Monday, September 19, 2011

Most borrowers worry their refinancing options are limited.

Home mortgage interest rates remain at historic lows, but consumers worry their refinancing options are limited.
New research shows that mortgage rates again reached historic lows for many programs. Rates as low as 3.750% were advertised on the BurlingtonMortgage site for a 30 year fixed rate loan on Friday, September 16th (APR: 3.914%) This was a .126% drop in APR when from the same period the previous week. While this is great news for many homeowners, many are unable to take advantage of the low pricing due to a lack of home equity, either because they purchased real estate with a low or zero down mortgage or as a result of falling property values.

The drop to a new historical low point was also highlighted in the weekly survey of mortgage pricing released Thursday, September 15th by Freddie Mac, a government sponsored enterprise that purchases residential mortgage loan in the secondary market. The data revealed that the average 30 year fixed rate fell to 4.09% (0.7 points), a record low, down from 4.12% (0.7 points) the week prior. 15 year fixed pricing followed a similar trend with the average dropping to 3.30% (0.6 points) from 3.33% (0.6 points.) The average 5/1 ARM rates rose slightly to 2.99% (0.6 points) after holding steady at 2.96% (0.6 points) the two previous weeks.

Widespread reports of tightened lending standards have homeowners concerned that these low mortgage rates may not be available to them.

Shaun Hamman, VP of Residential Lending at American Financial Resources, a National mortgage lender, commented, "We're doing what we can to educate consumers about their options. There are programs out there that can help even homeowners without a lot of equity. Every day we talk to people who are happy to learn they'll qualify for financing, be it an FHA loan, a USDA rural housing loan, or a traditional refinance."

Government backed mortgages including the FHA and USDA rural housing programs mentioned above, as well as VA loans available to qualifying active duty and veteran members of the US armed forces routinely allow anywhere from 97.75% - 100% to be borrowed with a refinance, depending on the program and eligibility.

Investors should also be looking at their options. Most of the attention is paid to owner occupied financing, but the rates for investment property loans are also extremely low. Landlords could be in a position to save on their rental property mortgages.

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