Still about PMI, why not shop between lenders?

This is related to my previus question about paying PMI. thanks to the answers is seems like pretty much impossible to get the rid of it with low down payment, if you want a loan. The only thing it really puzzles me is how the free market simply doesn't work in this case. For example I get an overwhelming amount of calls of companies to finance my home. Since it's my first home and I don't have bad credit, and I have some funds to back me up, it's 100% win for a lender give me money. Simply because there is really no chance I will not make the payment, even if I have no job for over a year. Now why can't I say: "look here's the deal, I have 200 loan companies interested in finance my home, so tell them I will take the loan that does not force me to pay PMI" Even if 199 drop, all I need is just one. My only explanation is that even thought it seems they are desperate to make money, they truly aren't. But still does not explain the overwhelming amount of people calling me.

You've got two things happening. No telling how someone got your phone number, but probably the first mortgage broker you talked with sold it. Getting them to stop may take some effort.

The main issue seems to be- how can you avoid PMI? In today's shaky market, where lenders are defaulting a lot, I doubt you'll find any lender willing to take a low-down or no-down loan without PMI. They don't want to be left holding the bag.

If, as you say, you've got money to tide you over for a year, why not use that money to decrease the Loan-to-Value below 75% and then no one will ask you for PMI.

By the way, having a ton of money in the bank is no guarantee you won't default. That's what PMI is for. Sure, you might think you won't default, but with a high LTV, the risk of defaulting is larger. The lender will insist on PMI.

The best you might do is find one who'll take you with 20% instead of 25%. Still, if you want to fill out 200 applications, you might get lucky.

And if you fill out 200 applications, your phone won't stop ringing.

(A) if you have an "overwhelming amount of people calling you" my first question would be why? Did you fill out an online application at one of those scummy websites that sells your name and number to 100 loan officers?

(B) Lenders do not set PMI rates, mortgage insurance companies do.

(C) Of course you intend to pay your mortgage--everyone does. But if you don't have 20% down payment or find a real lender who offers piggy backs (80/20) loans you are going to pay PMI on every dollar over 80% because the odds are against you.

(D) PMI is tax deductible through the end of 2010

(E) The free market is working fine -- people are offering you a high risk loan and the only way you will get it is to buy the insurance to mitigate the risk.

You logic sounds good but unfortunately the federal regulations have come down so hard on lending institutions right now they are walking a tight rope. Yeah they probably are desperate to make loans but it does not change the format in which they can. Bottom line is without a good down payment they are going to insure themselves that they will get paid even if you are not the one paying them. It is a case of the bad apple spoiled the cart and even those that will for sure make the payment are going to pay PMI.

I really, really hope you aren't giving personal financial information to people that just call you randomly on the phone...nor would I recommend that you do business with anyone that solicits YOU for a loan.

Look, you'll find one of two things:

1. A company that will offer you a loan with PMI.

2. A company that will offer you a loan with PMI built into the rate, which means you can never have it dropped, which means a higher interest rate overall.

You don't seem to "get" that you are looking for something in the lending world that just DOESN'T EXIST.

Have you not watched the news? I have seen people with the the most rock-solid jobs, at extremely high salaries, lose their homes in the last two years. EVERY loan has a risk...that includes yours. There is no such thing in the lending industry as a "no risk" loan...if you have that much money, then you should be putting more down than the bare minimum so you won't have to worry about PMI at all.

There are less than a dozen PMI companies in the USA...so it doesn't help to shop between lenders for a "better" PMI rate...b/c most of them use the same ones, and there MIGHT be a dollar difference here and there, but no more than that.

You can rattle, "I have people competing for my business" thing all you want sweetie....do you think you are the only borrower that has good credit?

Even a borrower WITH MILLIONS of dollars in the bank...if they are buying a $100,000 rental property and only putting 5% down...guess what? THEY PAY PMI !!!!!!! It's either paid separately or in the rate, but they still pay it.

Maybe THAT will put it in perspective for you.

PS: People are calling you because as soon as you applied for your first mortgage, the credit bureaus were selling your information to any company that was looking for lists of people that were applying for first-time mortgages....they just order up a list of credit criteria and then these companies start calling you....YOUR PHONE NUMBER/INFORMATION WAS SOLD!