Refinancing Advice for the New Year


With the Obama administration and the Federal Reserve making a concerted effort to keep interest rates low, you can’t go wrong with home mortgage refinancing.  In an effort to mitigate the foreclosure crisis and stimulate the housing sector, our government has been buying mortgage backed securities so that borrowers have the opportunity to refinance or purchase housing across the country.  Since the mortgage crisis of 2006 a lot has happened in the mortgage industry.  Thousands of mortgage companies have gone out of business and series of bank consolidation has transformed a new era for home mortgages.  For the most part, lenders have tightened mortgage refinancing guidelines.  There are however a few bright spots with government lending programs under FHA and VA refinancing.

Government Refinancing:  FHA rolled out FHA Secure, Hope for Homeowners and rumors continue to swirl that HUD will introduce a FHA refinance loan that includes a principal reduction for specific regions that have seen a significant loss of home equity and a higher foreclosure rate.  FHA refinance programs have tightened cash out guidelines to 85% while VA refinance with cash back remains at 90%.  Borrowers can still refinance with the FHA streamline to 96.5% and the VA streamline still allows borrowers 100% refinancing with no appraisal required.

Income Documentation Requirements:  Mortgage refinance rates range from 4.5 to 4.875% on the thirty year mortgage and the fifteen year mortgage has rates reported as low as 4.375%.  Conventional refinance guidelines no longer allow stated income or no income refinance loans.  No documentation mortgage refinancing has become very difficult to find in 2010.

Mortgage Insurance Replacing Second Mortgages:  Conforming lenders no longer allow borrowers to refinance with a second mortgage to avoid PMI.  In most cases anything above 80% CLTV requires borrowers to pay for private mortgage insurance.  Many believe that FHA will be increasing their mortgage insurance as well to compensate for the dwindling reserves and increased loan defaults.

Credit Score Factors:  Credit score requirements have become tougher for people with less than perfect credit.  Low credit refinancing programs are not available with conventional loan products, but FHA and VA continue to make exceptions for borrowers who have compensating factors.  However, even HUD and the VA mortgage lenders are beginning to raise the credit score minimums for the government refinance programs.  The bottom line is that now is a wonderful time to for home refinancing if your credit is good and you can document your income.  Most lending experts believe that this tightening trend will continue for mortgage refinancing for the near future.

The Mortgage Refinancing Buzz offer refinance advice at no cost.  Take advantage of our network of trusted lenders that specialize in home refinancing so you can save more money next time you shop for a loan online.


  1. refinance says:

    So true, with so much to learn and think of. Thanks for posting refinance articles that are helpful to borrowers!!! As a lon officer I appreciate it when by clients can get access to articles focused on mortgage tips.


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