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Questions About Harp Program Refinance

Is the Streamline Refinancing program a good choice?

I have been in my home since 3/2008. I purchased it at a 6% rate for 285,000 FHA loan. The mortgage is $2200.25 per month. I recently called Wells Fargo to inquire about a HARP loan but that is only conventional loans through Freddie & Fannie Mae. Ok, so the banker tells me about STREAMLINING (I had never heard of this before). She stated that I could get locked into a 4.625 and that my mortgage would be 2020.00 (about $180 a month less). Is this a wise thing to do? It is difficult to pay my mortgage but I have never been late and just roughed it out.

Also, I can’t do a normal refinance because my home is worth only $225,000 now (there were SEVERAL foreclosures in my area).

Any suggestions on if I should do the streamlining, what are the pros and cons?

Industry Expert answers:

Yes, I did exactly this.

There are no drawbacks, this is the perfect solution for anyone with good credit. 100 times easier then a modification too. Your mortgage should drop more then that though.

I am having cold-feet about refinancing my mortgage, what do you guys think?

I am a first-time home owner and I have been in my house just under three years. I have good credit and I have never missed a mortgage payment. Recently my lender contacted me about the new HARP program urging me to refinance. I let them send me a good faith estimate and it looks like I do qualify for this refinance.

Here are my details – after our 10% down-payment, our loan came out to $200,700. Our fixed interest rate is currently 6.375% and we pay approximately $1,570 a month including taxes, insurance and PMI. At our current payment rate we will be down to 78% base in about 2 years so we can look forward to a dropping that ~$80 PMI payment then.

The GFE has us locked in at 5.375% fixed which would drop our payment by about $140 a month and reset our mortgage @ 30 years.

Now, at our current payment we have payed approximately $57,000 in monthly mortgage payments but have only knocked about $6.2k off of the principal. Just typing that makes my knees weak. I understand that the front end of the life of a mortgage is paying heavily into the interest and a good chunk of that monthly payment goes into other things such as property insurance, PMI, taxes etc. but

I am not sure how i feel about resetting and “losing” those 3 years of payments. Our principal is currently at about 194,000.

The refinance will cost me about $4,100 with 500 due upfront and the rest rolled into the loan. so in other words we are almost right back to that 200k initial loan just with a reduced monthly payment.
Is this too much of a loss of ground or is it likely to be worth it in the long run? From my math we would make up that money in about 30 months and we will probably be in the house another 5 years before we start trying to sell. So part of me feels like it makes sense, but if we reset the loan now, are we essentially “losing” that $50,000? I know that probably isn’t the right way to think about it but it is what it is.

I know 6.375 is high and according to today’s numbers over at bankrate.com 5.375 is reasonable – especially going with the HARP program and having to do a traditional refinance full with appraisal etc – but please let me know what you guys think of this offer and if you have any other comments or suggestions.
thanks so much!
Thank you guys for so much great advice so far! I can’t believe I forgot to mention that I am in North Carolina – Durham, and the market value of my house has indeed gone up quite significantly since I purchased the home. Just under 10%. at least so I’m told by the county and my lender…
Thank you guys for so much great advice so far! I can’t believe I forgot to mention that I am in North Carolina – Durham, and the market value of my house has indeed gone up quite significantly since I purchased the home. Just under 10%. at least so I’m told by the county and my lender…

Industry Expert answers:

Arbor and Age gave good answers. I have also heard that one extra payment a year – just one – will knock off 7-10 years on a 30-year loan.

Keep in mind what the FMV of the house is, not just what you have put into it. If the market is down and the house is worth less, by all means skip the refi.

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