Mortgage Loan Refinance 2010 Is Problematic

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

Each mortgage company has the choice to offer their service portfolio a government stimulus refinance plan from the U.S. Dept of Treasury called the "Making Home Affordable" Plan. This home mortgage loan package allows home mortgage refinance with property valuation from the bank's automated valuation process and also allows loan approval 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 program is helpful for property owners who have undergone the loss of a portion of their income and/or devaluation of their homestead due to general financial conditions. This package offers aid to property owners who have fallen behind in their monthly house payments.

What the Plan Will Not Allow:

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

The borrower must be employed and cannot have become business owners in the last 24 months.

The refinance must show a benefit to the homeowner by dropping rate and monthly payment or taking the homeowner from an adjustable rate mortgage 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 mortgage company's version of the "Making Home Affordable" plan should be enough to let your mortgage company 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 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 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 currently 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 dwelling long enough to recoup the cost of the points paid. Each point represents 1% of the loan amount. The closing costs may be rolled into the loan and refinanced as well so that no out of pocket charges will be paid by the homeowner.

Rates for loans less than a 30 year term are less attractive. It appears bankers are more interested in locking in a long term borrower 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 monthly payment based on the payment for the term they wish.

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