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Mortgage Refi rate higher than purchase rate
Old 11-03-2011, 10:42 PM   #1
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Mortgage Refi rate higher than purchase rate

The rate today in CA to purchase is 3.875 and the re-fi is 4.125. Same points 1.250. Apr. comes out higher for re-fi , as the rate would indicate. 30 Year fixed non-jumbo for both.

Why would the re-fi rate be higher with B of A ?

Been tracking them for some time and this is usually the case with B of A.
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Old 11-03-2011, 10:46 PM   #2
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According to what I was told during my last refi fact finding mission, this is always the case. There's a premium on refinancing loans, there's a premium on cashout loans, there's a premium on pretty much everything except the original purchase loan. Not sure why, but it's definitely not just BoA.
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Old 11-03-2011, 11:31 PM   #3
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My guess (emphasis guess) is that it is easier/cheap to sell purchase loans to Fannie and Freddie than a re-fi.
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Old 11-04-2011, 06:52 AM   #4
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I used to do mortgages (a number of years ago). I sure don't remember there being a premium on purchase money. Both new and refi loans were sold to FNMA and it didn't seem to matter b/c the bank would get the same fee either way. Usually when there was a product with a higher rate it was because the bank didn't want to sell as many of those. But honestly this thing with B of A doesn't seem to make sense to me.
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Old 11-04-2011, 08:18 AM   #5
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Originally Posted by panacea View Post
But honestly this thing with B of A doesn't seem to make sense to me.
For the second year in a row I've received a laborious four-page analysis of why they need to change the amount withheld for taxes & insurance. Last year it dropped the mortgage payment by five bucks, this year it raises the payment by five bucks.

I don't think that having $750 of our money for most of the year is paying for this lengthy mathematical mastu fiddling.
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