As we near the end of another year, two vital home refinancing factors have stayed rather constant throughout the year. The first being that refinance mortgage rates have held near the all-time record setting lows. The second factor being that home prices continue to fall. As they say, you have to take the good with the bad!
For those that have been hit hard with regional home valuation dips that will cause a high loan-to-value (LTV) ratio scenario for your refinance, there are a couple of alternatives that will allow you to cash-in on the great refinance rates without paying the penalty in private mortgage insurance (PMI) and higher adjusted rates.
The first of those options would be to utilize a conventional streamline refinance program. You can refinance a loan amount up to 105 percent of the appraised value of your home and you still get access to the best rates with no PMI. To be eligible for this option, you only need to be currently in a Fannie Mae home loan.
The second option would be to refinance with an FHA loan. With FHA loans, the borrower can refinance a total loan amount up to 97 percent of the home appraisal amount with no big hit to the qualified rate. In fact, FHA rates have been outperforming conventional rates of late, especially in the 80-plus LTV scenario range. Yes, you will have PMI with an FHA loan, but the PMI rate is up to 50% less than what you would get with a conventional mortgage, and it will be eliminated in as little as 60 months, once your LTV drops to 78 percent. Also, for those looking to refinance into a 15-yr FHA loan, you will not be charged any PMI at all if your final LTV is at 90 percent or lower. Yes, Virginia, there is a Santa Claus!
To the most recent housing numbers, U.S. single-family home prices fell for a fourth straight month in October pressured by a supply glut, home foreclosures and high unemployment. It still could be some time until the supply and demand curve changes to a more promising direction.
All in all, it’s been a great year to refinance for thousands of homeowners, thanks to historic low rates. Yes, qualifying those loans has been more difficult, but the reward has been definitely worth it.
The year ahead in refinancing will be dependant once again on the housing market and employment. A potential curveball could be a rise in mortgage rates, as the 10-year treasury yield begins to bounce of its 2010 lows.
If you are considering a home mortgage refinance now and need some help, have questions, or need some competitive refinance rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.
May the Mortgage Refinance Rates be with You!
Refinance Tool Box
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