So we're finally getting settled in our house, and the bills are rolling in! I had an interest only construction loan that is supposed to be converting to a conventional mortgage. This is fine and dandy, except for the sad fact that the bank only goes by the "appraised" value of the prints on the house back before it was even constructed. This just so happens to = the contract price of the house + the cost of the lot. They won't take it to consideration the 10,000 + additional we put in to stuff such as irrigation, landscape, lighting upgrades, etc. The down side is, since I don't have 20% equity based on the loan amount, I have to pay the dreaded PMI.
Or maybe not... Today I spoke with my mortgage broker (who got us the original loan) and we can get a slightly higher rate (5.75% instead of 5.625) but fixed for 30 years, and not have to pay PMI because we'd be taking out a 2nd mortgage for the amount we need to make up to have 80% equity on the first. The nice thing is, my payment goes down about $50 a month, and I am not throwing away any money on PMI! Based on a loan calculator, I'd be paying PMI on the current loan for about 8 years (unless the bank reappraised me for and gave me the necessary amount, which is probably somewhat likely if I did so in a year, but I doubt my PMI would go away, it would just reduce).
Anyway, I just thought I'd JE about it. I'm not 100% sure I'm going the re-finance amount yet, still have to review the numbers. Right now it seems like a better option-- unless I could somehow get my PMI removed on the other loan.