With home mortgage rates at the lowest point since Freddie Mac began tracking interest rates, what more can the Federal Reserve do?  The Fed has little power left to lift the economy out of its rut. Congress, with an election looming, has no appetite for more stimulus. Typically, the Fed can lower home loan rates in an effort to stimulate consumer spending in hopes that it will invigorate the economy. But the benchmark interest rate controlled by the Fed has been almost zero percent for more than a year now. 

The Obama administration already funded the Home Affordable Refinance Program that enabled mortgage refinancing to 125% on select Fannie Mae and Freddie Mac mortgage portfolios in an effort to combat the highly deflated home values that have prevented many Americans from being approved to refinance into a more affordable fixed mortgage payment. 

Eligibility for the HARP home loan relief was difficult and not enough homeowners met the requirements set forth to refinance their underwater mortgages.In a recent article, Deutsche Bank indicated that there may be 20 million underwater mortgage loans that are outstanding by the end of 2011.  This puts a significant amount of pressure on homeowners that are already struggling with high unemployment and tighter loan guidelines.

 Now the government has given HUD the authority to approve an FHA short refinance option that actually reduces the principal mortgage balances.  FHA insures home mortgages, but the agency has nearly used their emergency loan reserves.  Who do you think is paying for this?   – - Yes the U.S. tax payers will be picking up the tab on this mortgage bail-out initiative as well.  And if that’s not enough risk for the government, they also agreed to another mortgage relief initiative with the Emergency Homeowner Loan Program that is designed to help self-employed and un-employed homeowners for six months.

The Fed announced this week they it would use the proceeds from its huge portfolio of mortgage securities to buy government debt. The idea is to make cheap credit even more affordable, particularly for things like mortgage loans.  The problem is that Americans who are worried about job stability, not to mention volatility in the stock market, don’t want to borrow. They saved 6.2% of their disposable income this spring.

Sure, the Federal Reserve still has options. It could launch another trillion-plus-dollar program to buy government debt or mortgage securities like it did when it was battling the recession and financial crisis.  But the Fed is unlikely to commit that much money unless things get a lot worse. Plus there are risks. Regulators are resistant to push interest rates on low rate home loans because they don’t want to artificially jump-start the housing sector like what happened that inflated the housing bubble.  The Fed could slash the rate it pays banks to zero in an effort to keep money parked there, a move aimed at getting banks to lend more, but banks are not exactly feeling cash-rich, either. 

As reported previously, home mortgage rates have fallen to record lows.  15-year mortgage rates fell to 3.92 % this week and rates on 30-year mortgage loans were published at 4.44 %.  Still, consumers aren’t in a mad rush to purchase homes and most homeowners are unable to meet the tighter guidelines for FHA refinancing.  HUD is considering implementing a minimum credit score and FHA guidelines may start requiring these higher risk borrower to put as much as 10% up for down-payments in an effort to stem foreclosures and loan defaults.  Many mortgage lenders believe that if the loan requirements were loosened for a period to get the distressed homeowners approved for refinance loans or loan modifications that our housing sectors will rebound locally and nationally.

Take Advantage of Record Low Goverment Mortgage Rates

Take advantage of low FHA mortgage rates available for fixed mortgage refinance and new home purchase mortgages.  FHA first time home buyer loans are a popular choice for new home financing.  FHA has been insuring American mortgages since 1934.

The U.S. government guarantees veteran loans and VA mortgage rates have never been better!  If you are a military veteran consider the 100% VA mortgage for refinancing or new home financing.Both FHA and VA streamline loans are available to borrowers seeking a rate and term refinancing who already have existing government mortgages in good standings. 

FHA Home Loans with only a 3.5% Down-Payment VA Loans with Zero Down-Payment on Home Purchases Streamline Refinancing with FHA and VA No Pre-Payment Penalties with FHA or VA Mortgages No Cost Government Mortgage Help

Take advantage of the Nationwide Mortgage Lender’s government mortgage experience and lock your mortgage rate now before the interest rates rise.

FHA Mortgage Rates Are Prime for Mortgage Refinancing

FHA loan programs remain more flexible than conforming home loans because the conventional guidelines have been tightened significantly more for borrowers seeking low rate mortgage refinancing solutions. FHA approves mortgage refinancing of up to 97.5% loan-to-value for qualified borrowers.  With FHA refinancing, borrowers must always document their income, but these days’ conventional loan programs have eliminated stated income and no income refinancing programs any way.

Below, we listed the best mortgage refinance loans so you can have a better idea on what is out there before you begin shopping lenders online:

FHA Mortgage Refinance – The most popular refinance loan this year because it is flexible with credit and not much equity is required.  The FHA streamline does not allow you to finance closing costs anymore, so we suggest sticking with the traditional FHA refinance loan because rates are available below 5% with no pre-payment penalties.  FHA allows cash out to 85% loan-to-value.

Conventional Refinance – This is a great refinance loan for borrowers with credit scores above 700 and at least 20% home equity.  There is no private mortgage insurance like FHA loans, so you will get the best of both worlds.  Most conventional lenders will allow cash refinancing to 80% LTV.

VA Mortgage Refinance – If you are active in the Military or a retired veteran you will love the VA refinance opportunities.  VA offers the VA streamline refinance that allows borrowers who already have a VA mortgage to refinance with reduced lending fees.  No appraisal is required, so you save money and do not need to have any equity.  No other lending program allows you to go above 100% loan to value and required no appraisal.  VA enables cash out refinancing to 90%. The VA mortgage refinance program will even allow you to skip a payment.

Whichever mortgage refinance loan you choose, know that you are locking into the lowest fixed rates seen in a generation.  Contact Nationwide for a free rate quote and refinance analysis with no obligation.

Let’s face it millions of homeowners owe more than their home is worth.  Fannie Mae and Freddie Mac offer the Home Affordable Refinance Program and the DU Refinance Plus program that FHA allows you to refinance your mortgage without an appraisal (so the fact that your house’s value has dropped like a piano from the roof is irrelevant) if you meet certain guidelines.

The FHA streamline refinance has been surging in popularity with FHA lenders because it meets the needs of so many homeowners that are blessed with an FHA loan.  FHA mortgage rates are as low as they have ever been and FHA loan companies have become much more efficient processing government refinance loans.

FHA Streamline Refinance Requirements

1. You have to have made at least six payments on your current FHA loan.

2. If you have had your FHA loan for less than 12 months, all the loan payments must have been made in a timely manner. If you have had the FHA mortgage for more than 12 months, you can have been late only once in the last year and must have paid on time the last 3 months.

3. Your new FHA loan payment must be at least 5% lower than your old payment, or you must be replacing an ARM with a fixed loan (the new FHA rate can’t be more than 2% higher) or hybrid loan (the new loan payment can’t be more than 20% higher), or reducing the term of your FHA loan, or reducing your interest rate by at least 2% (if replacing a fixed home loan with an ARM).

4. The property being refinanced must be your primary residence.

5. Closing costs for FHA streamline loans must be paid upfront (with the exception of mortgage insurance premium (MIP), which can be financed in the new loan.