HARP PMI – How Does PMI Affect Refinancing?
With the new HARP 2.0 program in full swing now, many folks are needing to know if they will qualify with their current mortgage insurance, both PMI(private mortgage insurance) as well as LPMI (lender paid mortgage insurance) scenarios. That being said, HARP PMI has quickly become a major question in determining HARP eligibility so we’ve put together a little Q&A:
HARP PMI Question #1 – If my current loan has PMI, will my new loan it too?
If your current (Conventional) loan has monthly PMI included, then your new loan would as well under the new HARP 2.0 program. Essentially, the PMI certificate from your existing loan is simply transferred to the new loan and you would continue paying the same amount. Please note that not all PMI companies and end lenders allow this so its best to complete our simple live rate quote form and discuss your scenario with on of our qualified lenders to see if your scenario will w0rk.
HARP PMI Question #2 – If my current mortgage has LPMI(Lender Paid Mortgage Insurance) will my new one have it?
This depends on whether your current lender paid the entire LPMI amount up front when you last closed or whether they are paying it monthly behind the scenes. If its the later of the two, then you can sometimes just transfer that way of having it paid to the new lender and pay a slightly higher rate with the new lender to offset them taking on the LPMI. However, if the LPMI was paid by your current lender all at once, then that is usually a sunk cost and you’d need to pay for LPMI again one way or another on the new loan. Still, its not too expensive to have the LPMI rolled in so be sure to ask lenders what their LPMI options are.
HARP PMI eligibility can be a tricky subject so its best to consult with one of our qualified lenders. Simply complete the free Live RateQuote form on this website to see if your scenario will work.
Question #3 – If I have to take on new LPMI with my HARP refinance because my original lender paid it all at once, how much should my new LPMI cost?
Generally speaking, if your new lender needs to roll LPMI into your rate, the rate should only be about .125% – .375% higher and then you would not be paying any monthly PMI on the new loan. The lender essentially buys out of the PMI requirement by using the extra premium they earn by charging the slightly higher rate and use that money for the PMI buy-out. The result is that you would not be required to pay monthly PMI on the new loan.
All this HARP PMI and LPMI stuff may seem a bit confusion and may would agree with you that it shouldn’t have to be this complicated. It’s best to consult with one of our qualified lenders to see if your scenario will work with the new HARP 2.0 program in relation to your loan’s PMI or LPMI.
Author Joe Karns is a seasoned mortgage banker and owner of the mortgage blog, hotratequote.com, is dedicated to bringing his subscribers relevant and useful information. Want a free mortgage checkup? Check out Joe Karns at the following link for more a FREE refinance consultation. Or, click here for a free quote and to determine if your HARP PMI scenario qualifies