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Mortgage Refinance Today Is Challenging A thirty year fixed home mortgage refinance is presently priced between 4.750% to 5.250% charging the home owner minimal or no points for a no cash out refinance. The refinance rates fluctuate daily for home loans depending on market conditions, but haven't deviated from this range since last year. Each lender has the opportunity to offer their current borrowers a government stimulus refinance plan from the U.S. Dept of Treasury called the "Making Home Affordable" Plan. This mortgage loan product allows home mortgage refinance with property valuation from the mortgage company'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 for homeowners who have undergone the loss of a percentage of their wages and/or devaluation of their property due to general financial conditions. This product offers assistance to borrowers who have fallen behind in their monthly mortgage payments. What the Plan Will Not Allow: The automated appraised value cannot show the home value over 105% of the current loan amount, 110% in certain cases. The homeowner must be employed and cannot have become business owners in the last 2 years. The refinance must show an advantage to the property owner by dropping interest rate and payment or taking the property owner from an ARM or pay option ARM to a fixed package. *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, asking for your current bank's version of the "Making Home Affordable" program should be enough to let your lender 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 ARMs. The mortgage package is basically a streamline refinance, but with the added advantage of no appraisal. In this economic atmosphere of declining market values and rampant employment losses, it allows a lower monthly 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 presently 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. Government loan rates are about the same as 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 house 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 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 lenders are more interested in locking in a long term borrower 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 monthly payment based on the payment for the term they wish. Call your current mortgage company for information specific to your mortgage loan. |
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