Tagged with " LTV"
7 Dec

Asking US Bank About HARP Refinance

Bank of America holds my first mortgage for $148,000 at 6%. US Bank holds my second mortgage for $44,000 at 8.49%.

Story Recap

If you’ve read past entries, you’ll know that I refinanced with US Bank 5 years ago at that rate because they offered me a loan that would allow me to refinance through US Bank when interest rates dropped, without closing costs. Then the economy crashed and I was stuck with that rate, because I had no equity and they said “No” on the refinance when rates dropped. Adjusting that loan is imperative, but it may not be possible, so I continue to focus on the first loan via the HARP program.

At the end of November, Bank of America offered me  5.375% interest (currently at 6%) with $3000 in closing costs to refinance under the new HARP program, which did not fit with the 4-4.5% average interest rates we’ve all been hearing about.

I went to US Bank to see what they would offer on either my first or second mortgage.

Interest Rates Over 4.5% Should Be Investigated

US Bank indicated that there was absolutely nothing they could do about the 8.49% loan I currently have with them on my second mortgage. That is the standard response I’ve gotten over the last 5 years. But they did think that Bank of America was in error for the interest rate they offered, possibly due to not having received the new guidelines. However, Bank of America said they had received them, and 2 weeks before the guidelines were distributed, Bank of America turned down my refinance. The lender at US Bank said that he thought he could get me 4-4.5%.

Appraisal Needed When Refinancing With Another Lender

I could get a lower interest rate with US Bank, but the lender told me that I would need an appraisal at the cost of $450. I reminded him that with HARP 2, an appraisal is no longer needed. He pointed out that the appraisal process is waived only if the loan-holder refinances with the original lender.

In the official HARP Q & A document, also available for PDF download in HARP Basics, appraisal is contingent on AVM (automated valuation model), which is extracted from Zillow.com or your home’s Estimatesd Tax Value. (And possibly other sources that I have yet to learn about.)

Cap or No Cap?

The US Bank lender also told me that there is a 105% loan-to-value restriction in place in order to qualify with another lender.

If my appraisal come back at $145,000, I would be approved for a $152,000 loan.

It’s unlikely the appraisal would come back that high, but that is approximately the minimum appraisal amount I would need in order to cover my first loan.

If my appraisal came back at $135,000, I would only be approved for a $141,000 loan: $8,000 less than I would need.

The lender I spoke with at US Bank discouraged me from doing the appraisal, and told me I should return to Bank of American and reattempt with a different person there to try to get a better rate.

Official HARP Fact Sheet and US Bank Qualifications Discrepancy

Below is an excerpt from the HARP Fact Sheet, available for PDF download in the HARP Basics section of this blog. The Fact Sheet indicates that the program will continue to be available for loans with LTVs above 80%. Where did the 105% LTV come from that US Bank quoted me?

What I discovered was that the 105% LTV is only a requirement when the new loan is an ARM. Was the US Bank lender attempting to put me in an ARM?

17 Nov
Posted in: Process
By    Comments Off on 10 HARP Eligibility Facts as of November 11, 2011

10 HARP Eligibility Facts as of November 11, 2011

1. Your loan must have been backed by Fannie Mae or Freddie Mac prior to June 1, 2009.
2. You must have made mortgage payments on time. for the last 6 months, and at least 11 on time in the last year.
3. There is no loan-to-value restriction for fixed rate 30-year loans.
(HARP ARM loans are limited to 105% loan-to-value.)
4. The current loan-to-value (LTV) ratio MUST be greater than 80%.
5. No appraisal is required for the HARP.
6. Your HARP loan can include closing costs.
7. Your income will not be verified by the HARP refinance program unless your new principal + interest payment increases by more than 20 percent.
8. You do not have to refinance through your current lender to apply for HARP.
9. You cannot consolidate mortgages through HARP.
10. If your mortgage has LPMI (Lender-Paid Mortgage Insurance) you are HARP-ineligible.

November 2011 : The Complete HARP II Eligibility Requirements