I received an email a recently from a homeowner who has a Fannie Mae mortgage interested in refinancing her mortgage with the HARP program.
QUESTION:
“Hi TED – Currently I have PMI insurance. My original loan was set up that once I got down to 20% equity I could stop paying PMI. Well now if I refi My numbers change. Example my house assessed for $245.000 I currently owe $218.000. PMI would be dropped once I hit aprox $200.000. Now my house is worth $165.000. I am with Fannie Mae and with the Harp 2 program how will my PMI work? Sadly to say I only have $18.000 to drop the $150.00 of each month. With refi my interest is currently 6.625% and if I get it lowered PMI could cost me a lot of money if I have to pay down past $165.000. Something isn’t right. Hopefully you can give me a answer and what about closing costs? What is the MAX I should be paying aprox. Thanks C”
ANSWER:
You will need to contact your lender to find out information about your PMI coverage. Typically with HARP 2.0 loans, the PMI company will stay the same on the new loan. If you’re underwater, you’ll have the PMI until you reach the 20% equity threshold. Unfortunately, that may take many years to reach that level in a declining or flat market.
For now, I recommend getting started on refinancing your Fannie Mae mortgage through HARP because you’re looking at several thousand dollars in annual savings even with PMI.
