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In the process of refinancing a property, currently do not pay PMI and we're 80% in the process, almost ready to closing. Loan agency just got the appriasal and they are requiring PMI now. Does anyone know if there are there any penalties if I just walk away and not close (and get a better lender)?
I mean I haven't signed anything aside from the loan application, good faith estimate, tax disclosures and permitted the appraisal...
In the process of refinancing a property, currently do not pay PMI and we're 80% in the process, almost ready to closing. Loan agency just got the appriasal and they are requiring PMI now. Does anyone know if there are there any penalties if I just walk away and not close (and get a better lender)?
I mean I haven't signed anything aside from the loan application, good faith estimate, tax disclosures and permitted the appraisal...
Normally there aren't any penalties - you're out whatever you paid for the appraisal, and possibly an "application fee" if you paid one.
Thanks! Makes sense. I forgot about the app fee (though the appraisal just went through, so there's a fee since it happened). I figured nothing is legal until one goes to closing.
Some back story as this is all becoming funny business to me: went through a credit union for refinancing. They gave me a good rate (4.5), which is almost 1.25 points better than my existing. Bit high on the closing costs, but I've been with this union for ages. Break even in a year. This is on a $560k property and I put around $150k remodeling into it (SoCal area) one of the best looking houses on the block, though sq ft in the middle range. They thought I would have no problem breezing though on a conforming loan at 440k, with excellent credit. Problem is the SoCal area is so depressed, I have a foreclosure that sold behind me in the last year and one that was reduce/sold down the road...all big homes.
Now the loan rep emails me saying the house appraised at 515k and I'm 5.75% over so I need PMI 30. He says he will ask the manager for a waiver/exemption. Then he emails back and suggests I provide a downpayment (25K) to get the loan to 417k 30fix loan, same closing costs. I'm now annoyed that to save a couple of hundred bucks in a market that wants you to refinance that this guy is asking me to ante up 25K or PMI when they originally made it looks like this was an easy deal.
You can get out without a problem and only be out the closing costs. As far as the whole PMI issue and getting another lender, if you refinance you are going to be stuck with the PMI because of the appraisal. The Appraisal isn't done by the lender, so its not like if you go elsewhere you won't be dealing with PMI issues, because you are still going to be dealing with PMI
I work in the industry, and actually have a deal potentially similar to this. Its very early in the process, and haven't had an appraisal done yet, but currently has no PMI but values dropped and we can tell the value is going to be extremely tight. In this case we know that he value could be an issue prior to the appraisal (have discussed it, and she is leaning towards paying down the mortgage if need be to get under 80% LTV), however in some cases you could have no clue the value in't going to be there until the appraisal is ordered and done with.
It doesn't seem that the loan rep was playing games or funny business, it just seems that the value just didn't come in. In most cases while giving some type of pre-approval prior to the appraisal, the lender will base it off what the client believes the value is. In some cases a lender can do a general search to perhaps get a feel for where the value could be, but they aren't going to have the same tools as an appraiser would so its not going to be as accurate, especially in this market.
thanks, I figured we're going have to address the PMI issue, but surprised that the reps didn't give us a recommendation if we were going to pass LTV. He assumed 'everything will be fine' since we put so much equity in the home from improvements w/no concerns about the appraisal. Talk about false security--we're only 5% above LTV.
We went through the process: filled out the application, went through appraisal, and now I'm going to cancel....another reason: the service was not so great as well, they were pretty rude the last 2 weeks. Hopefully I'll just be out a few hundred bucks on the appraisal (and not the entire closing costs), which is rather high now looking at what others are offering.
thanks, I figured we're going have to address the PMI issue, but surprised that the reps didn't give us a recommendation if we were going to pass LTV. He assumed 'everything will be fine' since we put so much equity in the home from improvements w/no concerns about the appraisal. Talk about false security--we're only 5% above LTV.
We went through the process: filled out the application, went through appraisal, and now I'm going to cancel....another reason: the service was not so great as well, they were pretty rude the last 2 weeks. Hopefully I'll just be out a few hundred bucks on the appraisal (and not the entire closing costs), which is rather high now looking at what others are offering.
One thing to keep in mind when comparing closing costs, is to compare apples to apples, make sure you are comparing the bank fees. Other fees such as title (which will depend on the title company you pick), taxes, etc will wind up being the same no matter who you go with, but the figures could differ on the initial disclosures, so you always want to make sure you are comparing the bank fees on one to the bank fees to the other.
You can still get a great rate if you can find a lender that will offer a second, for a cltv of 95%.
Banks are out there offering 2nds, you just have to do some digging. (We offer them in the Mid-Atlantic region)
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