Question about increase in mortgage

[robbob]

What is the name of your state? Massachusetts

Recently I received a notice from my mortgage company (Wells Fargo) regarding an increase in my mortgage. The corespondence informed me my payment would be increased by almost $200.00 beginning 10/1. The reason for this is a $1,200 increase in my property tax, an increase in my insurance, and a shortfall in my escrow account.
All of this seems to be legit, and I know this is wishful thinking, but is there any way to reduce this amount?
Also, I put less than 10% down on the house and pay P.M.I. I've owned the house almost a year and was wondering if I could get the house appraised and possibly get rid of the mortgage insurance. Can I get this done myself, or will Wells Fargo insist on their own appraiser? Typically, what would the charge for this be?

Thanks!
Rob

 

[gobonas99]

Rob - Welcome to the joys of home ownership.

Your total payment over the life of your mortgage WILL fluctuate from year to year. The P&I (principal and interest) portion of your payment will remain the same, but your escrow payment will change, as your taxes (and most likely your insurance) will change annually.

The only way I know of to reduce the amount of the monthly escrow payment is to make a lump sum payment into your escrow (ie when you received the notice from the mortgage company letting you know about the escrow shortfall, you should have paid it so you escrow payment didn't increase as much).

As for removing the PMI...my husband and I looked into this when we were looking to refinance earlier this year to get a super low rate. Most mortgage companies (and FHA) require you to carry PMI if you loan-to-value is more than 80% (is you owe more on the house than 80% of the value of the house). In our case, our house would have had to appraise for nearly $25,000 more than we paid for it in order to get down to an 80% LTV with a regular mortgage ($15k more if we were to take out a mortgage for 80% of the value of the house, and have the balance on a HELOC - which we didn't want to do because we only wanted one loan on the house). The cost for the appraisal would have been around $200 - which if the house didn't appraise high enough, we wouldn't have been able to remove the PMI...AND the higher appraisal/refinancing would have increased our assessed value, thus increasing our taxes - so our escrow payment probably wouldn't have changed much, anyway.

Hope that helps

-Christina

 

[robbob]

Thank you so much for the reply, it was very helpful. I knew it was wishful thinking, but it was worth a try.

Rob

 

[MortgageGuru]

You can also shop around for a new home owners policy. The guy you've done business with for 20 years is more likely to take your head off than the rest of the market. Also, your appraisal would have to be 78% loan to value in order to get PMI removed without having to refinance your home. 80% only applies at the table. Also, if your appraisal comes in lower than your new tax assesed value you can shave a few dollars off of it but it most likely would amount to less than the gas used to drive to the Assessor's office.

 

[amortgageman]

Just one minor correction.

FHA MIP insurance cannot be cancelled by a new appraised value.. It is based on 78% of the original loan amount.

 

[BriantheBanker]

refinance

The only way to get rid of PMI (in your situation,) is to refinance with a NO PMI program. There are many programs that will allow you to finance >80% without PMI.
Depending on your current rate, a refi for the same rate would still save you money. Additionally, do not escrow your taxes & insurance monthly. If you pay these bills as they are billed, you will not have the payment shock when taxes increase. Plus, if you have an account at your local S&L for your taxes and insurance- you can use the money in the event you need it.
If you want to try to have your company drop the PMI, good luck.
PMI is insurance to the bank. (in the event you don't pay, PMI insures the bank.) they prefer you have pmi.
If your current company agreed to reappraise your house, they would want to use their appraiser. (good luck with a fair value.)
You are better off just refinancing with another company.

Good luck,

BriantheBanker

 

[MortgageGuru]

If the Bank wants to insist on using their appraiser then tell them to to shove it. Any licensed appraiser with E&O insurance will be fine.