A thirty year fixed home mortgage refinance is currently priced between 4.750% and 5.250% charging the borrower minimal or no points for a Rate and Term refinance. The refinance rates shift daily for home refinances depending on economic conditions, but haven't changed much from this range since April 2009.
Each lender has the opportunity to offer their service portfolio a government stimulus refinance program from the United States Dept of Treasury called the "Making Home Affordable" Plan. This home mortgage loan program 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 normally 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 advantageous for homeowners who have undergone the loss of a percent of their earnings and/or devaluation of their homestead due to general economic conditions. This program offers assistance to borrowers who have fallen behind in their monthly house 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 homeowner must have a job and cannot have become self-employed in the last 2 years.
The refinance must show a benefit to the borrower by lowering interest rate percentage and monthly payment or taking the homeowner from an adjustable rate mortgage or pay option ARM to a fixed package.
*Also note the program will not allow a borrower to refinance second mortgages. Second mortgages are subordinated to allow the refinance to proceed.
When refinancing your mortgage, requesting your current lender's version of the "Making Home Affordable" program 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 ARMs. The mortgage loan is basically a streamline refinance, but with the added advantage of no appraisal. In this economic atmosphere of declining market values and rampant job 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 sizable monthly savings 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 borrower should plan to remain in the home long enough to recoup the cost of the buydown. 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 paid by the borrower.
Rates for loans less than a 30 year term are less attractive. It appears lenders are more interested in locking in a long term borrower than short term ones. 3, 5 and 7 year adjustable rate mortgage 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 mortgage company for information specific to your mortgage loan.
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