Mortgage Refinance Today Is Challenging


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A thirty year fixed home mortgage refinance is currently priced from 4.750% and 5.250% charging the home owner minimal or no points for a no cash out refinance. The rates shift daily for home refinances depending on market conditions, but haven't deviated from this range since April 2009.

Each mortgage company has the opportunity to offer their current customers a government stimulus refinance plan from the U.S. Dept of Treasury called the "Making Home Affordable" Plan. This home mortgage loan program allows home mortgage refinance with property valuation from the lender's automated valuation process and also allows qualifying with a higher debt to income ratio than traditionally 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 plan is helpful to borrowers who have undergone the loss of a percent of their income and/or devaluation of their property due to general economic conditions. This product offers assistance to homeowners who have gone delinquent in their monthly mortgage payments.

What the Plan Will Not Allow:

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

The borrower must be employed and cannot have become self-employed in the last twenty four months.

The refinance must show a benefit to the property owner by dropping rate and monthly payment or taking the homeowner from an adjustable rate mortgage or pay option ARM to a fixed program.

*Also note the program will not allow a borrower to refinance home equity lines of credit. Second mortgages 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" plan should be enough to let your bank know the specific program you're interesting in exploring.

The stimulus refinance package pertains to the refinance of 30/20/15/10 year fixed mortgages. Some lenders added the 5/7/10 year adjustable rate mortgages. The mortgage loan is basically a streamline refinance, but with the added advantage of no appraisal. In this financial atmosphere of declining market values and rampant job 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. Borrowers presently in an FHA or VA loan should use this option because the stimulus plan cannot make the change from a government loan to a conventional conforming program. Government loan rates are comparable to conventional conforming rates. Both translate to sizable monthly savings 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 rate, but a homeowner should plan to remain in the dwelling long enough to recoup the cost of the points paid. Each point represents 1% of the loan amount. The costs to close the loan may be rolled into the loan and refinanced as well so that no out of pocket charges will be incurred by the borrower.

Rates for loans less than a 30 year term are not as low. It appears lenders are more interested in locking in a long term customer 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 suggested a homeowner set up their home mortgage refinance on a 30 year term, but make the monthly payment based on the payment for the term they wish.

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

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