Ways For Homeowners To Take Advantage of Low Rates -Conventional Loans

In the first part of this series of articles, we touched on the fact that we currently are at the lowest levels we have ever seen for interest rates and the lowest we will perhaps ever see. Meaning that now is really the time to consider taking advantage of these low rates and lock in a fixed rate for a lifetime. Let's take a look a look now at some of the options available for homeowners who are looking to actually take advantage of these low interest rates with conventional home loans.

Options For Homeowners Who Currently Have A Conventional Loan:

     A conventional home loan is a term that is generally used for a loan that is Fannie Mae or Freddie Mac backed. These types of loans comes in different forms, as your loan could be a 30 year fixed mortgage, a 15 year fixed mortgage or even an adjustable rate mortgage.

Option 1: If you have equity in your home

            If you have some equity in your home and a conventional loan than the options are wide open for you. Depending on how aggressive you would like to be in paying off your home and watch stage you are in life, a 30 year or 15 year fixed mortgage will probably make the most sense. For most homeowners, with interest rates below 4% on 30 year fixed loans, it will make the most sense to lock into a low rate 30 year loan, for a low payment and rate combination. However, if you are closer to retirement age or it is financially viable, a shorter term loan may make sense as well.

In the current marketplace, if you have equity in your home, you may or may not even need to have an appraisal done on your home when refinancing. For instance, if Fannie Mae’s automated underwriting system agrees with your estimated value of your home, they may offer an appraisal waiver or an exterior only appraisal. In the current market, this is actually more and more common, further reducing financing costs and complications.

Option 2: If you do not have equity in your home

            If you have a conventional loan and are in a situation where you do not have any equity in your home or you are upside down on your home, don’t worry there are options available. As discussed in recent articles, the HARP refinance program is in full swing and is actually a program that does work for homeowners without equity in their homes.

            If your loan is owned by Fannie Mae or Freddie Mac, the HARP refinance program will allow you to refinance, without an appraisal, to a new loan rate fixed loan. To qualify for the program, first and foremost you must have a Fannie Mae or Freddie Mac loan obtained prior to June 2009. Next, you must be on time on your current home loan and you must have income to support your mortgage payment, just like you if you were qualifying for a regular refinance. However, you do not have to have equity in order to complete this type of refinance, as the program is more concerned with identifying how much your home is worth, not how much you are upside down. The HARP program is expected to run until December 2013, but my recommendation would be to act sooner rather than later if this program could help you, as nothing is guaranteed to continue on this program.

            So, if you have a conventional loan and equity in your home, now is the time to act to lock into a low fixed rate. Even if you refinanced in recent years, it may make sense to refinance one more time, before we hit that eventual upward trend in interest rates.

While, if you do not have equity in your home, the HARP program is here now, with no guarantees for how long it will last. Take advantage of being able to refinance your home even if you have little or no equity.

As always, contact a licensed mortgage lender to discuss all of your options and see what makes sense for your specific situation.

For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com