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HARP requires to include property tax and insurance payment

I'm currently seeking for refinancing options under HARP. One of the leaders offers 4.375% with a cost for HOA certificate, estimated $250, but requires to include the property taxes and insurance in the monthly mortgage payment.

I have 6.125% with the current loan and pay property taxes and insurance separately. Without including the property taxes and insurance, I will lower the payment (principal and interest) by $350 a month.

I would like to hear from you whether I should go for this option. Anyone knows what the differences between including property tax and insurance to the payment and not including. Thanks in advance!
  • August 23 2012 - US
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Answers (17)

Good news on Fannie Mae.   Your lender doesn't know what they are doing, there is no condo review done on Fannie Mae version of the property.

Rate is only one part of determining what is available.    That rate can come with Zero closing costs or with 8,000 of closing cost, so you need a formal estimate to determine if it is worth pursuing.  It sounds like you were quoted only on out of pocket costs but weren't provided an estimate on costs that will be financed at closing.

I'm in San Diego and I have some good sources available for HARP 2.0 Investment Property.   Contact me through my profile if you would like to look closer at your options.
  • August 23 2012
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Thanks Justin! I just found out I'm currently under Fannie Mae. The lender didn't mention about any other fees (i.e. Adjusted Origination Fee) but only HOA certificate I have to pay.
  • August 23 2012
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I would look up and find out which you have, I beleve the ZIllow Underwater Resource Center has links to this and if not a simple google search you will find the sites to confirm which type of loan you have.

If it is Fannie Mae loan, better options are very likely available.  Do you know how much "Adjusted Origination Fee" you are being charged for 4.375 Rate?

Freddie Mac is much tougher, especially on Condo as there are far fewer participating lenders for the version of the program.
  • August 23 2012
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I forgot to mention. I have 780 credit score (middle score) and good income. Anyone knows I would get a better deal than 4.375% on this rental property?
  • August 23 2012
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I'm not sure whether I'm under Freddie Mac. The lender mentioned I need HOA certificate only, not any other ones neither appraisal.
  • August 23 2012
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As already mentioned, several lenders allows Escrow Waiver in CA at unlimited Loan to Value.   

It sounds like you have a Freddie Mac loan then?   HOA certificate would not normally be required on a Fannie Mae loan.  

If Freddie Mac loan, certificate is just a starting point.   Full condo review is required for Freddie Condo in CA at your Loan to Value.  You'll need budget, bylaws, declaration, Certificate among other items.

  • August 23 2012
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All California loans with a loan to value over 90% require an impound account for taxes and insurance.    
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yet I continue to close them (HARP in  CA) at LTVs greater than 100%, even greater than 200% without escrows.   
  • August 23 2012
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IMHO there is no benefit to having impounds. Impounds are there to protect the lender and all it does is tie up your money that could better be invested elsewhere. Some say it's "easier" because you don't need to make the lump sum payment; To that I say, anyone that cannot put the same amount away in their own account without spending it is not financially mature enough to own a home.
  • August 23 2012
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" All California loans with a loan to value over 90% require an impound account for taxes and insurance."

Again, that is not true. If you are refinancing with HARP, escrows can be waived if the LTV on the new loan is less than 80% or escrows can be waived if the original LTV was 80% or less and the original transaction did not have escrows.

  • August 23 2012
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impounds

pros = you don't have to worry about saving the money on your own to pay them yourself. You usually get a better rate or more lender credit with an impound account vs. paying them on your own.

cons = your monthly payment is higher because it includes the taxes and insurance. You will also need to put 9 months worth of taxes into the impound account to get it started (assuming you close in September)

Since it is required, the pros and cons are a moot point.
  • August 23 2012
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All California loans with a loan to value over 90% require an impound account for taxes and insurance.   You will still be lowering your P+I payment by $350 a month.   However the TOTAL payment may be the same as what you pay now (or even higher, depending on how much your taxes and insurance are)   You are still saving money, just not the way you were hoping for.   Looking at the bright side, when your taxes are due in December and April, you won't have to worry about them since the new lender will be paying them.

4.375% for a 30 year fixed, non owner occupied, no cost refi is actually a good rate.   I would definately take the deal.



  • August 23 2012
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I owe about $193k. I still like to know what the pros and cons of the compounds. Thanks.
  • August 23 2012
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" It is a rental property, not my primary residence. It is underwater around $35k. Do you know a better deal?"

I can't say based on what I know. One of the reasons HARP loans are so hard to compare is because there are so many layers. 

How much do you owe? I know it's worth $35K less than that but I don't know the number. If your LTV is at 125% or better, there may be better options. however, you need the ability to waive escrows as well so you would have to be matched with someone who can do the investment property as well as the escrow waiver at a decent rate. 
  • August 23 2012
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It is a rental property, not my primary residence. It is underwater around $35k. Do you know a better deal?
  • August 23 2012
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You don't have to have escrow impounds with the new mortgage if you didn't with the old one. Some lenders may require it, but it's not a HARP requirement and there are those lenders that won't make you impound. 

What are the other details of your transaction because 4.375% seems a bit high. If this your primary residence?
  • August 23 2012
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Los Angles, California
  • August 23 2012
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What state are you in?
  • August 23 2012
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