Home Mortgage Refinance Today Is Complex

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 Rate and Term refinance. The home loan rates change daily for home mortgages depending on economic conditions, but haven't deviated from this range since April 2009.

Each bank has the opportunity to offer their current customers a government stimulus refinance program from the United States Dept of Treasury called the "Making Home Affordable" Plan. This mortgage loan product 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 plan is helpful for property owners who have undergone the loss of a percentage of their earnings and/or devaluation of their property due to general economic conditions. This product offers assistance to homeowners who have fallen behind in their monthly house 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 self-employed in the last 24 months.

The refinance must show a benefit to the property owner by lowering interest rate percentage and monthly payment or taking the customer 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. Second mortgages are subordinated to allow the refinance to proceed.

When refinancing your mortgage, asking for your current lender's version of the "Making Home Affordable" package should be enough to let your mortgage company 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 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 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 as the stimulus plan cannot make the change from a government loan to a conventional conforming program. FHA and VA 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 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 added into the loan and refinanced as well so that no out of pocket expense 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 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 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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