Don't be fooled by HARP 2, Intrest Rates Aren't Everything

Don't be fooled by the government programs supposed to help you. Be aware that Freddie Mac and Fannie Mae rules are very different for completing a refinance through Harp 2. I am currently trying to refinance an investment property though HARP 2 and Freddie Mac. Freddie Mac requires you to use your current lender. They are charging me points and origination. In other words, I am buying my own rate down, and I have no choice, if I want to refinance, I have to pay. They are tacking on $3500 in closing costs, which equals another 3 years on my loan. They are requiring me to prequalify for my loan. Which is kind of insane, if you think about it, if I have been making my payments on time, why shouldn't I be able to make a lower payment on time also? I am not getting the lowest intrest rate of 3.75%, they are charging me 4.75%.

My advice to you, check the numbers. Make sure lowering your payment now is not going to make you pay more in the long run. Choose a shorter loan time like 15 or 20 years, or double up on your lower payments. Or, if you look at the numbers, and it just doesn't look right, choose to stay in your current loan or short sale and be done with the whole mess.

  • March 01 2012 - Destin
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Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (38)

Don't be fooled by Agents who don't know what they are talking about! Freddie Mac does not require you to use your current lender, they just require you to wait until March 11th until it's open to everyone. (March 17th for Fannie Mae)

Just because 1 real estate agent wasn't smart enough to understand her options before making a move doesn't mean you can't be. 

Advising someone to short sale to "be done with the whole mess" instead of doing a HARP refinance because apparently 'it's TOO  HARD" is about the worst advice I have heard in a while. Agents who cannot manage their own financial affairs and/or cannot understand something as simple as HARP should refrain from sharing their ignorance with others.

If you have a question, you should ask it, but to post this ridiculous, ignorance on a forum where people come for answers is reckless.

" Or, if you look at the numbers, and it just doesn't look right, choose to stay in your current loan or short sale and be done with the whole mess."
----
How about if the numbers don't look right, ask questions? How about do some research? How about find an actual expert on the subject and get the facts? IMHO statements like that should be grounds for licenses being pulled!
Pure ignorance!
  • March 01 2012
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Thank you so much for your rude reply to my post. This is my experience with HARP 2. I posted it because I felt people should know. I am very frustrated with the process. I have run the numbers. I have added the intrest I have given them over the 7 years, and the additional intrest I will be paying if they restart my loan at 30 years. I have added in the closing costs as well as the new amortization schedule. I have found that it is not making a huge difference in my financial plan to pay the home down faster, paying less intrest to the banks, unless I make double payments or take a shorter loan period. I thought it may help some people undestand exactly what they are in for once they begin the process. I am required to use my current lender. Without going into too much detail about my loan, here is the information on why: http://www.freddiemac.com/sell/factsheets/relief_refi.html
If you are not careful, this program will put you further in debt for a longer period. It seems to me, this puts more money in the banks revolving doors of Mortgage Backed Securities, and is less helpful to the strugling homeowner. This is not an attempt to gain business. This is my story.

  • March 01 2012
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what a nimrod! Why would anyone trust her to help them buy a house if she's so clueless about her own housing situation.

1) Fla has some hefty closing costs to begin with, you already knew that when you bought the property.
2) pick an alternative rate that has slower fees, most lender rate offerings will go up to 5.5% or so.
3) you certainly can choose 3.75%; but I can only imagine the whinefest you'll post when you see what that'll cost you.

 
  • March 01 2012
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Ok, everyone. I am a mortgage broker, currently originating HARP 2.0 loans.

I understand Jennifer's point by saying "interest rate is not everything" and this is true in any refinancing case, not just for HARP 2. Before borrowers looking to refinance their mortgage, they should consider the new interest rate, closing cost and term compared with what they are having. There are tools on the Internet that can do a refinancing breakeven point for borrowers. I have one on my website but I am not posting it here just because the rule on here is " no self-promotion".

Also, before borrowers decide to commit to a lender for refinancing, they need to check out who can offer the best rates & fees. No lenders are equal - that is for sure! BoA is one the lenders that have the highest rates & fees in total. Next is Chase & Wells Fargo banks. These banks have the most retail branches around and so get the most customers just like that. We are in the technology era where the best deals can be found on the Internet, so do some research before you commit to do business.

BTW, the rate of 3.875% at absolutely no cost or very little cost to refinance your home is not something unheard of for the best loan scenario. I see it all the time in my daily business. Just find a good lender and watch the rates for the right time to lock!

And, Jennifer, short sale is definitely NOT an alternative for people who have been waiting for HARP 2. There is a reason why they still hang on to their property & pay their mortgage on time! They want to keep their homes & they don't want to damage their credit :).

Good luck!
  • March 04 2012
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the rate of 3.875% at absolutely no cost or very little cost  
==============
on an investment property?
  • March 04 2012
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Thanks Dana. Yes, I have been waiting. Yes, I do not want to ruin my credit. Yes, I do feel it is right to fulfill my obligation to pay back the money I borrowed from the bank. They have changed the rules since rolling out his program in the beginning of February. It keeps changing every week it seems. I have put the refinance on hold. I think there may be even more changes coming out as the program progresses and the banks get more familiar with the process and the changes keep coming. I hope they get it right. In the same thought, I hope I am not kicking myself for not dumping this home later... Patience is my plan right now. I have been making the payment, so I can continue making the payment. I have a full understanding why some homeowners do short sale. I cannot fault them for that.
  • March 04 2012
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Hi Norm, I ran a quote for this scenario below:
1)Investment property
2) LTV of 75% (loan amount of $300k & value of $400k),
3) single family home
4)credit score of 740+,
5) tax & ins. impounded

Here are the rates for today (3/5/2012):
1. 4% with total closing cost of $3152
2. 4.125% with total closing cost of $1808
3. 4.25% with total closing cost of $611

This closing cost includes all fees related to originating this loan: origination fees, lender's fees, appraisal, credit report, title, escrow, recording and notary.

The rate for this same scenario above but for owner occupied is at 3.875% with total closing cost of $620.

Thank you.
  • March 05 2012
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Thanks, I think you just proved 4.25% is not 3.875%.
  • March 05 2012
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" Here are the rates for today (3/5/2012):
1. 4% with total closing cost of $3152
2. 4.125% with total closing cost of $1808
3. 4.25% with total closing cost of $611"
----
Here is the biggest TILA VIOLATION for today!
  • March 05 2012
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Dear Clay,

Yes, 3.875% is more for owner occupied occupancy.  I never said the rate 3.875% at no or little cost is for an investment property :). You already know, for investment properties, there is a big hit in cost that causes the rate to be higher if you are looking for ano cost loan or very low cost loan.

In my previous post that I said a 3.875% with absolutely no cost or with very little cost is possible, and our rate today did prove it: 3.875% at $620 cost is for owner occupied scenario (please refer to earlier note).

To see APR rates for each particular rate & scenario, please refer to my website at [hotlink removed by Zillow moderator]

Thank you.
  • March 05 2012
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This is a community discussion and not where I advertise my business. So, I don't think I need to show my mortgage license nor APR on here, nor violating any TILA regulations.

My response to Mr. Norm was an attempt to give him a more details on a vague question he asked. Plus, I did list out the scenario, and the rates & all closing cost, and so I am not misleading consumers in any way. In fact, the way I present the interest rates might be better than just showing the rates with APR because APR might be confusing to consumers but we all understand it when somebody says the rates & accurate total fees.

If you are looking to see APR disclosure on each published rate that I advertise, you are welcome to visit my website & check it out, sir.

Thank you.
  • March 05 2012
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" To see APR rates for each particular rate & scenario, please refer to my website"
----
Sorry, TILA does not accept that as a valid disclosure. A link to your website where one has to search for the 3 rates you advertised does not meet the " clearly and conspicuously" requirement of TILA.

Nice try though!

  • March 05 2012
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I want to thank eveyone who has contributed helpful information on this topic. Especially the information on the different opinions on which rates should be offered. It is very helpful to everyone that is looking at refinancing under the HARP 2 guidelines. Everyone will not fall under the same guidelines. My situation may not be the norm, but I thought it wise to share the additional terms that some may not think about when looking at a refinance. Thank you for all your great input. Please rememeber, this post is to help others and not to slam the competition. Keep it professional, you catch more flies with honey!
  • March 05 2012
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" This is a community discussion and not where I advertise my business. So, I don't think I need to show my mortgage license nor APR on here, nor violating any TILA regulations. "
----
You are so VERY wrong. 
You clearly state "Ok, everyone. I am a mortgage broker, currently originating HARP 2.0 loans."

Your profile states your place of employment and has contact information. 

You are advertising as defined by TILA. If you are not, you have no need for contact information in your profile.
  • March 05 2012
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the rate of 3.875% at absolutely no cost or very little cost to refinance your home  
==============
You clearly wrote YOUR home and in this discussion the home in questions is clearly an investment property.

And this is a HARP refinance, upside down, so your follow up on 75% LTV remains irrelevent.

And becaues every lender on here can offer a note rate of 3.875% the APR is very relevant. 
  • March 05 2012
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Thank you, Jennifer, for staying professional.  We don't need to be here and "slam the competition" :).
  • March 05 2012
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" Thank you, Jennifer, for staying professional.  We don't need to be here and "slam the competition" :)."
----
Stopping loan originators from fly by quoting of bogus rates is 100% professional. Those that drop the "be professional" line are usually the ones that just got caught with their hands in the cookie jar. The discussion is very professional, your rate quotes are what are lacking in that aspect. 

Quoting bogus rates to make your phone ring then linking your website is what is unprofessional.
  • March 05 2012
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I was advertising on Zillow before aggressively, but then I stopped because Zillow didn't bring business as much as I thought, so I left. The profile is there was still left at where it was.

I am in compliance with the regulations as far as my website and any advertising I put out there.

You go ahead and report whatever you think is wrong to the right agency.

Thank you.
  • March 05 2012
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" You go ahead and report whatever you think is wrong to the right agency. "
----
Since you insist, I believe I will.

Maybe you will be next on the list.

Have a great day!
  • March 05 2012
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Norm,

"Your home" is not an indication "this is an investment". Actually, "your home" means "owner occupied".

What you asked about "investment" is not clear it means you are asking about "HARP".

BTW, HARP rates are not really available until March 19, when Fannie and Freddie Mac updated their DU & LP systems. So, I am not talking about HARP rates. The lenders that are participating in HARP 2 programs are taking loan applications at this time, but they all wait for the date that Fannie/Freddie Mac are ready with their system.

Anyway, everyone, I am here to try to share & discuss things that are related to the Real Estate & Financing industry.   I am not here to deal with negative people.  This discussion is done for me here.

Good luck to everyone on here. 
  • March 05 2012
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I certainly am grateful for professionals like Norm and the Professor for providing corrections on misleading information, and for giving the "details" that many others miss.  When skimming the original question, I missed "currently trying to refinance an investment property though HARP 2 and Freddie Mac".  Apparently Dana missed that too.  I didn't even know that HARP2 applied to investment properties, as I thought it was designed to help owners of owner occupied units.

But I did know that those quoting rates are required to provide the APR, unless it is specifically indicated as a statistical average, or something similar.

  • March 05 2012
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" BTW, HARP rates are not really available until March 19, when Fannie and Freddie Mac updated their DU & LP systems. So, I am not talking about HARP rates. The lenders that are participating in HARP 2 programs are taking loan applications at this time, but they all wait for the date that Fannie/Freddie Mac are ready with their system. "
----
 
  • March 05 2012
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With the dozens of Loan Officers posting that they have been doing HARP 2 loans funded by the same lender as the present loan for a couple months now, surely a person that advertises themself as "mortgage broker" would know they can get their clients a HARP2 loan and not have to wait until March 17?   And surely they know the primary reason to want to do HARP2 is to avoid the appraisal and have a higher loan to balance ratio, and is not to get better interest rates than non-HARP loans?

It appears the loan officer with an Agent tag is being pretty "negative" to potential clients in need of services that the Agent denies presently exist.

And claiming to be "professional" about it too, all while complaining about professionals that are actually providing the right information?
  • March 05 2012
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HARP rates are not really available until March 19, when Fannie and Freddie Mac updated their DU & LP systems.  
====================
HARP(2) rates have been available since December 1st, 2011. I've been originating and closing them since then. 


  • March 05 2012
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About the APR, here they are:

3.875% note rate, and APR 3.876%, total closing cost is $620. This is for the scenario below (rate quoted is for 3/5/2011 12:41pm).
1) owner occupied
2) rate & term refinance
3) LTV < = 75% (loan amt: #300,000, value: $400,000)
4) single family home
5) credit score of 740 and up
6) tax & insurance impounded
7) 30-year fixed conforming

For the same scenario above but with investment property type, the rates & APR are below:
1) 4% note rate, 4.055% APR, total closing cost is $3152
2) 4.125% note rate, 4.148% APR, total closing cost is $1808
3) 4.25% note rate, 4.253% APR, total closing cost is $611

For HARP 2 rates, I believe they will stay the same as what the current rates are in the market. Also, 125% LTV ratio is now completely removed and all types of occupancies can be qualified (owner occupied, investment & second homes), but the rates for HARP will likely follow the normal risk-based fee adjustments of a normal loan (LTV, types of properties, etc). Since all HARP loans will have a LTV more than 80%, I can imagine lenders will treat all LTV that is above 75% the same, and that means borrowers will get an extra risk-based fee of 0.25% to their closing cost.

this is the link to the Fannie Mae guidelines for HARP 2 for readers who are not familiar with the details of HARP 2 specifications. www.efanniemae.com/sf/mha/mharefi/pdf/refinancefaqs.pdf

  • March 05 2012
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and, Norm, if you can close HARP 2 loans right now, then you are the only company or lender that can do that right now & I guess your lender doesn't have to run DU/LP to get the Approve/Eligible confirmation from Fannie Mae or Freddie Mac approval either?!!

As far as I know: All lenders can manually approve HARP 2 loans since Dec 1, 2011 but can't close them until March 19 becaus they need to wait for DU/LP systems to be updated with HARP 2 guidelines.
  • March 05 2012
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<yawn>

all occupancies were already qualified under the original HARP, no change there.

>>>>"but the rates for HARP will likely follow the normal risk-based fee >>>>>adjustments of a normal loan"

wrong again.  here are the LLPA's:
   https://www.efanniemae.com/sf/refmaterials/llpa/pdf/llpamatrixrefi.pdf 
see table #2 in regards LLPA cap on primary residence and >80 LTV.

and stop saying "will", it''s been in place 3 months now.

>>>>>>>"Since all HARP loans will have a LTV more than 80%,"

That's really, really wrong.    pricing is available at any LTV and the program is available to loans <80 LTV also. again, already originated and closed them.  
  • March 05 2012
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" and, Norm, if you can close HARP 2 loans right now, then you are the only company or lender that can do that right now & I guess your lender doesn't have to run DU/LP to get the Approve/Eligible confirmation from Fannie Mae or Freddie Mac approval either?!! "
----
Well you just confirmed that you have no idea what you are talking about and don't understand HARP at all. Apparently you don't know that you can do Fannie refis as Refi Plus as opposed to DU Refi Plus and you can do Freddie as Relief as opposed to Open Access. 

" As far as I know:"
----
Thank you for further confirming what we all suspected and that "as far as you know" = nothing about HARP. You are dead wrong.

PS, posting your rates = SPAM!
I also find it interesting that you don't know how to post a hotlink to Fannie Mae but you surely knew how to post one to your site didn't you?
  • March 05 2012
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Keep posting Dana, this seems to be working out well for you.
  • March 05 2012
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This closing cost includes all fees related to originating this loan: origination fees, lender's fees, appraisal, credit report, title, escrow, recording and notary.

=================
So, you ran a scenario for the OP's property in Florida; without you having a Fla license. I'm thinking you forgot the state tax as well as the intangible tax., not to mention the recording fees are about 3 times higher than they are in CA; property tax rates are higher in Fla than Ca and are paid annually, not semi annual like in Ca.
  • March 05 2012
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