Contrary To Higher Mortgage Rates Applications Up

In the United States government has acted very swiftly in putting forward home affordability programs that help the current homeowners and first time house buyers to take advantage of historically low mortgage rates and refinance their mortgages.

Here are some of those programs:

• Making Home Affordable

• Hope For Homeowners

• Homeowner Affordability and Stability Plan

These plans are in place to help to prevent foreclosures and help responsible homeowners to refinance mortgage, thus taking advantage of all time low mortgage rates. This, in turn, should bring hope and stabilization to housing and real estate markets.

Mortgage Banker's Association report on the current mortgage rates shows the following picutres.

The average contract interest rate for 30-year fixed-rate mortgages increased to 4.79 percent from 4.62 percent, with points increasing to 1.17 from 1.14 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 4.57 percent from 4.45 percent, with points increasing to 1.07 from 0.96 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs increased to 6.36 percent from 6.23 percent, with points remaining unchanged at 0.12 (including the origination fee) for 80 percent LTV loans.

The mortgage industry has changed significantly over the last two years, writes Tim Marose from Rockville Mortgages. "The ability to refinance your home loan mortgage has become more difficult even for those with a good credit rating. Many homeowners that are attempting to take advantage of historically low interest rates are finding that there are more hoops to jump through than in years past, and lenders have been denying borrowers for credit scores, home values, loan to values and a variety of other reasons. Here are some important things you need to know before you call your mortgage broker to check on mortgage rates."

When it is time to refinance, you will likely have to pay points. In years past, most lenders were offering all loans with zero points, but times have changed. Paying points can offer you a significantly lower mortgage rate and may help you save thousands in the long run. Talk to your mortgage broker to find the "break even" point on points. In other words, how long will it take to pay back the cost of points. It may make sense when you try to refinance your home loan.

Taking cash out is more expensive than a rate and term refinance. Lenders realize that taking equity out of your home puts them at more risk, and they will charging you more money to do so. Expect to pay 1/8 to 1/4 percent higher if you want to take more than $2000 cash out of your home. You will also be limited to a maximum of 85% of the value of your home. It also requires a relatively high credit score in order to enable you to use the equity in your home.