Watch for Mortgage Insurance Hassles

What should have been an easy sell/buy transaction turned into a nightmare for one family. After pushing back their purchase due to lost paperwork, a lender called and told the borrowers that their private mortgage insurance was going to cost $664 a month. While the average PMI runs about $100 a month on a regular loan, no one at the institution could explain the exorbitant price tag. Their loan consultant advised them to sign the documents; then they would refinance in a month, hence only costing the family $664 one time and probably making them able to drop the mortgage insurance all together.

Bottom line is the second deal never went through, causing the family to foreclose on their house within six months. Though the lender and broker should have resolved the issue, they can’t be expected to say no to a deal that is closing. In a case like this, listening to gut instinct goes a long way. In the end, if a mortgage doesn’t sound right to the borrower, the loan should never go through. A buyer should always realize they have the final say.