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Jay Patel

Certified Mortgage Consultant

NMLS #274709, Over 25 Yrs Exp.

(714) 970-0882

Short Sale vs. HARP Refinance for Underwater Homeowners
If your home is worth less than your loan balance, use this tool to compare the costs of refinancing vs. pursuing a "short sale"
Enter figures in the boxes below and you will then be able to view and adjust the critical factors on the RESULTS page
Current Estimated Property Value
Enter the current value of your home
Current Loan Balance and Proposed Terms of Refinance
Enter your current loan balance
Enter the approximate closing cost factor for refinancing
Total new loan amount will equal
Starting Loan to Value
Enter the proposed interest rate for your refinance
Enter the term (in years) of the new loan
New Principal and Interest Payment will Equal
If you are currently paying for Mortgage Insurance (PMI or MI), enter the cost factor here:
Monthly PMI or MI Factor if applicable
Monthly Mortage Insurance Cost
Selling by Short Sale and then Buying a Comparable Home After Three Years
The Cost of Moving and Renting
Enter the cost of moving. It's up to you to include the time lost changing addresses, setting up utilities, etc.
Enter the monthly cost of renting a truly comparable home in the same neighborhood, school system, etc.
Projected Future Home Purchase Price
The Projected Value of a Comparable Home in 3 Years at an appreciation rate of
Down Payment & Closing Cost Factors for Future Purchase:
Enter the expected down payment percentage for when you purchase again
Down Payment will Equal
Enter the expected closing cost factor
Closing Costs will Equal
Loan Terms for Future Purchase:
Loan to Value and Base loan Amount
Loan to Value = Loan Amount =
Future Mortgage Interest Rate - you'll be able to adjust this from the results screen
Enter the Loan Term (in years)
Upfront or Single Premium Mortgage Insurance Cost =
Will the Upfront MI or Single Premium be added to the loan amount?
Yes No
Loan Amount will equal
Mo. PMI Factor if applicable and resulting monthly cost
Principal and Interest Payment
Cash Requirements for Future Purchase:
Down Payment plus closing costs plus non-financed mortgage insurance
Loan Payments:
Loan Payment for Future Purchase - this includes principal, interest and mortgage insurance if applicable
Loan Payment for Refinance - this includes principal, interest and mortgage insurance if applicable
Monthly Payment Savings of Refinance vs. Short Sale/Future Purchase
RESULTS - On this page you can see the results of the factors used and then further adjust the most important ones
This first graph - displays an after tax cost to own result. This reflects the cost of your mortgage interest expense less tax benefits and
then adds in the negative equity or "underwater" portion of your current home loan on the refi line.
The lower the cost, the better the option:
Refinance Payment = Purchase Payment = Difference =
Average Rate of Appreciation
Future Mortgage Interest Rate
Note: Though values have declined over the past several years, this is a rare event and not likely to continue. Over about the last 50 years, the national average is over 5% and this runs from the low 3's at a minimum for some states to over 7% in others.

State lookup list:       
Note: Though interest rates have recently seen historical lows, there is no guarantee where they will be tomorrow, much less 3 years from now. As a guide, over about the last 50 years the average 30 Yr.fixed rate is approximately 8.44%. Rates will rise as the economy improves and the Fed's support ends.
Marginal Tax Bracket used to calculate the after tax cost of your interest payments =
This graph - shows the amount of equity that you would have in your home with a refi vs. renting then purchasing another home. Renting will always show a $0 equity position. This graph will also adjust with the appreciation and interest rate controls above.
In this Final Graph - There is one single line that evidences the amount and the duration of any advantage that might be available by selling your home short vs. refinancing. This too will adjust with the controls above. A line that is declining means that over time, any benefit of selling short is also declining. If the line goes under zero, that's the point at which a short sale costs more than staying in your home and refinancing.
WARNING - There are some major negative consequences and risks with selling short - click help icon for MUST READ info

The information contained in these calculators and reports is for informational purposes only. The use, presentation or receipt of this information does not constitute an offer to lend, an application, a Good Faith Estimate, or estimate of fees. Where included, interest rates are subject to change at any time and are not intended to be viewed as the current market rate. Annual Percentage Rates (APRs) can also vary at any time and are presented as approximations. APRs shown here are generally calculated conservatively and may be higher than the actual current market APR, which will be determined and disclosed upon request of a formal Good Faith Estimate or upon application for financing. Every effort has been made to assure the accuracy of the information and mathematical calculations; however, the provider makes no guarantee and maintains no liability for use of or reliance upon the results. Formulation of a scenario using these tools does not mean that the results are guaranteed. All loan products have guidelines, and those rules or tolerances will vary based upon many factors, including but not limited to loan to value ratios, income, employment history, debts, assets, creditworthiness, and underwriter's review and approval.

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