Mortgage Refinance In Today's Economic Atmosphere Is Challenging

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

Each bank has the advantage to offer their current borrowers a government stimulus refinance product from the United States Department of Treasury called the "Making Home Affordable" Plan. This mortgage loan product allows home mortgage refinance with property valuation from the bank's automated valuation process and also allows qualifying 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 plan is helpful to property owners who have suffered the loss of a portion of their earnings and/or devaluation of their homestead due to general economic conditions. This package offers assistance to property owners who have fallen past due in their monthly house payments.

What the Plan Will Not Allow:

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

The homeowner must have a job and cannot have become self-employed in the last 24 months.

The refinance must show a benefit to the homeowner by dropping interest rate percentage and payment or taking the customer from an ARM or pay option ARM to a fixed product.

*Also note the plan 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 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 ARMs. 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. 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 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 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 paid 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 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.

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

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