New HARP Refinance Answers

by Kim in AZ, Tony in NC, Ferd in WA, Donna in OR, and Jody in MN

Ask Kate for New HARP Refinance Answers: Hi Kate, I want to refinance my mortgage using HARP. My loan officer said that I qualified for an expanded approval loan. I had never heard of that term before.


1. Fannie Mae Expanded Approval con't... I did some research about it, but am still unclear as to what it means to me - other than I might have an increase in interest rate. Kim from AR

***zz-portrait-left-small.shtml*** Ask Kate's Answer: Hi Kim, Fannie Mae defines expanded approval as pricing loans with less than perfect credit at competitive interest rates. I would ask the mortgage representative what combination of criteria is raising your interest rate and what can be done to reverse the effect. For help with improving your credit, go to Credit Score Help.

It's worth noting using Refi Plus HARP underwriting, there is no minimum credit score. Neither is there a maximum debt-to-income ratio unless principal and interest mortgage payments increase by more than 20%. Ask your mortgage originator how this affects your over-all qualifications for HARP.

2. HARP refinance closing costs... Is it true that the government pays all closing cost for the HARP program? Tony from North Carolina

***zz-portrait-left-small.shtml*** Ask Kate's Answer: Hi Tony, Nope, you might be thinking of a HAMP modification, also an option provided by Making Home Affordable (MHA). But back to the Home Affordable Refinance Program, each lender sets its own HARP refinance rates and mortgage refinancing costs.

For more details, here is my answer to Dawn from Kalamazoo, Michigan who was also asking about Reducing HARP Mortgage Closing Costs.

3. How can I get a bank to subordinate a second mortgage? I want to refi under the HARP program with my existing 1st mortgage lender. However, my 2nd mortgage lender refuses to subordinate to the 1st mortgage lender. What can I do? Donna from Oregon

***zz-portrait-left-small.shtml*** Ask Kate's Answer: Hi Donna, That's a difficult one. Your 2nd lien holder is under no obligation to agree upon returning to 2nd position when you refinance your 1st mortgage. (Subordination defines the order of lien holders claiming a property in foreclosure.)

Joe from Massachusetts is in a similar bind. Find my subordination tips I passed along to Joe at HARP Refinance Made Impossible. You should also keep in mind, the 2nd mortgage holder must use a Fannie Mae approved subordination agreement in the event they (hopefully) will decide to cooperate.

4. Should I reconsider my lender's mortgage rate reduction refinance offer? My lender is asking me to accept their mortgage rate reduction refinance from my current 4.5% down to 4% with no closing cost. But when I received documents and I was doing the math and my balance will go back to two years ago. Not sure if I should go with it or not. Ferd I. from WA State

***zz-portrait-left-small.shtml*** Ask Kate's Answer: Hi Ferd, Be sure you know if there are no closing costs or no closing costs out of pocket! There's a difference! Go here to see how I show Catherine one way of comparing mortgages. Here are 6 more questions to ask about their mortgage refi offer, including breaking even. But in the end, regardless of how much your lender attempts to convince you their offer is worthwhile, it's up to you to decide. After all, you'll be responsible for the ongoing mortgage payments, not them.

5. HARP refinance interest rates... My lender quoted me 5.5% for my HARP refinance because I'm upside down on my mortgage. My current loan is at 5.85%. My friend is a real estate agent and sent me sold comps. I don't feel my property is that upside down. Should I shop around? How much does each inquiry lower my credit score? Jody S. from Shakopee, MN

***zz-portrait-left-small.shtml*** Ask Kate's Answer: Hi Jody, If you decide to shop your HARP refinance, ask your Realtor friend for lender referrals. Then go here to learn How to Compare Mortgage Lender Representatives with Ease. You are right to be concerned that multiple credit reports will lower your credit score. Be judicious about giving out your social security number. You'll find more information on this at How to Compare Mortgage Rates.

Best wishes,


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