Real Estate Home Mortgages/HARP refi
Hi Mr. Rodenburg,
I have a question about a HARP refi. I now have a 30 year fixed mortgage at 6.5 percent. I owe 140000 on a property that is now worth about 90000. I pay 170 per month for PMI. I have good to excellent credit. I have been told by two lenders that I qualify for a HARP refi; however the cost are in the 8000 range to bring my rate down into the 3.5 range. I’m being told my PMI payments are too high (see the lender explanation below).
“In order to be in compliance, your rate and APR must be below a certain threshold. This lets the state and any auditors know that the company doing the loan is not a predatory lender and is giving you a good loan. The APR includes all fees and costs associated with the loan, including your PMI. The issue we are running into is that the PMI is so high (and therefore the APR is too high) that it is flagging the loan as a high-cost loan. This is a big no-no for a mortgage because it does not comply with State rules and regulations. The only way to get the APR lower is to bring down the rate, which in turn lowers the APR.
With a Freddie Mac loan, the lowest rate that we have is 4.125. In order to make this work you would have to buy the rate down to the low 3’s.”
I’m looking to see what an independent expert has to say about this. 5000 would be tacked onto the loan, and I would pay 3000 up front. It really seems excessive. I’m planning to stay in the home long term so I’m inclined to go along. Sorry for the lengthy question, but I’d really value and appreciate your take on this.
Unfortunately most banks are only doing their own HARP loans (there was a brief period when we would do anyone else's HARP loans, but that is long since gone by the way side).
The figures seem high to me, but I don't know all the details and we do HARP and FHA Streamlines all the time. We try to roll in any closing costs into the HARP loan itself; but as I mentioned we only do HARP loans on existing clients (I work for PNC Mortgage, div of PNC Bank).
I would recommend you go back to the bank that holds your note; and if they are the ones telling you what you quoted above, I would suggest you ask to speak to a manager.
All the best to you,
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