Should we refinance for a 15 year term or 30 year again?

We are under water and planning to take advantage of the new HARP program coming out in March to help home owners that are current and more than 125% under. We want to refinance to get a lower rate. We are currently at 6.5%. We want to move to a better neighborhood as soon as possible. We have considered a strategic foreclosure but value our excellent credit and are scared of the negative affects. So, we are definitely going to try to refinance under this new program either way. We have lived in our home for 7 years. We currently have a 30 year fixed.

Our dilemma is do we refinance to another 30 year term, lose the years we have already paid into the house , to lower the payments several hundred dollars a month. Or, do we refi. to a 15 year term, cut 8 years off the term.

A: The part of your question about whether to accept loan terms is really more of a financial question than a legal question. Many times if you do the analysis of the value of your credit, you find that the enormous price of paying off an “underwater” house is simply not worth it.

What I would do if I were you is consult with an Arizona real estate attorney who is familiar with the HARP program. Most attorneys, including me and even many real estate attorneys, do not know much about the HARP program. Bert Millett is one attorney who does. His phone number is 480-655-7440 if you care to follow up. Good luck.

* This answer does not constitute legal advice. I am admitted in the State of Arizona only. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. You should not rely on this advice alone, and nothing in these communications creates an attorney-client relationship.

Brad Denton, Mesa Business Attorney.
Re-posted from AVVO Legal Questions & Answers.

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