Refinance

by Ray from Visalia, John in Pasadena, Howard in Canal Fulton, Anne in...

Ask Kate for relevant HARP 2.0 refinance solutions for homes without equity: Meet 6 homeowners with insightful questions regarding underwater refinancing alternatives, HARP loan limits, frustrating PMI obstacles, finding reputable home loan professionals who understand the Making Home Affordable Program, and uncooperative 2nd mortgage lenders who won't subordinate to a new HARP loan.


Alternatives to Refinancing with HARP

By Ray A. from Visalia, California
HARP 2 Refinance Solutions

I refinanced a few years ago and when I checked into the HARP 2 program I found out that it was a conventional loan.

Is there a underwater refinance program for conventional loans?

I am fixing to retire and want to have my payment lower so we can stay in the home we have had for 20 years. We are current on the payments and never been late. Please advise me on what options I have.

Thanks Kate for your timely response to my last HARP 3 question. Ray A.

(See Ray's comment here.)

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Alternatives to Refinancing with HARP

Hi Ray, First a little shop talk.

1. Conventional loans are mortgages not insured or guaranteed by a government program such as FHA or VA financing.

2. Not all conventional loans are backed by Fannie Mae or Freddie Mac.

3. The HARP program refinances a conventional mortgage (which you have) but only if it is owned by Fannie Mae or Freddie Mac. And herein lies the rub!

Sad to say, you share the frustration of many underwater homeowners. Your mortgage is not guaranteed or owned by Fannie or Freddie, a choice never given to you. Regardless, your financing choices today are next to nil.
The policy requiring a mortgage to be backed by Fannie Mae or Freddie Mac for participation in the Making Home Affordable Refinance Program must change. See Responsible Homeowner Refinancing Act of 2013 which reviews my beef with the current proposal of HARP 3.
Here's one alternative. Because this plan does not require Fannie or Freddie backing, look into the HAMP loan modification program.

Don't be put off by the fact that Making Home Affordable states a personal hardship is crucial to eligibility. Call the free HUD counselor phone number that Making Home Affordable provides to find out how your personal circumstances could still fit into the program.

Best wishes for your retirement plans,

Ask Kate

HARP 2.0 Refinance Loan Limits

By John from Pasadena, CA

Kate: Love your site by the way! I live in a high cost area (91107). Can I refinance my loan up to the $625,500 limit under HARP 2.0?

Thanks, John

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: HARP 2.0 Refinance Loan Limits

Hi John,

The maximum dollar amount that can be borrowed in a HARP refinance is based on the conforming loan limits of the area in which the home is located.

The 2013 conforming loan limits for zip code 91107 is $625,500. But (don't you wish that word didn't exist), check with a trusted HARP lender to confirm there are no other restrictions on your HARP eligibility, such as the date your current loan was originated.

Best wishes,

Ask Kate

HARP Refinancing with PMI

By Howard from Canal Fulton, Ohio

Kate, I am refinancing under HARP. My original 30 year loan was for $107,350 in December 2001. The appraisal was $117,500 with $69.78 in PMI per month. After 10 years of paying PMI, the cost dropped to $17.98 per month.

The new loan is for $94,100 for 20 years.

So I am required to keep PMI. But everything I read about the HARP loan says PMI should stay the same and the price of PMI should not go up.

So why is my PMI insurer, United Guaranty, charging me .5% in points ($475) to refinance my HARP loan? And why are they raising my PMI rate back to original rate?

This seems contrary to HARP. It seems like there is a lot of grey area in this HARP refinance. Is this legal? Can they charge the .5% and raise my PMI back to higher rate?

If they can do this, then what is the basis for removal of PMI? I would think it should be still based on original appraisal value of $117,500. I am looking forward to hear your response. Thank you

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: HARP Refinancing with PMI

Hi Howard,

After a HARP refinance with mortgage insurance, cancellation and termination are based on the the new term, loan-to-value, and unpaid balance.

Secondly, MI companies are given leeway in charging a reasonable fee to facilitate a refinance. As you discovered, the fee can be financed into the loan amount.

Lastly, HARP lenders are told by Fannie Mae that when determining mortgage insurance coverage, they should obtain the same coverage in effect or standard MI coverage.

Ask your lender if the cost of your MI is higher because they switched you to standard coverage and what was the reason for the switch.

Go here for more details on getting rid of mortgage insurance: PMI Cancellation and Termination.

Best wishes,

Ask Kate

Choosing HARP Lender for Refinancing

By Anne from New Jersey

Kate, I currently have an interest-only arm at 5.5%, due to reset May 2013. I owe $10-15,000 more on my home than likely it is likely to assess. I've gone through HUD counseling and am a good candidate for the HARP program.

I contacted my lender, Bank of America, and after several attempts, was turned over to a lender that is working with me. However, there are a lot of negative comments about them on the net.

I haven't been able to find this info on the net: How do I find a lender with whom others have been satisfied?

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Choosing HARP Lender for Refinancing

Hi Anne,

I have always maintained the most reliable method of finding dependable lenders is to ask your relatives, friends, neighbors, and co-workers who they went through for their last refinance.

Ask if they'd use the mortgage companies again and most importantly would they send their mother or daughter there for financing. Important! Get the specific names and contact information of the mortgage professionals who processed their transactions.

Go here for more details: How Savvy Shoppers Compare Refinance Fees and Mortgage Lenders.

Best wishes,

Ask Kate

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Comments for Refinance.

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Response to Kate Regarding HARP Refinance
by: Plet

Wells Fargo would only decrease the interest rate to 5.75 from 6.75 percent (...and I think they would not go lower because they were paying PMI).

CMG 3.75 interest - loan $400,000.

Going to pay off loan using The Mortgage Freedom Project. :-)

Still no closing. Was suppose to happen this past week with $11,000 in mortgage closing costs - $5000 financed into the loan and bringing $6000 cash to table.

Hi Plet, Kate here... So happy to hear back from you.

Okay, I see why Wells was crossed off your list. But in addition, be careful at going with an unknown company because they quote the lowest interest rates. There may be a reason a company is unknown - No one ends up closing with them because of their lousy service and inability to back up their quotes!

All in all, I think your plan to pay off your mortgage using my 6-step magical system is the best! Get rid of the mortgage! Be free of the bank! Find the overview of my book at The Mortgage Freedom Project by Super Kate.

Best wishes, Kate

Subordination of 2nd Mortgage to HARP Loan
by: Anonymous

Kate, Chase called me to do a HARP refinance. I have excellent credit.

Greentree refused to subordinate even though they are already subordinated to Chase on this same loan. I cannot afford to pay off the $47,000 second. I am retired and living on a fixed income. Is there any help for me?

Hi, Kate here.

Getting a 2nd mortgage lien holder to subordinate to a new mortgage has never been a cake walk. But now that so many homes have negative equity, lenders are not shy about issuing a flat-out no to subordination requests.

Of course, you can pay off the mortgage. But realistically speaking, here are some other ideas. See HARP 2 Refinances and 2nd Mortgage Subordination.

Best wishes, Kate

Walking Away from Harp 2.0
by: Plet from USA

Kate, I have been dealing with the mortgage company CMG since April 2012. We still have not closed our HARP loan. Every month there has been a delay about something.

My husband and I have provided all necessary records. This last hold up was about the PMI insurance turning the current PMI from Wells Fargo to CMG.

So this was finally done then they reissued us a good faith estimate that was nowhere near the first one.

They added the PMI back on our side so the payment for us would be higher.

After I called them out on this issue, they have gone back into delay issues again. They said they would revise and pick up the PMI like our last provider Wells Fargo did when we refinanced.

At this time they are showing we need to pay $11,000 to close this deal. Should we just walk-away from this deal?

Hi Plet, Kate here.

Do you have $11,000 extra in savings to take to the table to close your refinance? If so, do you even want to part with it?

But I'd consider shopping for another lender since the lack of service sounds appalling. You might decide not to change lenders but at least you'd know your options. See How to Refinance a Mortgage when You Smell a Rat.

Best wishes, Kate

P.S. I believe the difference in cost of PMI is from switching it between Borrower Paid Mortgage Insurance (BPMI) and Lender Paid Mortgage Insurance (LPMI).

Go here to understand the difference:
When Lender Paid Mortgage Insurance is Clear as Mud
and
Refinancing for Lender Paid Mortgage Insurance

P.P.S. It seems that you were satisfied with Wells Fargo as the lender in your last transaction. Is there any reason you wouldn't contact your previous WF mortgage originator? Just a thought!

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You can also ask Kate about your mortgage at How to Find Your Mortgage Lender.

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