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Home Mortgage Refinance 2010 Is Complex
A thirty year fixed home mortgage refinance is currently priced from 4.750% to 5.250% charging the home owner minimal or no points for a Rate and Term refinance. The home loan rates shift daily for home refinances depending on financial conditions, but haven't changed much from this range since April 2009.
Each bank has the chance to offer their current customers a government stimulus refinance program from the United States Dept of Treasury called the "Making Home Affordable" Plan. This home mortgage loan product allows home mortgage refinance with property valuation from the mortgage company'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 package is helpful for property owners who have undergone the loss of a percent of their wages and/or devaluation of their home due to general economic conditions. This package offers aid to homeowners 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 property owner must have a job and cannot have become self-employed in the last 24 months.
The refinance must show an advantage to the property owner by lowering interest rate percent and monthly payment or taking the homeowner from an ARM or pay option ARM to a fixed product.
*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 lender's version of the "Making Home Affordable" package should be enough to let your bank know the specific program you're interesting in exploring.
The stimulus refinance package 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 employment 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 because 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 monthly payment, 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 costs to close the loan may be rolled 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 mortgage companies 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 monthly payment based on the payment for the term they wish.
Write your current banker for information specific to your mortgage loan.
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