Harp Refinance Should I Use Current Lender

by Allison H. from Chandler, Arizona, USA

Ask Kate about HARP Refinance, Should I Use My Current Lender: Kate, we have a first loan and a HELOC (home equity line of credit). We as many are a bit upside down. We now have the chance to refinance the first mortgage through our major lender who we are currently with on both loans.

Allison continues... How do I know we could not get a better rate somewhere else? Also, on inquiring with a couple of other lenders in the last month or two, they always seem to say we should first ask our lender, even though they would love the business?

Don't really understand why. Surely each place is in competition and can give their best rate?

We are older people now (54 and 56 years, my husband and I) and are not sure if we should just go for the refinance over 30 years and have more money (we have a 30 year currently and have paid off 6 years) or go with the 20 year and save just a tiny but each month from a refinance.

Really, hope you can help, and thank you so much in advance. Allison.

Kate Answers: HARP Refinance Should I Use My Current Lender

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

I'd start off by applying with your major lender.

Especially having a 2nd mortgage with them, your major lender may be able to structure a better deal for reducing your monthly house payments.

But shopping lenders to compare mortgage rates is not a bad idea either because in the end, you are free to use any participating HARP lender. However, compare the various good faith estimates very carefully.

HARP 2.0 Refinance Updates

The HARP program has been extended through December 31, 2016! Go here for an overview of the HARP 2.0 Program.

Make your voice heard to Congress! How to contact Washington DC about the HARP program.

40 Year vs 20 Year Fixed Rate Mortgage

Secondly, to decide between a 40 year fixed rate mortgage and a 20 year loan, I'd first consider affordability. Can you comfortably afford the mortgage payment for the shorter term? Be cautious not to overload your budget just because the 20 year rate is temptingly low.

Another option might be to go with the 40 year loan, making sure there are no prepayment penalties. Then plan to make additional payments to your principal. This way, you'd have a fall-back plan of the lower mortgage payment of the 40 year fixed rate mortgage but could pay off the mortgage in 20 years.

You'll find more help on this at Putting Together the Best Fixed Rate Mortgage.

And I'll add one thing here. Age is not a qualifying factor in mortgage lending as long as you are of contractual age, usually about 18 years old in most states. It would be discriminatory to withhold a 40 year term because you are in your 50's.

Best wishes,

Ask Kate

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