Refinance - What is LTV's role in 15 year mortgage rates/lender credits?

While refinance shopping, I found offers improved with an improved LTV on 30 year mortgages. I am waiting to close on a 15 year mortgage, and would like to pay down my principal, but will lose $1K in lender credit. I thought a solution to cover this loss would be an improved offer from the lender for improving my LTV from 75% to 50%. My loan officer's quick reply was that LTV plays no role in rates/credits for 15 year mortgages, and that LTV only helps 30 year mortgages.

True/False? Any insight welcomed.

1 Answer

It is true that score/LTV loan level price adjustments do not apply for loan terms of 15 years or less. See table 2 on the release below for more details:

https://www.fanniemae.com/content/pricing/llpa-matrix.pdf

You'll notice it says at the top of the table "Applicable for all mortgages with terms greater than 15 years".

The good news for borrowers without large equity and/or stellar scores is that the adjustments don't apply for loans 15 years or shorter in amortization. The bad news for borrowers with loads of equity and awesome scores is that they don't apply.

The interest you pay on a 15 year loan is remarkably low in any case. Unless you have ample cash on hand and few/no other debts, I'd think long and hard about putting 50% down on your home, and certainly wouldn't do it for the sake of saving on an LLPA when those aren't applicable on 15 year loans anyway.

Hope that helps. I write loans nationally, glad to assist if you have more questions.

Thanks!

Ted