HomeIt appears lenders are rolling out this program in phases. The first phase pertains to the refinancing of 30/20/15/10 year fixed mortgages for the majority of lenders. Some lenders, but not all, added the 5/7/10 year adjustable rate mortgages. The mortgage loan 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 much lower monthly payment and a substantial monthly savings.
Government VA and FHA home loans, still allow the Interest Rate Reduction and Interest Rate Reduction Loan (IRRL) with no appraisal except under certain circumstances. Borrowers currently 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 and FHA and VA loan rates are comparable to conventional conforming rates. No “cash out” is allowed on the “Making Home Affordable” plan, but with rates dropping to below 5% from a median 6.5% six months ago, it is translating to sizable monthly savings for most refinanced mortgages.
Paying points will allow an even lower rate, but a borrower should plan to remain in the home long enough to recoup the cost of the points paid. 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 borrower, however, a borrower has the choice of paying closing costs at the closing table or rolling them into the mortgage loan.
FHA Mortgage Refinancing