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Profile picture for Kent Coug

HARP 2 - What Should I Do and Who Can Help?

My wife and I purchased a home in 2006 for $300,000.  The home is now worth somewhere around $200,000.  We have no problems with the payments, never have and in fact, we could put a sizable down payment on something new.  As our family starts to grow, we want to buy something bigger and better, but we cannot because we are saddled with this current house that we are under water in.  I figure we have 3 options here and all involve the latest HARP program where we can refinance no matter how under water we are:  
Option 1
: Refi for a 30 yr.  Rates are still high for this because apparently we are "at risk," whatever.  We would only save about $200/month and our thought of renting kind of went out of the window because the rate is closer to 5.2% not 4.2% and we would still lose too much $$ per month renting.  
Option 2: Refi for a 15 year and plan on paying it down far enough so sometime in 5-6 years we could break even. Not sure what an extra payment a year would look like, I would be curious how much quicker that could speed the process up.  
Option 3:  Buy a new home now and walk away from ours.  I honestly do not think I could ever do this, too risky, but it seems that the only thing will suffer will be my credit.  I would have my dream home, I can pay cash for a car, what else do I have to worry about.  I still hate being able to buy something new now but having to stay in our current home because of how underwater we are.
  • March 24 2012 - Seattle
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Answers (6)

Profile picture for bruehlt
Agree with the professionals below.  I got 3 - 4 quotes from various places in my effort to refi under harp in the past week.  The rates that were quoted were all over the place.  My present lender (GMAC) wanted around 5.2 as well, which was crazy considering that their closing costs were no cheaper than the lender I chose (mortgage broker that I found on Zillow with excellent reviews and feedback.  He got me a rate locked in at 4.2, with a provision of float down if rates drop, in addition to fair closing costs.
  • March 26 2012
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We are sitting at 150% LTV, so hopefully that answers why our 30 yr is a little higher 
============
...not relevant.  the pricing would be the same whether your LTV is 200, 150, 100, or even 80.

Fannie Mae has agreed to waive any LLPAs (loan level price adjustments) in excess of 0.750 (=0.125% to 0.250% in rate) on a 30 yr loan.
  • March 26 2012
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Profile picture for Kent Coug
We are sitting at 150% LTV, so hopefully that answers why our 30 yr is a little higher.  Once again, we are supposedly "at risk" in the banks eyes even though our current mortgage payment is no problem.  We are leaning towards the 15 year plan so we can pay down quicker (we have to get out of this house), but I was quoted at 4.375%.  Actually, here is what I was quoted at for everything:
30 year - 5.125 + $2144 for approx closing costs.  The total of the is $300,000 and as I mentioned, we are 150% LTV
15 year - 4.375 + $2144 for closing.  Same as before, $300,000 loan.  
Are these too high of rates given our situation?  
  • March 25 2012
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5.2% tells me that all your closing costs are being paid by the lender, thus your new loan balance is the same as the payoff of the old loan. (if not, then it is high)

Every lender you speak with will have rates from about 3.875% and up, ask your lender for estimates in 1/8% increments starting at 3.875% then just pick the rate/cost scenario you like best.
  • March 25 2012
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Profile picture for Brian GFL Capital
those would be the options that are available to you. depending on the LTV the 15 year might not be possible as I believe there is a cap on the 15 year right now that should be removed in June.

the rate that you are being quoted for the 30 year seems high. im working on a couple Washington state HARP 2.0 loans at lower rates than that. most lenders do have adjustments to their rates based on what tier of LTV that you are at.

under 105% has a better rate than under 125% and then over 125% to unlimited has its own rate adjustment. the adjustments are not huge because of the adjustment cap that is placed on this particular program, but there is still a rate difference between them.

im not sure if this answers your question but hopefully it sheds some more light to the details of the program.
  • March 25 2012
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Profile picture for Brian GFL Capital
those would be the options that are available to you. depending on the LTV the 15 year might not be possible as I believe there is a cap on the 15 year right now that should be removed in June.

the rate that you are being quoted for the 30 year seems high. im working on a couple Washington state HARP 2.0 loans at lower rates than that. most lenders do have adjustments to their rates based on what tier of LTV that you are at.

under 105% has a better rate than under 125% and then over 125% to unlimited has its own rate adjustment. the adjustments are not huge because of the adjustment cap that is placed on this particular program, but there is still a rate difference between them.

im not sure if this answers your question but hopefully it sheds some more light to the details of the program.
  • March 25 2012
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