Dropping PMI with a higher interest rate

[Quynh-Chi Nguyen]

Hello

Need some advice about dropping PMI ($140). Quicken Loan called me and told me that they can can pay for my PMI because of my 820 credit score but my interest rate will be .5 higher. (My balance is not getting down to 80 or 78 percent rule yet)

I need to put down $500 deposit but will be returned upon closing. No other fees. They will pay for the appraisal. 

My current interest rate is 4.375%. The new interest rate would be 4.87%

Should I do it? They have been calling me day and night for this and I don't have time to think it through yet. 

Thanks 

Chi

[Upen Patel]

@Quynh-Chi Nguyen There is no free lunch. Instead of you paying the PMI (monthly) they will do a lump-sum payment and are charging you for it with the higher rate. So guess what, you are still paying the PMI. If you really want (and can afford it) you can always refi and do a upfront PMI payment and still get a lower rate.

With regards to a deposit. That's just dirty tactics. My understanding of the new TRID regulations was that NO fees can be collected until after the disclosure documents are sign. So Quicken might be running a muck with CFPB.

I would run away from Quicken and while you are at it report them to CFPB.

Upen Patel, Mortgage Banker

Federal NMLS# 1374243