I received two quotes from two different mortgage Copani?

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The first was of Quicken Loans and is a classic ready 80/20. First, to 6.3% to 7.8% Secound. Came the second quote is from Global Mortgage. 100% without PMI. The bank Charter One and the interest rate is 6.875%. I was told that its no way I could get such a loan without paying PMI. What is the law reguarding this? Which loan would you recommend? Thank you, Jesse Taber

7 Comments
  1. Reply
    Phoenix
    May 2, 2011 at 1:54 am

    Well, banks aren’t legally required to charge PMI, but it is certainly in their best interests to do so. Could there be closing costs that charge you a certain amount that would pay for PMI for the bank? There would have to be other stipulations in the loan that cover the bank.

  2. Reply
    Amanda H
    May 2, 2011 at 1:57 am

    There is no law regarding PMI. It’s simply an insurance that most banks require you to carry in order to insure themselves against losses.

    In my state Bank of America is doing their loans with no PMI and no closing costs, whatsoever.

    100% loan: 6.875% APR

    OR

    (.8 x 6.3) + (.2 x 7.8) = 6.6% overall

    They’re pretty closely matched. What you need to do is look at the terms. Are you paying down points on either loan? Are their prepayment penalties? Closing costs? Etc.

    I’d prefer the 100% mortgage simply becuase its simpler as far as payments, usually has lower closing costs (one set and not two) and if you choose to get an equity loan later, its easier becuase the equity loan is in 2nd position and not 3rd. However it will cost you a few bucks a month more, depending on your overall loan amount.

  3. Reply
    ratrace_72
    May 2, 2011 at 2:01 am

    The single 100% loan is good. 6.875% is good, is it a 30 year fixed? Is there a prepayment penalty? How many points will it cost?

    100% single loans and others can be had without MI, because in this case it is “Lender Paid MI”, which really means you are paying the Mortgage Insurance through a higher rate. Nonetheless if that’s a 30 year fixed, it’s a hell of a loan.

  4. Reply
    Destiny
    May 2, 2011 at 2:50 am

    FYI I wouldnt ever do the Quicken Loans thing again. They send your info out to tons of people ( not just quicken but any company like that) you’ll be getting tons of calls if you listed your number…but moving on. The 80/20 rates arent so bad and thats a way to avoid the insurance that you mention. banks usually require it for a loan more than 80% but you technically wont have that. you’ll get 100% financing in two loans and neither of them is over 80% of the loan amount. Seems like you have pretty ok credit…why dont you just go to your bank?

  5. Reply
    Kevin H
    May 2, 2011 at 3:39 am

    The second loan isnt a conforming loan and therefore PMI is not a requirement. I think your looking at close to the same end payment with either loan but cannot tell with the limited info given. I wont try and sell you a loan but you can e mail me to analyze both scenarios for you confidentially. Based upon whats shown here the second one would be likely better.

  6. Reply
    CA Mortgage Planner
    May 2, 2011 at 3:40 am

    Are those just rough numbers or are you actually approved at those rates? What is the better option depends on the amount on each of the loans. If you want a third quote, I can shop FOR you at 250+ banks for the best rates. Just give me a call or email!

  7. Reply
    Fancyface
    May 2, 2011 at 4:06 am

    Some Lenders pay your MI or finance it in. Confirm that the Lender isn’t just financing it in, but is actually paying it. In which case, yes, there are loan options that allow for 100% LTV with no PMI.

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