The Basics of Refinancing Through HARP and Streamline

While many people have already refinanced their existing mortgages, there are many more that have not yet made the move. Millions of borrowers can now refinance to lower home mortgage rates since additional options have been added to the list of mortgage rescue programs which have been available for the past few years.

For several reasons, many existing borrowers have not been able to refinance while mortgage rates have been decreasing to historic low levels. With housing prices dropping, some are considered underwater which means they owe more on their mortgage than the value of the property. For others, stricter lending guidelines have prevented them from receiving an approval. Because of this, the Administration has brought forward two new programs to help borrowers who have been denied mortgage refinancing but have continued to make payments on their current mortgage. For mortgages that are held by Fannie Mae and Freddie Mac, the Harp 2.0 program is now available and offers borrowers the opportunity to refinance without the need of an appraiser. This program also does not require income verification as long as the new monthly mortgage payment does not increase more than 80%. Also available for investor and second home mortgages, it has been designed to reach a multitude of borrowers. It is estimated that millions of borrowers will be able to refinance to lower home mortgage rates under this current program that will be available to the end of 2013. Even those who do not meet the guidelines at this time due to late monthly payments, have plenty of time to become current and refinance before the end of the program.

The FHA streamline refinance has always been a quick and easy process provided that it is a no cash out transaction. Many lenders did not offer this option because they were approving a mortgage without underwriting. In order to have more lenders offer this program, FHA has removed the risk to the lender's rating opening the door to more FHA refinance approvals. In addition, it has just been announced by the Administration that the FHA Streamline Refinance upfront mortgage insurance premium will be reduced to .01 percent and the annual mortgage insurance premium will drop to .55 percent. This is great news for existing FHA borrowers since FHA mortgages are facing increased premiums beginning April 1st. There is a substantial amount of savings to be recognized when borrowers take this refinance offer of lower premium and lower FHA home mortgage rates.

While other areas of the economy may be showing some signs of improvement, the housing market continues to struggle along. Credit is tight, borrowers are underwater and potential home buyers are worried. These efforts by the Administration are being implemented so that millions of existing borrowers become part of the economic recovery which is intended to put more spendable cash into consumers hands. Borrowers will actually be able to refinance to lower home mortgage rates without the restrictions of normal mortgage guidelines.

FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders' rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard .07 to 1% point origination fee.