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There are really some nice people to help out there!!
Yes simcity, my credit was bad when making the purchase. Right about the 600 range. I was one of those people that found out just before hitting the closing table that my payment would be extremely high, w/the PMI, not originally quoted. I was already out of my apartment and ready to move in at that time, still should have walked away. Live & Learn!
Dave, although with the info simcity found, I guess it's probably legit (the amount they charge). I kindly appreciate your suggestions and I'm still going to send the letters-- it may be a shot in the dark, but it may pay off huge if something is worked out. I have printed all the info. and it's so appreciated! I'll have to send you guys gift certificates to dinner if the advice pans out! Pretty cheap legal advice!
Monthly PMI payment: Monthly cost of Principal Mortgage insurance (PMI). For loans secured with less than 20% down, PMI is estimated at 0.5% of your loan balance each year. Monthly PMI is calculated by multiplying your starting loan balance by this percent and dividing by 12. When your loan balance exceeds 20% of the original purchase price, your PMI payment drops to zero.
Source: Experian National Score Index - U.S. Average Credit Score Rankings
Using the above calculation based on the “National Index”, you should be paying $715 per year in PMI, which is $59.58 monthly. I see what the problem was. Your lender made an error (or a deliberate scam) in calculating your PMI. They multiplied your loan balance by 5.0% instead of 0.5%, which resulted in a PMI that is 10x what the correct amount should have been.
$143k on a 30 year amortization @ 7.25% originating in 2003, your loan balance will be below 80% of the original purchase price in the year 2016:Mortgage calculator: Bankrate.com
If your let the bank have their way, you will be throwing away another $48,120 in PMI and $73,716 in additional interest before they drop your $501.25 per month PMI. That’s at a total cost of $263,328 to have $28,600 in equity (from 2003 to 2016), assuming your property’s value stays flat at $143k and does NOT lose value by 2016.
This is why I only do 15 year fixed mortgages now, as I sorta learned the hardway too. For my primary residence, I was on a 30 year fixed @ 8.25% back in 2001, but when rates fell I refinanced to 4.5% fixed on 15 year. This way you pay more to principle than to interest right off the bat (1st month's payment applies 51% to principle). Fast forward 5 years later to 2008, and now 63.5% of my monthly payment goes to principle, and only 36.5% is interest. My monthly payments are actually lower on a 15 year than they were on the 30 year, because of the lower interest rate.
So, if you could refi to a 15 year fixed I bet your monthly payment would be significantly LOWER than they are now, even with a PMI (assuming they use the correct cacluation of 0.5% of the loan amount). Just review your next loan carefully, I'm pretty sure you won't let this mistake happen to you again.
Do what you can to repair your credit in the meantime, but omitting your PMI would inevitably result in foreclosure as you wouldn’t be meeting the monthly payments in your loan agreement.
if your correct, and the PMI is mis-calculated in error.. The OP wants to call and get this fixed, to get a refund of the overpayment..
At $500 per month, this is way off because on a $110K mortgage, PMI for us would have been about $75 per month, if we didnt put 20% down..
If you have to, sell the house and rent a modest apartment until you save up enough for a down payment. You can't afford to own a home right now.
Yes, you're are absolutely right!!!! Although I was given false promises from my mortgage broker: "PMI automatically drops after a year or two and you can use the market increase", it still was foolish. $30,000.00 later in PMI, I'm sick of paying for my mistake. We are putting it on the market this week (2nd try), I pray this time it goes!
OP said taxes and insurance was impounded,he would have to look at how much of the impound are taxes,how much is insurance,how much is PMI,but on 143k with 7.25% interest actual P&I should be about $1195.00 per month.what is the tax Rate in WI and Insurance Rate?
Wow, $500 PMI for $143,000 loan. This is far far off.
I bought my first house in Nov 2004 for the loan of $230,000 (zero down) with the interest of 5.75%, 30 years loan. I paid PMI $200/month. Seven month later I refinanced so I didn't have to pay PMI anymore. Eventhough was only $200/month, I still feel throwing my money away.
Would be curious as well as to how this turns out. If the lender indeed overcharged him in error, don't they owe him some form of interest? I would demand that as well. OP, let us know what happens!
Does anyone know the answer to question: What would happen if I stop paying PMI and just pay the other portion of mortgage? Any legal advice?
As far as I know the lender will apply the payment amount to the interest/principle first and then cover the rest. How does it work with PMI?
Mine is $205 and I am trying to cancel it with CountryWide with no success.
Thank you.
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You're absolutely right!
