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Finding Competitive HARP 2.0 Mortgage Rates

Is the HARP mortgage rate a good deal... in the Ballpark?

I am refinancing my home. I owe $151,000, my home was appraised at $131,000. I am refinancing with Quicken Loans. They offered me a a loan at 4.5%, $2,800 closing costs excluding the additional for my escrow. I do have great credit and have never been late with my payment. Seterus owns my loan and does not do refinances. I am having trouble finding someone to refinance my loan since I am not a current customer. Bottom line: Does this sound like a good deal?

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Bill's Answer
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HARP Mortgage Rates

Thank you for your question about HARP mortgage rates.

The HARP loans, in many respects are similar to other mortgage loans, with complicated underwriting requirements. Keep in mind that you want a HARP mortgage rate that is a good deal, one that is in the ballpark, but also one that gets you to home plate.

It is frustrating to hear an answer from lenders that they offer loans only to current customers. This is partially due to the backlog that was created while waiting for the March 19 deadline, when the automated underwriting systems were activated. Since your current servicer is not a participating lender, you will need to go through an automated underwriting system, either the Fannie Mae DU Refi Plus loan or the Freddie Mac LP Relief Refinance loan.

Loan rates vary due to a number of factors including market rates, borrower’s creditworthiness, and LTV ratios. Although the HARP eligibility is generous in terms of qualifying for loans, lenders have added extra requirements (overlays) that increase the difficulty of getting a loan and/or the cost of the loan.

In order to help you understand if you got a good deal let’s look at these three factors:

  1. General Ballpark figures
  2. General Pricing Differences for Loans
  3. Shop Around
the harp 2.0 mortgage is like playing on a different field, with confusing rules. bills.com can help you find harp loans. with rates at historic lows, it pays to apply now.

General Ballpark Figures

Mortgage Interest rates and fees constantly vary. Freddie Mac publishes a weekly –Primary Mortgage Market Survey- including national and regional data. There data includes 30-Yr FRM (Fixed Rate Mortgage), 15-Yr FRM, 5/1 ARM (Adjustable Rate Mortgage) and a 1 Yr ARM. There figures are an average and rates vary from lender to lender and borrower to borrower, however they give you at least a ballpark figure. Here are rates for 30 Year FRM:

Source: Freddie Mac Primary Mortgage Market Survey
Date Interest rate Points & Fees
April 12, 2012 3.88% 0.7
April 5, 2012 3.98% 0.7
March 29, 2012 3.99% 0.7
March 22, 2012 4.08% 0.8
March 15, 2012 3.92% 0.8

Bills.com readers have left numerous comments since the rollout of the HARP 2.0 program and more specifically since the March 19 rollout of the automated systems, which is most relevant to your case. Just as borrowers situations have varied, credit scores, LTV, and mortgage insurance among other variables, so have interest rates varied. Readers have mentioned quotes for 30-Yr FRMs ranging from 4% to 4.75%, with a wide range of closing fees.

The big lenders dominated the market, especially during the period between December 2011 and March 2012, when the HARP 2.0 automated systems were not available. Rates seem to be coming down with increased competition.

General Pricing Differences for Loans

HARP 2.0 Rates - Getting to Home Plate It is often difficult to compare interest rates due to their fluctuations and the varying circumstances of the borrower. Underwriting guidelines are technical, complicated, and interrelated. For example, the type of property influences the FICO score required, and the interest rate charged.

Fannie Mae and Freddie Mac set up minimum requirements for HARP eligibility, but lenders often have stricter requirements (overlays). Although the pricing mechanism set up by Freddie and Fannie has caps on the fees they charge lenders, and have waived many of their underwriting representation and warranty requirements, many lenders are still worried about buyback risks. It seems that this is more prevalent in the case of a new lender.

Borrower Related Criteria: The main criteria that lenders look at are your credit score, credit history, and DTI ratio. Paying on time is a pre-requisite of the program and it will not gain you a better interest rate. Lenders, including Quicken Loans, offer different rates based on FICO scores, with a minimum requirement varying from 620 – 720.

Other factors that interface with the offered HARP mortgage rate are your geographical region, LTV and Mortgage Insurance requirements. As noted, lenders have overlays creating stricter barriers to their HARP programs. Sometime, these overlays are relaxed, but used as pricing mechanisms to create different levels of risk and pricing for their loans.

Cost of the Loan: In order to get to home plate, shop around. Whether shopping for a home purchase mortgage or a HARP mortgage, remember to compare apples to apples and oranges to oranges. Even with laws and regulations governing the mortgage industry there is still a lot of confusion regarding costs. In fact, the Consumer Financial Protection Bureau is working to improve the GFE (Good Faith Estimate) and the TIL (Truth in Lending) forms.

Make sure that you compare similar terms including the length of the loan, they type of interest rate (fixed or variable) and the type of payments. I recommend that you compare HARP mortgage rates and costs by dividing them into these categories:

  • Interest Rates
  • Lender’s fees (origination fee and discount points)
  • 3rd party fees including appraisals, title search, prepaid interest and insurance, etc.
  • Mortgage Insurance requirements. (If you currently have mortgage insurance and need to transfer the policy or take out a new one, then your termination dates will be reset).
HARP 2 Updates
Read the Bills.com HARP 2 mortgage page for the latest updates about HARP.

Bottom Line: Shop around

In general, the Quicken Loan offer was in the ballpark. Your 115% LTV (although that has to be verified by the lender) and great credit make you a candidate for a good HARP mortgage rate. Other factors, including your DTI, the type of property, mortgage insurance needs, and your geographical location will make a difference on the rate you will get.

If you have an offer, check to see the cost for a rate lock, and the time needed for the lender to close the deal. Make sure you compare similar costs and my recommendation is to shop around. Bills.

bills.com will help you get to home base. with rates at historic lows, it pays to apply now for a harp loan.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

Get Mortgage Rates!
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6 Comments

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  • VL
    May, 2012
    Val
    Yorba Linda, CA
    I have a Fannie Mae loan through Chase from 2008. I did a stream line re-do through chase in 2010. Can I qualify or does that change my "loan securitization date" to now be after 5/2009? I meet all other qualifications. Thanks.
    0 Votes

    • BA
      May, 2012
      Bill
      Since your new loan was originated in 2010 you do not qualify for the HARP loan. Your loan must have be originated and delivered to Fannie Mae before June 1, 2009. If your LTV is under 97.5% you might qualify for a FHA refinance, although if so you will have to pay both upfront mortgage premium and monthly mortgage insurance premiums.
      0 Votes

  • JG
    May, 2012
    JG
    Orland Park, IL
    Here is what I don't understand. I keep reading the average 30 year rates are 3.75,3.8, etc. Yet every time I contact someone re the HARP 2.0 loan, they never quote a rate below 4.5. Why is this? I thought these loans were supposed to be the same as a regular 30 year. I can understand a slight discrepancy if they're underwater, but with a high credit score, etc., is this normal or should I expect to find a lower rate? Thanks!
    0 Votes

    • BA
      May, 2012
      Bill
      We have many examples of people being quoted under 4.5%. However, the actual rate that you are being quoted will depend on your LTV, credit score, type of property, and location of property. If you have a high LTV, low credit score, high DTI, a condo property in a distressed area, or an investment property, then any or all of these reasons could be a cause for higher interest rates. I recommend that you get a mortgage quote from one of Bills.com participating HARP lenders.
      0 Votes

  • RM
    May, 2012
    Robin
    Milford, DE
    We were with BOA when we got our mortgage. It was a Freddie loan. Contacted them about the HARP. Because they sold our mortgage to M & T, they told us we HAD to call them. They did our application and gave us a figure of around $40 more a month for our mtg payts, which was fine because it put us in a traditional mortgage. Now, they are saying we have to escrow our taxes AND insurance and our payts are going up by almost $200 each month. The interest rate they quoted now is at 4 1/2%--when this started they said it would probably be around 3.8%. Should/Could I contact another lender or do I have to stay with my current mortgage company. Aren't the interests rates a lot lower than 4.5?
    0 Votes

    • BA
      May, 2012
      Bill
      I recommend that you shop around, to see if you can find a better rate.
      0 Votes

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