# Harp 2.0 question

I have stupid question on refinancing under the HARP 2.0 program since I'm a novice with all these lending terms and practices. We have a 30 year fixed rate 5.5% with Citibank currently. We have had loan for 7 years. We are eligible to refinance under HARP since it's a Freddie Mac loan.

Question: when you refinance does that change your repayment terms? So we have 23 years left to pay on our loan currently, does that mean we now have a "new" 30 year term or we still only have our existing 23 years left to pay?
The Citibank offer we got will shave \$365 off our monthly payment which sounds fantastic but if we go from owing 30 years vs 23 years. Just isn't making sense in my head that we will really save that much money. Thanks!
February 27 2012 - North Andover

#### Replies (12)

• Contributions:3404
You are probably being put back into a new 30 year loan. What rate and fees are you being quoted?
February 27 2012
• Contributions:304
You are correct.  You will start over again with a "new" 30 year term.  Before you walk away from the opportunity, do the math.  Calculate your interest expense for the remaining period on your current loan and compare it to the "new" loan.  Does it save you money?  If so, how much?  Is it worth it?
February 27 2012
Interest rate is 4.625% offered by Citi
APR is 5.218% (on the Truth In Lending Disc. Statement Preliminary)

Total est. settlement charges are 3127.30 which they said we can roll into our loan so we do not have to pay any cash up front.

Guess I need to go back and do the math 23 years vs 30 years.

February 27 2012
What's your loan amount, that sounds like a terrible offer.
February 27 2012
try a 20 year fixed; have them price it out for you; there won't be any LLPAs (adjustments for score, LTV, etc) with the winning situation of both lowering the rate and reducing the term

I'll guess by the APR that you have PMI on this loan, otherwise that's a pretty high APR.
February 27 2012
Yes we do have PMI. (Groan!) We bought the house in 2005 when the market was around peak and we could not afford 20% down. We are definitely under water now. Our current loan balance is 299,500. I estimate the property to be valued between 250-280. No appraisal done recently.

With a baby on the way, the HARP program sounded like a solution to get some more money in our pockets for diapers, bottles and day care fees.
It's not sounding so good to me now.

I'll contact them regarding the 20 year term.
February 27 2012
The rate you have been offered is too high, you should contact Shapiroamg who answered you on this thread for a quote.

Also, if you qualify for HARP and want to keep your property, you should definitely take advantage of it and lower your rate. Even if you did take a new 30 year, you would be better off by continuing to pay the same amount as you do now. Doing so will still reduce the amount of time it takes to payoff your mortgage. If your option is to continue making the same payment by not refinancing, or continue to make the same payment by refinancing, the choice is obvious. If you need the extra savings a month or 2 you will still have the option of the lower payment.  Ask about a "no cost" refi and one that does not increase your principal balance.
February 27 2012
• Contributions:662
I would guess it is determined by what financial situation you are in before you decide what is best for you. Remember your new loan is going to be at the lower price, so your interest will be based on that.
If you were looking for a lower payment that 20 year is going to send it back up again.

If you can at all afford to do so, pay your own closing, why do you want to roll those into your mortgage .... putting yourself behind the 8 ball again.

February 27 2012
BTW many times they never explain, then an agent comes in and gives an answer to the question without knowing what the content actually was.
INANE!!
=====================
sounds like what happens when a sign pounder comes onto a mortgage thread and gives "advice".
February 27 2012
• Contributions:3404
Lovely Rita meter maid...
February 27 2012
• Contributions:17
One important thing to remember here is that you haven't lost what you've paid into your loan.  The basis for the refinance is not your original loan amount, but just the remaining balance owed.  Much of that difference is contributing towards your monthly savings because you are financing approx. 30K less now.  If you finance 30K, it's worth about 150-160/month that is coming directly from what you have paid down on the existing loan.

You can have someone run a payment schedule (reverse amoritization schedule) to figure out how much payment you would need to pay each month to payoff the new refinance loan in 23yrs or the exact term you have remaining now on the old loan.

This would be my best advice for you to compare apples to apples.  You can still take the 30yr term knowing if you pay the minimum you will have to make up the difference another month to stay on schedule.

Comparing a 23yr term to a 30yr is best done this way.  Sometimes it's tough because you have PMI, but it can be done.  I would ask for these schedules to be emailed to you so you can make the comparison.

February 27 2012
• Contributions:30
Your best scenario is to go to a 20 year term and lower your rate to around 4%.  Your payment should go lower because of the lower interest rate.  We can help you with your refinance on the HARP program with Unlimited Loan to Value and DTI up to 50%.  Contact me for details.

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March 21 2012

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##### Harp 2.0 question
March 21 2012 | 12 answers
• Posted by she_sween
• In Refinance
• February 27 2012
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