Is lender scamming me?

Question

Im getting a special loan to purchase a home at an extra low rate (4% fixed) I get this loan because i have a disabled family member. The loan is thru fannie mae and originally I was putting 5% down. I had some problems with PMI so i just decided to put down a full 20%. Now before I was being charged a .25% adverse market fee and a 1% my community mortgage fee from what i was told the my community fee was to reduce PMI payments. But now that I am putting 20% down, should i be paying either of these fees? My lender still wants to charge me for them and says it doesnt matter that i am putting 20% down i still have to pay it.

Answer 1

No, your lender is not scamming you.

Just because you're putting 20% down instead of 5% doesn't mean the terms of the loan would necessarily change. If they originally told you to pay the .25% plus the 1% fees, I don't see why you would assume you wouldn't have to pay those now. However, remember that this is 1.25% of the amount you're borrowing. If you're borrowing less, the actual fee is less (1.25% of $160K borrowed instead of $190K on a $200K house, for example).

Keep in mind you're saving a bunch of money by not paying PMI every month. Also, PMI is not tax-deductible.

Answer 2

Go to other lenders and see what they are offering.  If you have a credit union that is affiliated with you job that is great place for info and to get competitive rates.  Also try lendingtree.com.  If you are uncomfortable then you need to do some more checking.  Ask your Realtor about this as well.  My parents are Realtors and they can answer most questions about these loans.  Don't take their word for it.  Go get the information.  And not from here..... any idiot with a computer can answer you here.  Go to a professional.

Answer 3

Change lenders if they aren't flexible with the junk fees as i seems.

Answer 4

Shop at least 3 different reputable lenders, using the same loan program, and compare how the APR and the monthly payments stack up against each other.

And just for the sake of clarification PMI stands "Private Mortgage Insurance" on a non-government loan.  For our purposes here, let's say that non-government means non-FHA.  A non-government loan would be a loan made through any private lender that is neither insured (like FHA is) nor guaranteed (like VA is) by the federal government.  PMI would be paid on any conventional conforming loan with an LTV greater than 80%.

MIP stands for "Mortgage Insurance Premium", and this is the insurance that you pay on an FHA loan.

If your My Community loan is through FHA, then you will probably need to pay MIP for a couple of years, but you can probably drop it after that point in time.  FHA usually requires payment of MIP for at least two years, no matter the loan-to-value ratio.

Maybe that's your problem.

If the loan is a private (non-government loan) through your bank or broker, then you shouldn't have to pay an PMI at all.  

Again, shop three different lenders against each other, and let them know that you are doing it.

And BTW, that "adverse market fee" is a total scam.  Just a way to make a few extra bucks for the lender, commonly referred to as a "junk fee".

Good luck!

Answer 5

They can't give you an explanation of "it doesn't matter". They must furnish to you any and all supporting documentation of the fees in question. If they can't, I'd go to upper management, etc. until I found an answer.