Lender paid mortgage insurance......any opinions?

We were going to refinance too...but  DH said he did the math and the closing costs make the payement not much different and the difference isn't worth it. Our original rate was 6.37%

Wish I could be more help or had read this earlier so I could ask him! I'll see if I can catch him tomorrow...do you mind if I email the info to him at work sans names and such...just the numbers? He could also ask his friend in mortgage lending...he'll  be honest, I'm pretty sure, lol.

I don't mind at all.  You can just send him the link if that is easiest.  I did update my current rate info this morning in the original post.  I am about to work on the math too....sometimes even when the interest rate will be lower it still won't be enough of a difference but based on his calculation it will potentially save me up to almost $150 a month which I can apply to principal each month or pay less later when we have kids and could use the money.  My friend told me he won't charge me discount/origination fees or any of the stuff he can control so that helps....I need to call my uncle as well since he is also a mortgage broker. 

Thanks Gina!  If he wants more info PM and I will send you specifics on our balance etc.  In doing research last night it sounds like a good deal, I just want to make sure it is a smart financial move and I am not getting into something that has obvious disadvantages that I could avoid. 

I'll letcha know what I find out!

You know Gina...the more I look at this and take all factors into consideration, I am not sure it is really worth it to us either.....I am realizing that part of that difference in payment is in escrow which won't really bring the principal payment down much...maybe $50.  Our taxes are still being escrowed at $1200 higher than they are until this summer when they do an account analysis.  Also, I thought our rate was much higher but it seems it really isn't. 

Here's what dh said...remember he is a conservative banker type...lol...but that's helped us out so far!

"Lender paid mortgage insurance (LPMI) is just PMI that is being paid through a higher interest rate.  Where borrower paid mortgage insurance (BPMI) is paid directly by the borrower.  In reality the borrower is paying for it one way or the other.
 
I would think the LPMI would be ok if they are planning on refinancing or moving again at some point.  Otherwise I think that BPMI is actually a better deal.  Once the loan falls below 80% LTV the Borrower can cancel BPMI; however, with LPMI the Borrower is stuck with the higher interest rate for the life of the loan.
 
Personally, if your friend is capable of making her payments right now.  I would not recommend refinancing.  They are going to actually increase the amount they owe on their house by financing the closing cost, and they are going to add 1.5 years on to the length of their mortgage.  Sure she might not be there 30 more years, but she is going build equity slower by increasing the outstanding amount and increasing the tenor of the loan.  It just doesn't seem worth it to decrease the payment by $100 a month.  Of course if that is difference between making the payment and not making the payment it is a good deal."

Thanks Gina!  That just confirms to me that we are probably better off to stay put for now.  He made a lot of REALLY good points and that is exactly what I was looking for!  And the decrease in payment won't even be $100 once I figured out part of that difference was taxes.  It would be closer to $50.  I am somewhat conservative when it comes to this stuff as well so I see eye to eye with what he said.  We are making our payments just fine and actually paying extra on principal each month.  Tell hubby I said thanks for his input! 

rwbeagles

I would think the LPMI would be ok if they are planning on refinancing or moving again at some point.  Otherwise I think that BPMI is actually a better deal.  Once the loan falls below 80% LTV the Borrower can cancel BPMI; however, with LPMI the Borrower is stuck with the higher interest rate for the life of the loan.

That's really good information to know and I wonder how many people don't realize this. We don't pay PMI now but when I met my husband, he was paying it on the house he owned. Prices had risen substantially and he had more than 20% equity after only a few years in the house and was able to cancel the PMI. Having to pay it for the life of the loan would definitely be a deal breaker for me.

That was one of the points I thought was really good too....that would make it a deal breaker for me b/c likely we are not far from having 20% equity in ours with all of the improvements have done and still plan to do and the area we live in.  That isn't even talking about the equity we are getting by paying down our principal.  That was a disadvantage I was not aware of and am glad I know about now!

Hmmm my dh will love all this stroking of his financial brain LOL. He does know his stuff tho...I am glad there was info of general use....I'll pass on the strokes LOL!

My pee brain has trouble with some of this stuff but he did explain it well if I can even understand it mwah ha ha!

rwbeagles

My pee brain has trouble with some of this stuff but he did explain it well if I can even understand it mwah ha ha!

He explained it perfectly, so feel free to pass on the strokes and appreciation and be sure to mention that this isn't just a fun forum but educational as well

Oh, and could you ask him if he has any stock tips other than buy low and sell high