He actually did qualify for the 6.74% payment, the lender approved it and locked it that way. On day of drawing docs, lender called me and said that program didn’t allow lender paid MI…which was an add of .49%
So they changed it to 6.25%, with an MI payment.
It was lender mistake. I got my borrower a $1,000 credit for their mistake. He was OK with it, still a great loan for 95%.
His payment will be about $120 a month higher until MI can be removed, and then he will save $130 a month at the lower rate for the life of the loan.
He plans on staying there a long time, so it may actually work out better for him in the long run.
With a 30 YR amortization, a loan is at 80% after 10 years, and about 78% after 11 years.
He may be paying the loan down sooner, and get rid of the MI.