Mortgage Refinance Today Is Problematic

A thirty year fixed home mortgage refinance is presently priced from 4.750% to 5.250% charging the property owner minimal or no points for a no cash out refinance. The home loan rates change daily for home mortgages depending on financial conditions, but haven't deviated from this range since last year.

Each bank has the choice to offer their current borrowers a government stimulus refinance plan from the United States Department of Treasury called the "Making Home Affordable" Plan. This mortgage loan package allows home mortgage refinance with property valuation from the lender's automated valuation process and also allows underwriting guidelines with a higher debt to income ratio than generally allowed.

The stimulus refinance program refers to the refinance of 30/20/15/10 year fixed mortgages. Some lenders added the 5/7/10 year ARMs.

This approach is helpful to property owners who have suffered the loss of a percentage of their wages and/or devaluation of their property due to general industry conditions. This package offers help to property owners who have gone delinquent in their monthly house payments.

What the Plan Will Not Allow:

The automated valuation cannot show the home value over 105% of the current loan amount, 110% in certain cases.

The property owner must be employed and cannot have become business owners in the last 24 months.

The refinance must show an advantage to the homeowner by dropping interest rate percent and payment or taking the borrower from an ARM or pay option ARM to a fixed program.

*Also note the package will not allow a borrower to refinance home equity lines of credit. Lines of credit are subordinated to allow the refinance to proceed.

When refinancing your mortgage, asking for your current mortgage company's version of the "Making Home Affordable" package should be enough to let your mortgage company know the specific program you're interesting in exploring.

The stimulus refinance program refers to the refinance of 30/20/15/10 year fixed mortgages. Some lenders added the 5/7/10 year adjustable rate mortgages. The mortgage package is basically a streamline refinance, but with the added advantage of no appraisal. In this financial atmosphere of declining market values and rampant employment losses, it allows a lower monthly mortgage payment and a savings every month..

Government VA and FHA home loans still allow the Interest Rate Reduction Loans with no appraisal except under certain circumstances. Homeowners currently in an FHA or VA loan should use this option as the stimulus plan cannot make the change from a government loan to a conventional conforming program. FHA and VA loan rates are comparable to conventional conforming rates. Both translate to substantial savings every month for most refinanced mortgages with rates around 5% from a median 6.5% a year ago.

Buying down the rate will allow an even lower monthly payment, but a homeowner should plan to remain in the dwelling long enough to recoup the cost of the buydown. Each point represents 1% of the loan amount. The closing costs may be added into the loan and refinanced as well so that no out of pocket expense will be incurred by the homeowner.

Rates for loans less than a 30 year term are not as low. It appears bankers are more interested in locking in a long term property owner than short term ones. 3, 5 and 7 year ARM loans give no measurable break in interest rate from a 30 year fixed. It is thought a borrower set up their home mortgage refinance on a 30 year term, but make the payment based on the payment for the term they wish.

Write your current lender for information specific to your mortgage loan.

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