Is this mortgage rate too high? HARP 2.0 refinance

US Bank is known to have more conservative guidelines, and yes, the rate appears high but they are probably giving you a rate credit as well to lower the costs too. I am not sure why they would not allow you to go to a 15 year, but as your existing loan has MI you do not qualify for 'Open Access' and are at the mercy of your current loan servicer.

You will still be saving a lot, but I would try and speak with a Manager and get confirmation and an explanation as to why you cannot refinance from a 30 year to a 15 year. That is what makes no sense to me (assuming your ratios qualify at 15 year term) and I see nothing in my guidelines supporting what they are telling you regarding that matter. The 15 year rate should be close to .50% less than the 30 as well.

Good luck!
-Adam

Quote from tiedyed1 : US Bank is known to have more conservative guidelines, and yes, the rate appears high but they are probably giving you a rate credit as well to lower the costs too. I am not sure why they would not allow you to go to a 15 year, but as your existing loan has MI you do not qualify for 'Open Access' and are at the mercy of your current loan servicer. You will still be saving a lot, but I would try and speak with a Manager and get confirmation and an explanation as to why you cannot refinance from a 30 year to a 15 year. That is what makes no sense to me (assuming your ratios qualify at 15 year term) and I see nothing in my guidelines supporting what they are telling you regarding that matter. The 15 year rate should be close to .50% less than the 30 as well. Good luck! -Adam

Thanks for the suggestion about asking her Manager (good idea). One more question please...does the rate on HARP loans fluctuate daily? In other words, if I wait until March when the full terms of HARP are released, can I monitor the rates via LIBOR etc (maybe I can get a lower rate than 5.25% if the FED cooperates). Also, is there a chance in March the govt will tell the lenders there is a cap on closing costs? Thanks again.

I'm sorry, but beggars can't be choosers. Meaning you don't have many options, especially with the lender paid MI. Second comment, US Bank typically does not sell their loans to Fannie or Freddie. Them telling you it's Freddie is somewhat surprising. Were they the original servicers of the loan or did they pick it up from some other company?

Not being able to go from a 30 to a 15 is just their overlay, so again, you don't have much choice. If you could find out who the MI company is, it might be possible to do the Open Access and have the MI company reissue the insurance with a different lender.

Thank you for your reply.........as far as I know, US Bank was the originator. Regarding it being Freddie Mac, they told me its 'investor type' was F Mac, and I confirmed it on the FM website. Do you know if HARP loan interest rates are indexed against prime or LIBOR etc? Also, do you know if the govt will cap the $amount banks can charge for closing costs and/or the interest rate? Thanks again.

Talked to US bank today again, the agent said we could put some money to buy point. At the beginning, she said $1600 for 1 point and will lower the interest rate for 1%. Then when we called back ,she changed to say 1 point can only lower for 0.25%. I don't know what to do now, can anyone give me some suggestion?

Should we buy point? Is she trying to do some trick to make more profit? I know we don't have that many options, but I'd like to lower our rate as much as we can. We don't know what will happen tomorrow, an extra money saving can save a lot for us every month especially you have a newborn.

http://www.foxbusiness.com/person...omeowners/

That .25% equals $25 a month savings.

Lets say instead of a $162K loan you put that $1600 toward the principle and had a $160,400 loan, then you'd be paying $10 a month less.

So that $1600 .25% deduction at $25 a month. It will take you 64 months before you benefit from that reduction. And if you hold this mortgage for 30 years, you will save $9000 in interest by having it reduced that .25%. So that sounds like a lot, but can you afford to be out of pocket another $1600 and do you plan to keep this mortgage for at least 6+ years? You could invest that $1600 elsewhere, but lets remember you are only earning interested on that $1600. The .25% deduction is for your $162K amount. Even if you made 1% on that $1600 over a 30 year period you'd probably only make a few hundred dollars in interest.

While in no way exact, a general rule of thumb is 1 point buys down .25% in rate. Personally I do not recommend buying down the rate as the break even point, as flee demonstrated, is usually 5-6 years. My opinion? Keep your money liquid and deduct the interest on your taxes.

In respect to HARP, look at it as a set of guidelines that you qualify for. The base pricing of the loan product is exactly the same as non-HARP conventional loans, however, the pricing adjustments are kinder as there are ceilings as to the total pricing adjustments that may normally accompany a regular conventional loan. Pricing is a fluid thing with rates sheets constantly adjusting base pricing based on the Mortgage Backed Securities (MBS) market.

In respect to US Bank, while they do have a large portfolio of loan products they hold, like many others, most of their fixed conventional loans are Freddie Mac or Fannie Mae; especially the 30 Fixed products.

In respect to your desire to get a 15 year product, did you speak with a Manager?

Quote from tiedyed1 : While in no way exact, a general rule of thumb is 1 point buys down .25% in rate. Personally I do not recommend buying down the rate as the break even point, as flee demonstrated, is usually 5-6 years. My opinion? Keep your money liquid and deduct the interest on your taxes. In respect to HARP, look at it as a set of guidelines that you qualify for. The base pricing of the loan product is exactly the same as non-HARP conventional loans, however, the pricing adjustments are kinder as there are ceilings as to the total pricing adjustments that may normally accompany a regular conventional loan. Pricing is a fluid thing with rates sheets constantly adjusting base pricing based on the Mortgage Backed Securities (MBS) market. In respect to US Bank, while they do have a large portfolio of loan products they hold, like many others, most of their fixed conventional loans are Freddie Mac or Fannie Mae; especially the 30 Fixed products. In respect to your desire to get a 15 year product, did you speak with a Manager?

Thank you for the reply. You're exactly right, our breakeven point is 6 years on the points.....I declined because we want to pay double the P&I every month and pay off the loan in 6 years (I'd rather keep the $3200 in the bank). Your comments RE: HARP terms almost mirroring conventional terms helps too (I was expecting the banks to have caps on closing costs and rates because I heard it on some talk show...........no one really understands these Obama lead programs because everything he does is non-transparent). God Bless.

Quote from flee : That .25% equals $25 a month savings. Lets say instead of a $162K loan you put that $1600 toward the principle and had a $160,400 loan, then you'd be paying $10 a month less. So that $1600 .25% deduction at $25 a month. It will take you 64 months before you benefit from that reduction. And if you hold this mortgage for 30 years, you will save $9000 in interest by having it reduced that .25%. So that sounds like a lot, but can you afford to be out of pocket another $1600 and do you plan to keep this mortgage for at least 6+ years? You could invest that $1600 elsewhere, but lets remember you are only earning interested on that $1600. The .25% deduction is for your $162K amount. Even if you made 1% on that $1600 over a 30 year period you'd probably only make a few hundred dollars in interest.

Thanks for your time to read my post and give me some ideas. We decided not to buy the point since it's not worth that much.

Quote from cavan : http://www.foxbusiness.com/person...omeowners/

Thanks for the information