Lender Paid Mortgage Insurance HARP Refinance

by Shelly from Anaheim, California USA

Ask Kate about Lender Paid Mortgage Insurance HARP Refinance: Hi Kate, We have lender paid mortgage insurance (LPMI). We would like to refinance under the Home Affordable Refinance Program (HARP). Is this possible?

Shelly continues... My husband and I bought our first home in 2007. We financed the loan for 100% of the cost of the home. Our interest rate is 6.5% and the mortgage insurance is paid by the lender.

Our loan originated (or is backed) by Fannie Mae. We have never been 30 days late with a payment. We have excellent credit. Our home value is under water. We bought it for $350,000 and owe $335,000 and our home value is around $299,000.

We would like to refinance under the Home Affordable Refinance Program (HARP). I understand there is a change that is becoming effective sometime this month or next month that will allow under water homeowners to refinance.

Our current mortgage servicer when asked told me they are not participants of this HARP program. I contacted our original mortgage broker that found us our loan originally but he says it may be a problem to refinance because it has to be refinanced through the current mortgage servicer because of the lender paid MI.

Can you offer me advice on how to get refinanced when we have a loan with lender paid MI?

Kate Answers: Lender Paid Mortgage Insurance HARP Refinance

Dear Shelly,

It is possible to HARP refinance with Lender Paid Mortgage Insurance (LPMI) and Borrower Paid Mortgage Insurance (BPMI).

But first, a little background for those who are not familiar with LPMI. Lender paid mortgage insurance cost is calculated into the interest rate. On the other hand, when the cost is a separate charge in the mortgage payment, it is borrower paid mortgage insurance . (For many years, it has merely been referred to as private mortgage insurance or PMI.)

Why would a borrower choose LPMI over BPMI? Various mortgage programs require the use of lender paid mortgage insurance. Before the IRS offered homeowners PMI tax breaks, LPMI was the best way to write off mortgage insurance.

But here's the problem encountered by homeowners since 2009 when HARP program began. Lenders have been skittish when it comes to refinancing the underwater mortgages that carry LPMI, very similar to the quandary you are in. Homeowners with BPMI have met lenders' reluctance too.

HARP Refinance for Borrower and Lender Paid Mortgage Insurance

The bright light in the mortgage insurance gloom is this! March 17, 2012 marks the date of Fannie Mae, Freddie Mac and the mortgage insurance companies simplifying HARP refinances with both borrower and lender paid mortgage insurance.

Update! Find out about HARP 2.0 Loan Program!

Although the same levels of coverage will need to be carried over, and there are bound to be a few exceptions, this is the expectation. Borrowers with either lender paid mortgage insurance (LPMI) or borrower paid mortgage insurance (BPMI) will be able to switch to a different lender during the HARP refinance or stay to refinance with the current lender.

Ask Kate! Home Affordable Refinance Program HARP Updates

For breaking HARP updates and announcements, watch the blue box you see on my

• Home page at Get-Your-Best-Mortgage-Rate.com
• Right here at Lender Paid Mortgage Insurance HARP Refinance

Bookmark the pages in your favorites for a simple return.

Best wishes,

Ask Kate & Link to Kate

Ask Kate a question or skip to the bottom of this page to add a comment.

Would you also like to send a link to this page for your friends and family to see? Or link from your website or blog?

Simply add --
http://www.get-your-best-mortgage-rate.com/lender-paid-mortgage-insurance-harp-refinance.html
-- to your email, website or blog.

Have You Seen the Most Recent Ask Kate Answers

• 5 New HARP Refinance Answers
• Change in Interest Rate After Locking
• How to Reduce Mortgage Refinancing Costs
• HARP 2 Refinance Condo Mortgage Rates and Closing Costs
• Who Can Make Monthly Payments on the Mortgage

Back to Making Home Affordable and other Loan Modification Q&A with Ask Kate from Lender Paid Mortgage Insurance HARP Refinance

Home to
How to Get Your Best Mortgage Rate from Lender Paid Mortgage Insurance HARP Refinance

Tell a Friend

My goal is to empower homeowners! Please spread the word about Lender Paid Mortgage Insurance HARP Refinance on Twitter and Facebook or another group. Word of mouth is great too!

The information you obtain at this site is not, nor is it intended to be, a substitute for financial, real estate or legal advice. You should consult an attorney, accountant, lender or real estate agent, as applicable, for advice regarding your individual situation. Comments and opinions found here are not necessarily those of Get-Your-Best-Mortgage-Rate.com