.

Tim: right now as of this moment - yes we have PMI (we are on an FHA loan too) with the new appraisal and the refi the PMI would be removed, because we have 20% market equity (not paid by us on the loan). We were told that the lender gave us better rate because they want the escrow kept with them , if we chose to do the escrow ourselves (which we wanted to do anyway) we will have a higher interest rate.
I am not sure that we can waive home insurance only from the escrow i guess I can ask them


Now they really want us to close so they are pushing us to approve the insurance change with the insurance company and only then they can give us the new fees sheet !??!?! grrr

So if the fees sheet is too high and we cannot afford the closing then we are stuck with high insurance and higher rate on the loan

[TimtheGuy]

Typically a .25 fee (a closing cost, not a rate increase). So if you have a $200k loan, there would be a $500 fee to not escrow. The typical fee is cut in half to .125 if you opt to not escrow for insurance, but keep the escrow for taxes.

See if they will eat the .125 fee.

[LOL_Whut]

Originally Posted by SmartMoney

It sounds like you may have been under insured on your old policy.

When considering if the refi makes sense, compare old P & I + PMI to new P & I + PMI. Leave taxes and insurance out of the equation.

Yep. Your bank did you a favor if they found out you were under insured. It may cost more to rebuild your house today than it would have when you originally bought.