HARP 2 Refinance Condo Mortgage Rates Closing Costs

by Rae from Orlando, Florida USA

Ask Kate about HARP 2 refinance condo mortgage rates and closing costs: Hi Kate, My lender tells me they can do HARP 2 with me but the interest rate will be higher (4.625%) than the "regular" rate of 4%. Reason is I have a condo. I can't find any documentation confirming that fact.

Rae continues... Is that true, that condominium interest rates run higher? If so, why?

Also, they say they must charge mortgage closing costs and they would be $4,000 and they would roll it into my loan which of course then my loan would be even bigger! (I heard closing costs should be around $2,500 to $3,000.)

The lender also tells me they must do an appraisal. My argument is that an appraisal is a $400 expense for me and HARP 2 guidelines say you don't need an appraisal.

They also say they are the only ones that can refinance me since they own my loan. I heard in March other banks will be offering the HARP 2. Should I wait it out?

I live in Orlando, Florida and presently have a $112,000 mortgage for 30 years at 6.625% with no PMI. I've lived here for 5 years, since 2006. I paid $154,000 for my condo and the value now is $60,000. My credit score is excellent at 817 and I would be refinancing for 30 years, again.

I feel they should be able to do better than 4.625% and better in closing costs. Your thoughts or suggestions please? Thanks!

Kate Answers: HARP 2 Refinance Condo Mortgage Rates Closing Costs

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Dear Rae,

I am sorry to hear of such a drop in the value of your condominium.

I wish there was something I could do to fix this horrid trend across the nation.

In lieu of a magic wand, I'll do my best to answer your questions, as I know many other homeowners are asking the same.

1. Are condominium mortgage rates higher? Yes, you could encounter higher mortgage rates with condominiums for the simple reason that they are riskier to lend on. The homeowner's association, for example, brings in many unknowns to a lender.

But this seems like a good reason to compare mortgage interest rates among lenders - if for no other reason than to confirm you are getting a fair deal.

2. What are HARP 2 refinance fees? Closing costs just like mortgage rates will vary from lender to lender. In most cases, you are free to shop rates, points, and fees just as you would in a traditional refinance of your mortgage.

Challenge junk fees! Watch my website for more on junk fees in the next couple of days. Follow my Best Mortgage Rate Blog to know when the information is available.

3. Why does my lender think they can require an appraisal? Your lender is going to run a report called an AVM. Depending on its reliability, the lender may still choose to require an appraisal. See Sweeping Changes to Home Affordable Refinance Program.

Good news though. Requiring an appraisal does not nullify the removal of the 125% loan-to-value (LTV) ceiling for fixed rate HARP 2 refinances. (That means it doesn't matter how far underwater your value has dropped.) Bad news, as you found out, is that you can expect to get socked with the appraiser's fee.

4. Do I have to use my current lender? Private mortgage insurance has forced some homeowners to stick with their lender for a HARP refinance. But you do not have PMI. So unless there is something unique to your condominium complex that would discourage other lenders from wanting to loan, why not try shopping for lower mortgage rates and closing costs?

It's your HARP 2 refinance after all.

Best wishes,

Ask Kate

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