Refinance with HARP OK?
December 11, 2009 6:09 PM   Subscribe

Are there any downsides to a HARP (Home Affordable Refinance Program [pdf]) refinance? My wife & I are employed and not behind on our mortgage, but this seems like an awfully good deal.

We bought the house about a year ago to cut our commutes by 2/3 with 15% down, 80% 1st at ~6.625% and a 5% 10 year 2nd at 4.25%. It's our only house and it's the third house we've owned (in 10 years).

Now the originating bank (Wells Fargo) who sold the mortgage to Fannie Mae has called up and is offering 5.375% 30 year fixed which is low enough that we can pay the normal amortization at only 1.4% more than we were paying for a limited-time interest-only feature.

I can afford the small bump and would be relieved to not have a big hike coming in 4 more years when the original loan amount must be paid off in only 25 years. I know how dumb not paying off the principal is, but living on paychecks only with no credit card use or stock options to sell has been surprisingly hard for us.

There are supposedly no fees and no points. Our house is supposedly worth 89% of what we paid for it. The Loan-to-Value is still acceptable in the program, though the banker mentioned they may end up doing an appraisal.

I meet with the banker Monday. I'll be sure to ask who pays for the appraisal if it's needed. Anything else to watch out for?
posted by morganw to Work & Money (1 answer total) 2 users marked this as a favorite
Sounds good to me. And, from a US taxpayer, you're welcome. The better alternative is for the lender to take a cramdown for part of the 11% depreciation in home value, but apparently hell will freeze over long before US home lenders have to take any responsibility.
posted by fatllama at 6:30 AM on December 12, 2009

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