HARP vs. Traditional Refi?

[SweetErika]

We need to refi our mortgage ASAP. I'm trying to figure out if the HARP program is worth looking into. Our current lender, Chase, says we don't qualify solely on the basis that our PMI is not separate from our loan (it's paid for by a higher APR, which we foolishly took on the assumption that we could gain enough equity quickly to have that APR lowered; then the market crashed hard, and we were severely underwater), yet we clearly qualify under every stated HARP condition.

Now we can actually afford a traditional refi with a loan that doesn't require PMI. Our LTV ratio is 89%, so we'd have to pay about $27,000 plus the closing costs of a new loan to get to the point where we wouldn't need PMI at all on the new loan. We have excellent credit and a steady income, so we'd likely qualify for the lowest rate on a traditional refi.

Are there any advantages to a HARP refi vs. a traditional refi? Lower interest rates, less in closing costs, etc.? I guess I'm wondering if it's worth trying to find a lender that would allow us to use the HARP program, even though our PMI is rolled into our mortgage. Or should I just concentrate my efforts on shopping around for a traditional refi?

Yes, I've googled, but I'm having trouble finding good info on the benefits of HARP that would actually be applicable to us (we're not underwater anymore, don't have credit issues, etc.).

 

[C5MiGuy]

What's your current interest rate vs what the new rate will be (whether HARP or traditional)?
How long do you plan to stay in the current house?
What closing costs will be incurred with either venue?

 

[Que]

I am not at all current in the industry so the advice to be cautious about "inquiries" generated from talking to several mortgage brokers might have been solved. If you talk to more than one, try not have more than one pull your credit.

If you know of a very successful Realtor in your area, ask them for a recommendation of their favorite mortgage broker. That individual will be one of the most knowledgeable people in your area about various programs, who has the best underwriting for your particular situation and so on.

 

[SweetErika]

What's your current interest rate vs what the new rate will be (whether HARP or traditional)?
How long do you plan to stay in the current house?
What closing costs will be incurred with either venue?

Our current rate is 7.25% and we plan to stay for at least another 7 years, so we need to refi immediately.

 

[C5MiGuy]

Our current rate is 7.25% and we plan to stay for at least another 7 years, so we need to refi immediately.

Unless they changed it, I know that as soon as you got enough equity you could request to have the PMI removed from the loan. If you don't have the $27,000 to get out of it at the beginning and qualify for HARP, I would find a lender with the best closing cost/interest rate over the next seven years. A slightly higher rate with lower closing costs may actually work to your advantage over a lower rate with higher costs if you plan on selling in the 7-10 year range. You (or your lender(s)) would have to run the numbers based on loan amount.