HARP Mortgage Closing Costs Reduced

by Dawn from Kalamazoo, Michigan USA

Ask Kate about HARP Mortgage Closing Costs Reduced - Updated December 2011: Kate, The only refinance we can do is through the Home Affordable Refinance Program (HARP). What's keeping us from proceeding is the estimated $3K we're being told we have to bring to the closing table.



Dawn continues... We wonder if it's wise to wait until the "new rules" for HARP are issued and some of these fees might be lowered or eliminated. Yes, we know mortgage rates are rising again, but we still don't want to pay out closing costs we don't have right now.

Is it a good idea to sit it out for another two months, or should we find a way to get the money and refinance now under HARP? Thanks!

Kate Answers: HARP Mortgage Closing Costs Reduced

Ask Kate at Get-Your-Best-Mortgage-Rate.com

Hi Dawn!

I wish I had a crystal ball to send your way.

So instead, let's look at a quote from the Obama Administration released in conjunction with Fannie Mae and Freddie Mac.

Reductions in HARP Mortgage Closing Costs

"...eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers."
and
"...eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the Enterprises."

Setting aside gobbledy-gook lingo, they are saying there will be LESS cost to homeowners refinancing with HARP due to three improvements...
  1. Waived fees when homeowners decrease their mortgage term
  2. Fewer required appraisals
  3. Fannie Mae and Freddie Mac are lowering certain fees
How much will these reductions add up to? We don't have specifics yet.

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11 Million Homeowners Deserve Good News

Now don't get me wrong. I am super excited over the HARP announcement. Eleven million homeowners with upside down mortgages need the help.

But at this point, we only know the general information contained in the press release that I wrote about at Sweeping Changes to Home Affordable Refinance Program. That's it, so far.

New! April 2013 updates for HARP 2.0 Loan Program!

Easy steps to writing your representatives! Who to contact about the HARP program.

Moving Forward With HARP vs Postponing Action

My suggestion at this juncture is the 2 column list. In the left column, list the benefits to moving forward with a Home Affordable Refinance Program under the existing guidelines. As you mentioned, locking in a low mortgage rate might be at the top of your list.

In the column to the right, enter the drawbacks to moving forward, for instance if you have to borrow $3000 to pay HARP mortgage closing costs.

I understand this may seem simplistic, but the exercise of writing out pros and cons helps brainstorm new ideas.

Important Home Affordable Refinance Program Notes

New! April 2013 updates for HARP 2.0 Loan Program!

Easy steps to writing your representatives! Who to contact about the HARP program.

It is important to remain current on your mortgage payments, with no late payment in the past six months, and no more than one late payment in the past 12 months.

Should anyone question whether they have a Fannie or Freddie mortgage, they can call 800-7FANNIE and 800-FREDDIE during the hours of 8 am to 8 pm ET. Have your account number and subject property address available.

December HARP Closing Cost Update

Since writing this page, the November 15 and December 20, 2011 HARP II Eligibility Requirements have been released.

On December 1, 2011, lenders began taking HARP II applications.

Many HARP refinance borrowers are currently finding their property appraisal fees are waived when reliable AVM (Automated Valuation Model) estimates are available.

Other pricing improvements which lower closing costs are:

1. Loan terms of 20 years or less will not have an adjustment to the fees.

2. Loan terms greater than 20 years will have a maximum .75% cap to loan fees.

A big announcement regarding HARP II Refinancing is scheduled for mid-March, 2012. In the meanwhile, I'll be posting additional updates.

New! April 2013 updates for HARP 2.0 Loan Program!

Easy steps to writing your representatives! Who to contact about the HARP program.

Check back often at my Best Mortgage Rate Blog. And watch for Ask Kate notifications in your email like this one - Update on Borrower and Lender Paid Mortgage Insurance for HARP Refinance, BPMI and LPMI.

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Huge closing costs on HARP 2.0 refi
by: Steve and Carol

Kate,
We've been waiting for our lender to "get everything together" for the HARP program. In mid February, we applied, only to be quoted .5% higher rate and over 4000 dollars in closing fees. (Our credit score is 756).

The loan came with a 2200 dollar origination fee! Not only were our closing costs not less than a "normal" refi, the interest rate was quoted higher because of HARP (or so the loan processor said)

Anyhow, we decided to wait it out for the new underwriting tool and have another application in with an independent mortgage broker. He is telling us that he will be charging us for an appraisal AND his fee of 350 to process the loan, his total costs are $1000 less than the original lenders but he won't lock a rate until we pay the $350 fee and begin underwriting and rates are going up???

It kind of seems like those who got in over their head and were given loans they couldn't afford or defaulted on are being given a lot better deal than those of us who have continued to pay our mortgage and that the lenders aren't giving those of us who have been paying our mortgages the level of help they gave those who are in default?

With the level of risk being eliminated on these loans by the government AND of course considering we bailed out all these institutions for giving bad loans... These offers we are receiving seem to be a bit shady.

Hi Steve and Carol, Kate here. I'm sorry to hear of the difficulties. Have you thought about talking with a few more lenders?

I am a firm believer in getting a referral. Hopefully, one of your friends, neighbors, relatives, or co-workers can point you to someone they used and would use again. The individual mortgage originator can make all the difference. Best wishes, Kate
Confused Still
by: Anonymous, Townhouse in Falls Church VA

I have a 30 fixed at 5.5% since 2005. Now with little equity and $310,000 left, my major major lender offers me a HARP at 4.2% and at $3469 (see below). Are these all my mortgage closing costs?

I like that my payments will be almost $500 a month lower, but now I will have payments to I am 70 years old! They don’t want to offer me a shorter term then 30 year term, which I don't understand at all. The loan specialist believe this is a great deal since I lost most of my original 20% equity with all the falling prices in Northern Virginia.

Now the lender threatens to cancel my application when I ask them to explain what fees I may shop around to reduce closing cost! Someone said if I used the same title company I would save money. This so confusing to me. They say, "THE FEES ARE ESTIMATED FOR WORST CASE SCENARIO. MANY OF THESE FEES WILL NOT APPLY TO YOUR LOAN REFINANCE BUT MUST BE DISCLOSED IN CASE OF ANY CHANGES DURING PROCESSING. (FOR EXAMPLE, ESCROWS FOR TAXES AND INSURANCE AND APPRAISAL FEES)"
PROC/CMTMT/UW $625.00
0FLOOD ZONE DET $19.00
PRICE CREDIT RT $665.05
P/P INTEREST $977.13
TAX SERVICE $70.00
TOTAL LENDER FEES $1026.08
TITLE FEES ARE $2393
SUBORDINATION FEE $50
----------------------------------------
TOTAL ESTIMATED FEES $3469.08
When are the closing cost expected to go down? What do you think is best? Please help me sort this out. Is this a good deal for me?

Kate here The expected date for the next major HARP announcement is March, 2012. Please watch for the announcement here at my Best Mortgage Rate Blog.

As I just told Joy (see previous comment), you'll like the letter from Audra at How to Reduce Mortgage Refinancing Costs, especially while sorting through this mix-mosh communication from your lender. And keep in mind, you can vote with your feet. In other words, you are free to use any participating lender for your HARP refinance in most cases. Best wishes, Kate
HARP Closing Costs
by: joy

Has there been more clarification on what closing costs are waived with the new version of HARP? Recent Good Faith Estimate from my current (nationwide) lender show charges of fees for points for the rate, $100 fee for face to face signing, $900 fee for loan origination fee. I find most of this to be crazy. Looking forward to your comments on what can and should be waived. Thanks, Joy

Hi Joy, Kate here. Thanks for asking. The most update to information is still here at HARP II Eligibility Announcement. But I will post as soon as specific updates for HARP 2 closing cost reductions are released.

I think you will enjoy the letter I answered today at How to Reduce Mortgage Refinancing Costs | Junk Fees and Changed Circumstance. So appropriate to the $100 fee you mention above. Best wishes, Kate

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