Mortgage Loan Refinance Today Is Challenging

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Mortgage Loan Refinance Today Is Challenging

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

Each lender has the choice to offer their current customers a government stimulus refinance plan from the U.S. Dept of Treasury called the "Making Home Affordable" Plan. This mortgage loan plan 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 typically 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 program is advantageous to homeowners who have suffered the loss of a percent of their wages and/or devaluation of their home due to general economic conditions. This product offers help to borrowers who have fallen past due 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 business owners in the last twenty four months.

The refinance must show a benefit to the property owner by lowering interest rate and monthly payment or taking the borrower from an ARM or pay option ARM to a fixed plan.

*Also note the program 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, requesting your current bank's version of the "Making Home Affordable" package should be enough to let your lender know the specific program you're interesting in exploring.

The stimulus refinance plan 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 payment and a substantial monthly savings.

Government VA and FHA home loans still allow the Interest Rate Reduction Loans with no appraisal except under certain circumstances. Homeowners 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 about the same as 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.

Paying points will allow an even lower rate, but a homeowner should plan to remain in the property long enough to recoup the cost of the buydown. Each point represents 1% of the loan amount. The closing costs may be rolled into the loan and refinanced as well so that no out of pocket expense will be paid by the homeowner.

Rates for loans less than a 30 year term are less attractive. It appears mortgage companies 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 thought 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.

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

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