A thirty year fixed home mortgage refinance is currently priced between 4.750% and 5.250% charging the home owner minimal or no points for a no cash out refinance. The home loan rates change daily for home refinances depending on financial conditions, but haven't changed much from this range since April 2009.
Each lender has the advantage to offer their service portfolio a government stimulus refinance plan 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 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 approach is useful for homeowners who have undergone the loss of a percent of their income and/or devaluation of their homestead due to general financial conditions. This product offers aid to property owners who have gone delinquent 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 borrower must be employed and cannot have become self-employed in the last 2 years.
The refinance must show an advantage to the borrower by dropping interest rate and monthly payment or taking the homeowner from an adjustable rate mortgage or pay option ARM to a fixed product.
*Also note the product 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 bank's version of the "Making Home Affordable" plan 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 financial 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 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.
Paying points will allow an even lower monthly payment, 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 charges will be incurred by the homeowner.
Rates for loans less than a 30 year term are not as low. It appears bankers are more interested in locking in a long term customer 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.
Contact your current banker for information specific to your mortgage loan.