Interest, closing cost, PMI, and points?

Bank 1: A credit has a promotion of 6.125 fixed for 30 years with “no closing cost” with no points. There’s a fine print where you pay for Title insurance, Lien insurance, recording charges, document tax, city %26amp; county tax, application fee of 65 to be refunded later. They require PMI for 5% down. The program only waives processing fee, underwriting fee, credit report fee, appraisal fee, and tax service fee. Bank 2: Another bank claims to pay all of the custom fees: Title insurance, application fee, document tax, survey fee, processing fee, underwriting fee, credit report fee, appraisal fee, ALSO NO PMI. Catch 22: Their rate is 6.65% to the most qualified client with no point. I asked the mortgage specialist why the rate is high and he said they have to make up for the fees they are paying on our behalf especially the PMI, but I can buy down the points. Can you please advise me which one seems better? I personally think not having the no PMI make the latter one better, but i%26#039;m no expert

Interest, closing cost, PMI, and points?apply for a loan

Personally without seeing all the information I see the first one as better. The reason being is that as of JAN 1 of this year, PMI is tax deductable. Your payments might be close on both of them, but your PMI will fall off, your rate wont change. Usually after a year, if you submit an appraisal, they will take your appraised value over sales price and remove your PMI (assuming your LTV is below 80%). They will never lower your interest rate.

From limited information I would take the first deal.

Interest, closing cost, PMI, and points?

loan

You would need to determine what the PMI rate is (what you would pay monthly), and then calculate that yearly vs the rate you are paying on the second loan (monthly payment at the higher interest rate. Since you provided no %26quot;base%26quot; number of the loan, it is impossible to determine which is the LONG TERM better rate.

Points however equal a percentage of the loan. 2 points on a 100K loan is 2000 dollars. You need to determine if paying points tolower your interest rate is worth the additional cash outlay or increased loan amount.|||I could probally do a 80/20 type loan and get you a payment better and no PMI|||WRONG.

PMI is now tax deductible, first of all (unless you make more than $100K/year).

PMI can also be dropped in as little as 2 years. Did you ask Bank #2 what happens to your high interest rate once you reach a 20% equity position? If you have PMI, it can be dropped. They won%26#039;t drop your rate though.

So, unless you%26#039;re in the home for 3 years or less, Bank #2 is likely to be the more expensive option.

And instead of shopping online from Ditech and Bank of America, perhaps you should meet face to face with a real live loan officer, not some glorified phone clerk who has no real idea of how mortgages really work.|||You would need to figure what you payment would be on each one of the loans. Chances are with out the PMI and with a little higher interest rate you payment would be about the same but with out the closing costs. So I would say that would be the better loan. If there is any way to get around PMI, I always recommend doing that.|||the first choice just by looking at the rate and no point. it is a no brainer.|||To really know what the rate is you must look to the APR (the annual percentage rate) By law that figure should be included in the interest rate quote. That will show you your real cost. There are so many ways that people can present a loan to try to make one seem better than another when the truth is they both will end up about the same. There are no fee loans, lower interest rates and so on but the truth there is an expectation to make a certain amount off the loan and that amount will be there no matter how it is presented. The amount they expect to make off the loan can be set by the company then the agent may try to pad the costs to make more.

You have a hint of that when you asked for the lower rate and were told that you could buy down the rate.

There are certain costs that must be covered by the lender then a certain amount of padding that can be unnecessary. It is like buying a new car that adds fees that are profit only and have no real bearing on the cost/profit a dealer should make according to the factory suggested retail price. For instance dealer preparation... a bogus charge. Scotchguard seats and carpet $300.00. You can buy a can of Scotchguard for 8 or 9 dollars.

The point I am trying to make is it seems like that both parties are trying to get your loan by slightly deceptive means. It also seems that the rates quoted might be a little high and padding by both agents.

Just when you thought you were halfway there in your loan decision. Don%26#039;t you think your gut was telling you somrthing when you posted your question here? Do you feel that you are asking for a choice between two questionable loans?

If you would like I could give you a free consultation. You will get a rate quote that isn%26#039;t full of game playing with no charge or obligation.