No. of Recommendations: 0
We were shooting for a 80/15/5 but my wife's credit was making the 2nd trust rate quotes I was getting lousy at about 9+% so our broker suggested this [95 LTV with LPMI] as an alternative...

I suggest to ignore the numerical RATE, and get the actual monetary figures. Takes a bit more pencil work... but you'll likely find that even 9% (tax deductible) on a 15% piggy 2nd is beneficial to the non-deductible levels of PMI loan-to-loan.

That's the funny thing. Forgetting about the rates (which could be refinanced within a year or so anyway), the 80/15/5 put us up near $1800 per month, the 95 LTV puts us at around $1700 which is clearly more confortable from a cash standpoint. Beyond that I never was able to figure out if the 2nd trust was going to give us the difference back and I'm not sure I want to "buy" a second tax deduction when I already have two dependents and assume I will beat the standard deduction anyway. Note: I keep good records and file accurate returns but I am not a tax pro by any means. Regardless, since neither has PMI (the FHA would have put us at nearly $1900), I reason that the lower payment is better at a time when the economy is, um, slow and I'd rather come closer to breaking even on taxes than having Uncle Sam borrow my $ interest free and send me a bigger refund check. Am I looking at this the right way?

On another note, I saw on the T&L Disclosure that our broker's commission is 1% above an existing $250 processing fee which I find excessive particularly since others are running about 3/4% with a processing fee of about $200.

Sounds to me like you're falling into the trap of believing what you read on the paper they're throwing at you.

Pick an originator you trust, and negotiate a deal (service level for compensation level) that feels right to you, then go for it. As a consumer it's pretty much impossible to effectively segregate & control what the originator actually makes. Best you can do is have someone you trust, and either measure the final bottom line (if you work with someone with a competitive gaurantee,) or get transparent market access (if you work with someone who offers that.)

Yeah, this is where it gets tricky. I trust Lender 1 a bit more than Lender 2 but Lender 2 is offering the 95 LTV which Lender 1 won't touch. What I'm concerned about is that when all is said and done, Lender 2 wil have "sold" me a loan with potentially higher closing costs, similar monthly payments, and perhaps a shrinking payment vs. tax advantage. I don't have any specific reason not to trust lender 2, I'm just suspicious of the deal as a whole and I'm hunting for that mytery element. Keep in mind too that this is the lender that is charging a nice chunck of change for originiating the loan in the form of a 1% fee. Lender 1, in that regard, is running lower.

I guess the bottom line is this: I'm concerned that we will get half-way or more through underwriting on the 95 LTV when it will be aha! we can't do this after all but we can do the 80/15/5 or FHA -- which would mean I might as well have gone with lender 1 from the get go. OTOH, maybe they come back with the 95 LTV but under different terms which renders the GF Estimate nothing but crap.

Thanks for the feedback. It's nice to at least talk to someone who doesn't have a hand in my wallet!

- D

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