HARP Refinance Fees and Underwater Loan Mayhem
by Emma in Oklahoma, Terry in Texas, Deb in Minnesota, Jim in Illinois
Ask Kate about HARP refinance fees, underwater investor-backed loans, and 2nd mortgage subordination: Emma asks which HARP closing costs are required to be paid by the borrower. Terry asks how to refinance an underwater investor-backed home loan.
Deb must decide between keeping her loan modification and paying $7000 for a HARP refinance. Jim's 2nd mortgage lien holder refuses a subordination request required by HARP.
Who Pays HARP Refinancing Fees By Emma F. in Tulsa, OK
What closing costs are required from the borrower on the HARP refinance loan?
Ask Kate answers: Who Pays HARP Refinancing Fees
Closing costs for the HARP refinance program are handled differently than the HAMP modification program.
HARP closing costs should cost no more than a traditional refinance. In fact, in some instances, they may even be less.
The fees can be grouped into two categories, non-recurring closing costs (one time costs such as loan fees or title insurance) and recurring closing costs (ongoing expense such as property tax and homeowners insurance).Go here for the explanation of mortgage closing costs and Good Faith Estimates
The borrower can pay them by increasing the loan amount. Alternately, the interest rate can be increased. Both methods finance the closing costs over the life of the loan. But there is nothing stopping you from negotiating lower costs with the lender.Click here to learn how to reduce and negotiate lower closing costs
Modification Closing Costs vs HARP Closing Costs
It is worth noting that the HAMP modification program
does not charge fees to the borrower. This is, in part, because the loan approval process is based on hardship relief.
How to Refinance an Investor-Backed Mortgage By Terry C. from Humble, TX
We have an investor backed loan that is also underwater.
I have spoken with Quicken loan and was told they could not help us.
Our previous lender, Ocwen, told me that they do not refinance loans.
Ask Kate answers: How to Refinance an Investor-Backed Mortgage
If you are disenchanted by Making Home Affordable's underwater refinancing program, I can understand why. HARP 2.0 is exclusively
for Fannie Mae and Freddie Mac mortgages.
If you had a Fannie Mae or Freddie Mac mortgage, you would be free to shop lenders. But since your home is secured by an investor-back loan, choosing between participating banks is not an option for you.
Not sure what type of mortgage you have? Here's how to find out if your mortgage is backed by Fannie Mae or Freddie Mac
Insist on HARP 3.0
This is why the next generation of underwater mortgage refinancing (aka HARP 3.0) has to happen!Read about the HARP 3 proposal and what you can do to make it happen
Harp Program Closing Costs By Deb M. from Owatonna, MN
We want to refinance with the HARP program.
The one company we actually sent all our paperwork into wants over $7000 for closing costs.
They assured me most of it was going to be turned back over to us, as far as escrow, etc. and the interest rate is up there.
We currently are on a modification program at 3.75% until 1/2015, than we go up to 4.75%.
Should we wait awhile or take their offer?
Ask Kate answers: The Harp Program Closing Costs
Have you received a copy of a signed and dated written Good Faith Estimate (GFE)? Without a written GFE, there is no way to verify your mortgage originator's claim that fees are mostly recurring closing costs.
You actually need to read through the GFE to see for yourself which closing costs are being charged. Study the loan fees and discount points! Do property taxes and homeowners insurance in the escrow section actually equal $7000? See Emma's letter for help reading a GFE
Deciding to Refinance a Mortgage
Only you can decide whether or not to proceed with a refinance. But considering this may help: Is the security of a fixed rate more important to you than keeping your modified payment that can potentially go higher after another year or so.
For more help, read Refinancing a Home Mortgage to Save Money... I Think
HARP Refinance without 2nd Mortgage Subordination By Jim from Lisle, IL
My mortgage was set up in two parts. Both loans were acquired by Sovereign (Santander) bank and Freddie Mac. The house is upside down and was approved without an appraisal for a refinance under HARP but Sovereign refused to subordinate the second mortgage.
The home is currently worth about $420,000-$430,000. The primary mortgage is $370,000 and the secondary is $65,000.
Shouldn't I be able to get one loan large enough to pay off the secondary mortgage so I only have one loan, preferably through HARP without the appraisal, but worst case, outright.
Ask Kate answers: HARP Refinance without 2nd Mortgage Subordination
Unfortunately, since your mortgage is underwater, you have hit a brick wall. HARP guidelines do not allow paying off a 2nd mortgage by rolling it into a larger 1st mortgage.
The HARP program offers only two options to homeowners with a 2nd mortgage. Pay off the 2nd with your hard-earned cash (unlikely) or wrangle a subordination agreement out of the 2nd mortgage lien holder.
Read how to get your 2nd mortgage lender to cooperate at HARP Refinance Made Impossible
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