How to Get YOUR 4.5%
Rhonda Porter on 01 28, 2009
This morning I’m quoting 4.5% for a 30 year fixed rate. Here’s how you can have a 4.5% rate too (before rates change–don’t forget–lenders are currently averaging 3 rate changes per day). All scenarios below are based on a $400,000 loan amount and a 45 day lock and single family dwellings (sorry condos…Fannie has spanked you with a huge hit to fee. Add 0.75% to points (fee) if you have a condo with a loan to value over 75%).
Purchase or rate and term refinance (no cash out and you’re not paying a second mortgage/home equity loan that your obtained after your bought your home–that’s considered “cash out”).
The following qualify for this rate:
4.5% with 1 point (origination/discount) APR 4.622%.
- 700 or better low mid-credit scores of all borrowers (the lowest middle score of all borrowers is what is used to price conventional mortgages) with a minimum 40% down payment (60% or lower loan to value-LTV).
4.5% with 1.25 points (origination/discount) APR 4.654%
- 740 minimum credit scores with a loan to value higher than 60%.
- 720 – 739 low mid-credit scores with a loan to value of 60.01 – 75%.
- 660 – 699 low mid credit scores with a loan to value of 60% or lower.
4.5% with 1.5 points (origination/discount) APR 4.676%
- 720 -739 low mid-credit scores with a loan to value of 75.01 – 80%.
4.5% with 1.75% points (origination/discount) APR 4.698%
- 700 – 719 low mid-credit scores with a loan to value of 60.01 – 75%.
- 680 – 699 low mid-credit scores with a loan to value of 60.01 – 70%.
4.5% with 2 points (origination/discount) APR 4.720%
- 700 – 719 low mid-credit scores with a loan to value of 75.01 – 80%.
Others scenarios are possible… I just want to get this post published before rates change! 
And I need to get back to work. At the very least, you can see how Fannie and Freddie’s hits to rate (LLPA) impact you based on credit scores and loan to value.
About the Author: Rhonda Porter
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20 Responses to “How to Get YOUR 4.5%”
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On the cash out–HELOC/2nd mortgage issue, would that also apply where say the people bought for 300k with an 80/20, and then refinanced the 60k second up to 80k? Is there a time limit on that? What if they bought for 300k back in 2000, and only increased the borrowing by 20k over that time?
Kary, if the original (purchase money) second mortgage has been refinanced–even if no cash was extracted from the refi transaction–it’s treated as a cash out refi.
All conventional cash out refi’s have a price hit in addition to what I’ve quoted above.
Thanks! So much for my theory the low rates were to get all the good old mortgages out of the system.
just received my first rate change of the day (for the worse)… I’m not kidding you–they change that quick–it’s not even 9:30 am PST.
There are really some great deals if you are willing to pay a point and closing costs. However, I am finding a lot of people are still stuck in the “no cost” and “free” refi mindset.
One of the things I have been doing is just floating. We underwrite, get the appraisal, and then close on a 15 day lock after we are Clear to Close. It usually works out better than trying to get a 45 day lock. It also eliminates the fallout from people trying to get lower rates if the market improves.
I only do this though on my < 80% LTV deals since they are not as at risk for guideline changes though.
That’s a great option, Russ. I’m also encouraging borrowers to start the application process, supply their supporting documentation, go through underwriting and we hold off on ordering the appraisal, title and escrow until they’re ready to lock.
I think many consumers don’t understand what happens when rates dip–they suddenly want to lock and IF they can get through to a LO, we’re on the internet (sometimes more than one screen at a time) trying to lock w/a phone in each ear trying to keep up with the request and actually secure the rate BEFORE it changes.
Lock fall-out is deadly for lenders during this time. It impacts the rates we’re able to offer and our lender relationships. Lenders are looking to cut back wholesale staff (AE’s, support staff, etc) and one way to do that is to reduce their client base (mortgage brokers/correspondent lenders). We’re being scrutinized.
On a separate note, it will be interesting to see how the FOMC impacts mortgage rates today and the possibility of getting a 4.5% rate…we should have about a half hour to go before we hear any announcements.
As a (broken record) reminder: the Fed does not directly control mortgage interest rates…but bond traders will react to what the Fed does/says.
Does one of these contain a typo?
“740 minimum credit scores with a loan to value higher than 60%.
720 – 739 low mid-credit scores with a loan to value of 60.01 – 75%.”
Should it be higher than 75%?
cautious buyer, that’s two different scenarios…and it’s no typo.
just received another rate sheet for the worse following the FOMC statement… 3 rate sheets so far today (I feel like the Count from Sesame Street).
Rate sheet #4 today…from the same lender and it’s for the worse. This makes all the rates quoted above more in points. This is why if you really want that 4.5%, you must have a complete loan application and a commitment with a lender to capture it…IF you’re going to chase a rate.
Rates are up about 0.25-0.375% in fee or 0.125-0.25% in rate right now from what I’ve posted this morning.
I do wish there were more talk about the Jumbo Loan Market. If you run into any interesting posts on that topic, in your “travels” would appreciate your giving us a heads up. Thanks.
Jumbo is over $506,500 and Conforming is up to $506,500 now? Does $417,000 mean anything now that we are passed Jan 1st?
Does $400,000 have any significance in this post. Would the rate be different if it was $500,000?
Ardell,
Conforming is up to $417,000 for 1-unit properties.
King, Pierce and Snohomish County have a “high balance” conforming loan limit from $417,001-$506,000 (other WA counties may have another high balance limit or no high balance program–they’re stuck at $417k).
The rate would be different with any loan amount over $417,001.
In fact, I just quoted this rate at Twitter: http://twitter.com/mortgageporter/status/1156663923
The difference between a conforming and high balance rate varies day to day. Sometimes they’re the same and other times, it may be 0.25% or more…just depends.
There was a good article in the WSJ today saying that 6.9% of Jumbos are in default right now. I think the stat was mixing up just being a jumbo with all the other non-conforming garbage (stated income, etc) though.
Hi Rhonda,
What is the highest LTV being offered for refinancing right now?
Seattle Veggie, a lot depends on what type of refinance it is (cash out vs. rate term). FHA will allow up to around 97% LTV for refi’s.
With the volatile economy I’m considering a refi to get my monthly payment lowered should anything change with my employment. Current situation: have 5 1/2 yrs left on a 10 year fixed at 5.25%, prin bal at $105K. Payment is $2,111/mo (incl tax & insur). Also have var. rate HE LOC currently at 3.00% with a bal of $65K. Payment is $165/mo min. Does it make sense to refi with a cash out of the HE at $178K (incl. loan orig. & fees & prepays) bringing my estimated pymt down to $1,269 /mo (30yr fixed 5.00%). I would pay an extra $1,000/mo toward principal. If nothing changed with my employment and I continued the additional $1,000/mo, how soon could I pay off my mortgage? – OR – Am I better off to just keep my current mortgage and borrow on the HE LOC to make payments for 6-12 months if I lose my job? Will interest hover at 3% for awhile? Is there also a risk my bank could shut down our HE LOC, as I’ve heard some have. (We have excellent credit)
Mike, how concerned are you that you may lose your job?
HELOCs can (and are) being shut down or reduced without much warning from the bank.
Mike (I’ve had more coffee)… you have a lot of questions/issues in your comment (18).
It sounds to me like you are considering lowering your payment in exchange for a much longer term mortgage. If you pay $1000 a month towards principal with the new mortgage, it will be paid off in about 10 years…this is still longer than the 5 1/2 years you have remaining with your current mortgage.
Relying on your HELOC to fall back on should you lose your job could be risky as well as there is no guarantee that the bank will keep it open or not reduce your the amount of your credit line.
It’s a real tough call and I don’t know all of your other factors (how much savings you have, current loan to value, other house hold incomes, etc).
Should you decide to refinance in order to obtain a lower payment, I would suggest considering keeping the extra $1000 not towards principal (since you’re worried about your job) and build your savings for security for worse case scenarios. You can always apply it towards principal later (when the economy is better).
Once you put money into your home mortgage (paying down principal) it’s more expensive to extract it…if you wind up unemployed, trying to get cash out via a refi may be next to impossible.