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help with harp refinance with current loan having lpmi

I was recently surprised to find out my current loan has lpmi. This was discovered at the 11th hour of a harp refinance I was trying to get done. My mortgage company surprised me with a form I needed to sign indicating I now owed a monthly insurance payment that was being transferred to me from my old loan. This was never explained to me up to this point and we were days away from setting up the closing date. They claimed they were surprised with it as well but shouldnt they have seen it coming knowing the details of my current loan? Anyways not knowing what I now know about the harp program and lpmi, I thought I was getting a similar deal that I had gotten on my original mortgage where I would pay a slightly higher rate and still pay no pmi. But what I think i was really getting was a higher rate and also paying the insurance. Not happy about the surprise and feeling being taken advantage of I backed out of the loan. My question is what is my best option now knowing that I have lpmi on my current loan? Is transferring the current lpmi the best option or can I pay it myself and get a better rate? How hard is it to find a bank that will work with this situation.
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October 28 2012 - US
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This should have been disclosed to you from the beginning not at eleventh hour. The existence of the MI is indicated in the Fannie Mae/Freddie Mac software which should be reviewed as soon as you submit your application. No excuse for the originator to miss this. It sounds like you have a "recurring pay" LPMI and it is customary to convert this to a borrower paid policy on HARP refinance. It is much easier to convert an existing policy than obtain a new one. The attainability is easier and the conversion is based on the grandfathered MI rate that was previously purchased. It is unfortunate you were surprised at the last minute but you should expect the same result if you start again.
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October 28 2012
I thought I was getting a similar deal that I had gotten on my original mortgage where I would pay a slightly higher rate and still pay no pmi.
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If you had the single premium LPMI then you're better off transferring it.

In that case, because the premium was already paid with the first loan, you do not have to pay "a slighty higher rate" on the new loan; you'd get the same rate that you'd get if you had no mortgage insurance at all. The new loan will not have monthly mortgage insurance.

If you had "recurring pay" LPMI follow Justin's advice.
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October 29 2012
If your existing lender paid the MI upfront then you will not be responsible for it.  However, if they pay it per month then yes you would be responsible for the MI payment unfortunately.  Some lenders also do have rate adjustments for having MI.  We specialize in HARP loans and can at least direct you to the proper lender.
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December 20 2012
 
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