Question by cyb_at: I’m closing on my mortgage refinance tomorrow.What happens if I don’t sign the papers?
My current mortgage has a PMI of . With the refinanced mortgage, the bank is more than doubling the PMI to 0. The refinanced amount is significantly lower (5,000) than the original mortgage loan (5,000). I am trying to contact the bank to understand why the PMI has been increased and it has been in vain. I have to sign the papers for closing tomorrow and I think if the bank does not bring the PMI down to or close, then I will not sign the papers. What can happen if I do this? What else can I do?
Thanks a lot in advance!
I also took 0.5 pt which cost me 5. If I were to walk away do I still have to pay the point fees and the attorney fees for both sides? My attorney represents the bank too.
Yes I still save 0 per month from my current mortgage. But if the PMI was kept as the original then I would save about 0 per month, which is significant.
The previous LTV was 98.5% and the current LTV is about 94.7%. Does that drop of 3.8% account for doubling the PMI? Is there a way to have the PMI reduced?
Best answer:
Answer by Tubby Rower
You will have to pay out of pocket a few of the expenses that usually get charged at closing. These expenses are things such as appraisal fee, credit reporting fees, loan application fee, etc. Other than that, you should be able to walk away.
As to why your PMI has gone up, the economy has taken a downturn and the banks are very reluctant to lend any money especially in mortgages where PMI is needed. As you may know, PMI is insurance for the banks paid by you. The insurance companies have raised their rates because they’ve been paying out claims.
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Well the bank is not in control of pmi rates. those premiums are going to a insurance company. Insurance rates change all the time so this is not unexpected. Especially given the big losses these mortgage insurers have taken. I am sure they have changed their pricing from previous years when defaults were a lot lower.
You have to factor in increase in PMI with reduction in interest rate to determine if refi is a good deal. PMI has to be considered part of your borrowing costs. So yes interest rate is going down but PMI is a little higher. Is it still a positive for you to refi?
Another thing to consider is your home’s value may have fallen. Has your loan to value ratio increased because of falling real estate prices? LTV % affects PMI rates.