Mortgage Loan Refinance 2010 Is Complex

A thirty year fixed home mortgage refinance is currently priced between 4.750% to 5.250% charging the home owner minimal or no points for a no cash out refinance. The home loan rates shift daily for home mortgages depending on market conditions, but haven't deviated from this range since April 2009.

Each bank has the opportunity to offer their service portfolio a government stimulus refinance product 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 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 package is beneficial for property owners who have undergone the loss of a percentage of their wages and/or devaluation of their home due to general industry conditions. This product offers help to property owners who have fallen behind in their monthly mortgage 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 have a job and cannot have become self-employed in the last 24 months.

The refinance must show a benefit to the homeowner by dropping rate and monthly payment or taking the customer from an adjustable rate mortgage or pay option ARM to a fixed product.

*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 bank's version of the "Making Home Affordable" package should be enough to let your lender know the specific program you're interesting in exploring.

The stimulus refinance program pertains to the refinance of 30/20/15/10 year fixed mortgages. Some lenders added the 5/7/10 year adjustable rate mortgages. The mortgage plan 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 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 substantial savings every month 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 house 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 paid by the borrower.

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 property owner 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 suggested 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.

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