If HARP 2 Refinance Increases Mortgage Payment

by Starone 1 from Cincinnati, Ohio

Ask Kate for options if HARP 2 refinance increases your mortgage payment: I wrote you about a week ago stating that a refinance under HARP would actually raise our payment by $580 a month to a total of $2500. We are 66 and 64 years old and bought our house in 2004 with the thought that we would keep it for 5 years and sell with a small profit.

Starone 1 continues... Obviously, so did many others.

Huntington Bank loan officer said we made too much money to qualify for a modification or do a Short Sale. Our debt to income ratio would be 43% under HARP and we do have excellent credit scores. Yes, we are making our interest only payments NOW, but in 2 years our "interest only" loan will reach the 10 year limit and could go up to 9% interest rate.

The problem is that we have exhausted all of our savings in the past 8 years. If one of us would get sick or if my husband's 2000 car would break down, what would we do?

At our age, I feel it is financial disaster to stay in this house and not be able to save any money. It seems foreclosure is the only answer at this point. I would appreciate any suggestions you have, Kate. We are desperate!

Kate Answers: If HARP 2 Refinance Increases Your Mortgage Payment

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Dear Starone 1, Thanks for writing again with more details.

(Starone 1's first letter with my answer is found at HARP 3 Mortgage Refinance News.)

What you've just written to me is a good start to a hardship letter required by loan servicers when applying for HAMP loan modification. See HAMP Tier 2 Help for Underwater Mortgages for more modification tips.

Documentation is important. Old bank statements showing the account balances were larger compared to today's statements with maxed-out ending balances are good way to reinforce your letter.

HAMP Loan Modification and Real Estate Short Sale Options

I don't mean to sound too skeptical about the loan officer's advice but he might not get paid for mortgage loan modifications through HAMP. So instead, try going straight to your loan servicing by calling their 800 number. Ask for the HAMP department. Assume that you are eligible to apply and ask them how to get started.

This way instead of restricting your future actions based on the loan officer's information, you'll be going directly to the source.

You can also verify the advice from the loan officer and information from loan servicing with the free counseling provided by Making Home Affordable at 888-995-HOPE (4673).

Ditto for the advice you received on real estate short sales. Research your area to find the most qualified real estate agent who is handling short sales with banks. Because you will be receiving offers that are less than your mortgage balance, you need someone looking out for your best interests who can negotiate with the bank.

Making Home Affordable Foreclosure Alternatives

If you get to the unenviable point of having to leave your home, I describe alternatives to HARP at Strategic Default vs HAFA Deed in Lieu, Deed for Lease, Short Sale Foreclosure Alternatives. Remember this, you are not alone.

I wish you the very best in working through these trying times.

Good luck,

Ask Kate

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