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Old 05-18-2009, 11:57 AM
 
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Just to clarify - it is a conventional loan, not FHA. Also the loan is from a local credit union and they do not sell their mortgages to Fannie, Freddie, etc. We have an excellent credit history and this same credit union has held the mortgage on our previous home for the last 6 yrs with a perfect payment history.Yes, it is perfectly clear that the mortgage lender would prefer I pay PMI and make more money on me, but PMI or not, they will certainly not be losing any money on us. Looking at the Good Faith estimate, it seems they will make 10s of thousands of dollars on us over the next several years in regular interest alone. I do not begrude them the profit.However, the lender's criteria for refi without PMI is 20% equity in the home as per an appraisal by an approved appraiser. Seems I have that. I am very happy that we have gotten such a good deal on the house; however, I don't want to pay $78 dollars "extra" every month for PMI for more than 8 yrs (that's when we reach 78% LTV and it automatically drops off) because I decided to "just relax" and not do my homework.
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Old 05-18-2009, 01:38 PM
 
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You did your homework but in this case there is nothing more you can do, unless you can come up with 20% at closing.
How did you get the $1090 cost to refi?
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Old 05-18-2009, 01:52 PM
 
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The lender does does NOT have to sell mortgages to Fannie & Freddie to want the highest rating in the secondary mortgage market. The world of "mortgage back securities" is different than it was a short time ago, but the MAJORITY of mortgages are still "made liquid" through a process of originating lenders building confidence in the quality of their underwriting.

Even if a lender were to keep a conventional mortgage in their 'portfolio' (which is pretty unusual) they STILL would want to hold it to the same standards as mortgages destined for the second market so they would have the regulatory check boxes ticked and the flexibility to market it through the secondary market at some point in the future. The lender could not really come back to you and say "the loan that we gave you w/o PMI now needs PMI added on now for us to be able to make it more liquid" if they already have an agreement (and the lien on the collateral) for a different set of term...

You are operating under an assumption of "refi will remove PMI" that was true in the past but simply is not standard practice in the DECLINING real estate market...
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Old 05-19-2009, 08:33 AM
 
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$1090 is their standard loan application fee on both purchase and refi loans. This is actually our third time getting a mortgage from this credit union. Once on the purchase of our first home, once to refi that home because rates were lower, and now to purchase our second home. In the 6-7yrs we've had loans through them they've never sold our loan to another financial institution. I do understand though what chet is saying about wanting to have the high standard for their loans in case they ever need to sell them.

It does seem that there is nothing further I can do now - I'll re-evaluate in a year or so and perhaps explore refi then depending on what the market does.

Last edited by JenJen3574; 05-19-2009 at 08:51 AM..
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