The Home Affordable Refi Program (HARP 2.0) is a refinance program to help home owners who have lost home equity take advantage of today’s historic low interest rates. In order to qualify for this program, the existing mortgage must have been securitized by Fannie Mae or Freddie Mac prior to June 1, 2009. Learn more about the HARP 2.0 program here.
Loans with private mortgage or lender paid mortgage insurance (LPMI) who meet the securitization requirement are also eligible for HARP 2.0. The terms of the private mortgage insurance, as far as the rate, remains the same as what the home owner has on their existing loan. The existing coverage is transferred to the new HARP 2.0 mortgage if the coverage is still in effect.
Borrower Paid Mortgage Insurance (bpmi) is the most traditional form of mortgage insurance. Homeowners will see this in their monthly mortgage payment. If you currently have private mortgage insurance included in your monthly mortgage payment, you will have it in your new HARP 2.0 mortgage payment too.
Lender Paid Mortgage Insurance (lpmi) is not “seen” in your mortgage payment. LPMI is essentially financed into your loan. Homeowners who have LPMI probably traded the monthly pmi payment for a slightly higher interest rate when they obtained their last mortgage with a loan to value greater than 80%. Often times, LPMI scenarios offered lower payments than bpmi or combo loans at the time they were originated.
Some mortgages with LPMI were “single premium” meaning the coverage was paid for in one lump “single premium”. Single premium LPMI may be transferred to a new HARP 2.0 mortgage.
It’s also possible that the existing LPMI may be paid monthly by the lender. In this case, the private mortgage insurance company may be able to convert the “LPMI” from “lender paid” to “borrower paid”. The borrower is trading their higher rate mortgage with LPMI for a much lower rate with monthly pmi in their mortgage payment. The monthly savings has been significant.
It’s my understanding that once PMI is transferred to a new HARP 2.0 mortgage, private mortgage insurance companies consider this a new loan. This means that when the pmi may drop off is reset. Typically pmi drops off your mortgage when your loan to value reaches 78% of the mortgages loan to value based on the appraised value. If your home is significantly underwater, the private mortgage insurance will likely remain until you can refinance. PLEASE DO NOT LET THIS STOP YOU FROM GETTING A HARP 2.0 QUOTE. Mortgage rate quotes are free and it’s doesn’t hurt to find out what your options are. Click here for your HARP 2.0 quote for your home located anywhere in Washington state.
Here are two scenarios from quotes I provided yesterday, May 10, 2012, for HARP 2.0 mortgages with existing lender paid mortgage insurance (both borrowers have excellent credit):
Owner occupied home in Federal Way with a loan amount of $283,000 and an estimated value of $186,000 with LPMI single premium. With 30 year fixed mortgage and a rate of 4.375% (apr 4.515) they are reducing their monthly mortgage payment by $459 per month!
Owner occupied home in Renton with a loan amount of $311,000 and an estimated value of $215,000 with LPMI that was being paid monthly by the lender. 30 year fixed mortgage and a rate of 4.500% (apr 4.569%) they are reducing their monthly mortgage payment by $422 even with the lpmi converted to borrower paid.
NOTE: The difference in rate above due to having a mortgage priced with discount or rebate. How you have your mortgage priced (with discount or rebate credit) is up to you!
If you would like me to provide you a quote for your HARP 2.0 refinance on your home located anywhere in Washington, please click here.
I am required to have the language below if I am soliciting your Home Affordable Refi for your home in Washington…and yes, I would love to help you with your HARP (or any) refinance:
Freddie Mac and Fannie Mae have adopted changes to the Home Affordable Refinance program (HARP) and you may be eligible to take advantages of these changes.
If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP.
You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites: