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Is Refinancing through HARP a good option for me?

I currently have a 5/1 ARM.  We are at an adjustable rate now but due to low rates were are at 3.125%.  We qualify for HARP and I have started the process.  Our LTV ratio is %143.  IF we get a fixed 30 year rate of 4% or payments will slightly go up but we will be locked in.  With taking closing costs in to account.  Is this something that makes sense to do and is 4% a current good rate considering we have good to great credit (above 720) We have 12 months of current mortgage  in savings, and we are current on all payments and debt free? 
  • October 30 2012 - Oceanside
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Answers (9)

Most people would argue yes.   Because the average rate over the life of your loan will LIKELY be much higher than 4%.  We never know for sure, but if history is any indication, rates will not be this low forever.  And as your rates go up on your adjustable, so too (likely) will the 30 year fixed rate, so choosing to "lock in" to a 30 year fixed, will likely bring with it a higher rate.  There is a very strong trend here.    A year from now, rates COULD be even better than they are now, or they could be much worse.   So, unfortunately there is no right answer until the 20/20 of hindsight. 

On the other hand, if you were going to sell it in the next couple years, I might have a diffferent answer for you. 
  • October 31 2012
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If you plan on staying in your home that seems like a good opportunity for you. Although payment will go up this offers long term stability as you never know what ARM will do. As for whether 4.0% is good deal or not its going to depend on what fees are, if its Fannie or Freddie, and there are LTV adjustments at some banks. It always makes sense to shop your scenario.
  • October 31 2012
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Profile picture for sunnyview
If you plan to keep your house, a 5/1 ARM is a bit scary so locking a rate would give you stability. Shop your rate and fees to get the best deal you can. Without HARP, it would be unlikely that you could refi later without bringing significant money to the table so it is a good option if you do not plan to walk away.
  • October 31 2012
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Profile picture for user88084717
This rate does seem on the high side for your credit score. I would shop around a bit more. If you are going to be in the house for 2  years or more then you should get a fixed rate because the market is showing signs of recovery and rates will likely start to climb.
  • October 31 2012
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4.0% seems a little high right now
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A rather presumtuous statement since we don't know the adjusted origination charges (or credits)
  • October 31 2012
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Profile picture for Mortgage Center Corp

What's your loan amount? 4.0% seems a little high right now. The pricing for 4.0% is the same as 3.75% so unless you have other adjustments than you could be getting 3.75%.

  • October 30 2012
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How long are you planning to live there? 





  • October 30 2012
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Do you know how much your "Adjusted Origination Fee" is that corresponds to the 4% rate?    You can likely do better on rate but what matters is the rate/fee combination to determine if you have a "good" offer.

As to overall refinance out of ARM, that really depends on your long term plans for the property.   If you plan on staying for awhile then of course stability is worth converting to for a similar payment.   

I would be happy to give you a competing estimate to compare, I'm in San Diego (Mission Valley) and you can contact me through my profile.
  • October 30 2012
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Hi user,

I recommend that you take a look at our Underwater Resource Center.

Thanks,
Candace
Zillow Customer Service
  • October 30 2012
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