refi?

That's why I asked. I was curious how it was done there. BTW, we call it Canola now, for the children.

then HOW BERKELEYING COME there were all those defaults and the banks didn't collect from the PMI companies? Because it was all really just a scam to suck another hundred bucks a month out of the peons?

I'd LOVE to hear an answer to this. We refi'd when we bought our business. The berkeleyers that did the refi said "Yeah, you'll have to have PMI, but you should be able to drop it in a couple years." Guess how that worked out?

But yeah, the whole "why didn't PMI 'bail out' all these 'high risk' people" has crossed my mind more than once.

Sorry to threadjack: JG Obviously carguy knows his E36 M3. I will add that Clark Howard was talking to a guy on the radio the other day who was right around 6%, and said, "Even if you have to bring a little cash to the table, go for it." Rates can't get much lower, but I can see them getting a lot higher soon.

It'll be interesting to see if the panic over the debt ceiling/credit rating will effectively have an increase on large, financed purchases like cars & homes.

Oh, and still no Scott Lear satchel pics. WTF?

Zomby woof wrote: OK, let me tell you the real point. Our system is a lot different than yours (that's what I suspected, that's why I asked), and you guys are getting screwed even worse than we are. The banks gave us the best deal, that's why we shopped them, and not the brokers, and mortgage companies. It's a very competitive market here, and most of the fees, charges and interest rates are negotiable. Renewal fees are a good example. After your term is up, there is a fee to renew the mortgage, but nobody actually pays it.

Decided to check back in one more time before I walked out the door. Good thing I did.

No, the system is the same nationwide. It's a national system and not a regional system. The actual closing methodology (attorney vs. title company) varies, but not the mortgage system itself. it's the same in NY, Cali, Nebraska, Fla, or wherever.

Closing costs are not negotiable because they are government mandated and not controlled by the lender. Well the fee isn't mandated but the requirement for a certain service is. The actual cost for the service will vary by area of the country, but the person furnishing the service isn't going to work for free.

So if you think someone is negotiating a fee they aren't, they are simply transferring it from one side of the equation to the other. That's my big beef with the big banks they don't explain things and people get burned.

Things like your scenario are what gives rise to new laws and new agencies like the CFPB.

As far as renewal fees being waived (and I'm presuming you are referring to adjustment periods on the ARMS) that isn't a closing cost and that too might have been covered by charging you too much initially.

And the MI companies did pay off. Many, many went out of business paying off.

carguy123 wrote: I could write a novel on the changes that will happen if Frannie should disappear or come totally under the Govt.'s thumb but let me just say that virtually every standard thing you know about mortgages came about due to Frannie and will disappear along with Frannie.

You should write that book now. Double win: people get educated, you get paid.

carguy123 wrote: Decided to check back in one more time before I walked out the door. Good thing I did.

Should have checked a little better. I'm in Canada. I was asking because I wanted to know how your system worked.

Dr. Hess wrote: CG, on this whole MI/PMI thing: If I understand it correctly, you are paying for the bank's insurance so that if you default, then the bank gets paid for the loan by the MI company. Is that right? If that's the case, then HOW BERKELEYING COME there were all those defaults and the banks didn't collect from the PMI companies? Because it was all really just a scam to suck another hundred bucks a month out of the peons?

It is the case - you are paying for the bank's insurance. What's happening is that the PMI companies are pushing back as hard as possible on the bad loans, arguing wherever possible that they weren't originated correctly. Sometimes they win, sometimes they don't, but the argument takes a good long time to resolve.

I’d like to add that when performing the trade off analysis between keeping your existing loan and refinancing to get a lower interest rate, you need to consider the tax consequences. You’re only going to realize a portion of the difference in the interest payment. Most homeowners are in the 25% tax bracket ($34,501 – $83,600 for singles & $69,001 - $139,350 for couples filing jointly). So, if you reduce your interest payment by $12,000 per year for instance, you’re only going to realize $9,000 in post tax savings due to the fact that your AGI (adjusted gross income) will be higher. As a result, your breakeven point will actually be about 33% longer than you’d think if you didn’t take the tax consequences into consideration.

Yes, for the super egg heads on the board, I didn’t get into “last dollar earned” calculations for purposes of simplicity and because, in most cases it either won’t matter at all or very little.

You also didn't take into account (ha-ha) the standard deduction versus itemized deductions.