I just refinanced on my 1st home using the HARP program and we have made an offer on a short sale property. In our situation, I qualified for both loans so its not too much of a big deal. We are excited but the short sale has taken 6 weeks so far and no end in site. All I can say is get the ReFi done ASAP, then when you have your new mortgage payment, see a new lender about your purchase amount to determine what you can afford based upon your circumstances. Remember, always get 3 quotes for a loan. I typically get a few big banks and a mortgage bank. Once you have that ready research what you can lease your 1st home for and if you can cover that note now with the new mortgage. Then enjoy your shopping. I know for us, we are buying in West Murrieta and it is HIGHLY competitive. The home we picked was on the market for 48 hours and had 10 offers. We offered 8% above asking and won. We were lucky. Things are selling fast and inventory is low so I see prices slowly climbing up. I think its the best time to buy. Under 4% on a 30yr isn't going to last much longer.