Home Mortgage Refinancing Guide

Mortgage interest rates are up to their highest levels in over two years. According to a survey of one national mortgage lender interest rates for fixed, 30 year, traditional mortgages rose to 6.37% this week. This is up from 6.24% last week and the highest mortgage interest rate since the fall of 2003.

Inflationary concerns have driven interest up despite the Federal Reserves futile attempts to cool the economy by raising short term interest rates. This has led to the dramatic rise in mortgage interest rates. The Federal Reserve may react to recent inflationary pressure by raising short term rates again. Most analysts had predicted the Federal Reserve was done tinkering with the economy and interest rates were leveling off.

Interest rates for 15 year, fixed mortgages are up to 6% this week. Last week the 15 year, fixed rate mortgage was 5.89%. This is the highest level 15 year fixed mortgages have been at since the summer of 2002. One year adjustable rate mortgages are up to 5.45% this week. Last week a one year ARM averaged 5.34% and the highest since the fall of 2001. Interest rates for 5/1 hybrid ARMs are up to 6.03% this week; last week a 5/1 hybrid averaged 5.97%.

One year ago a fixed 30 year mortgage was at 5.85%, 15 year mortgages averaged 5.38%, and one year ARMs averaged 4.24%.

2nd Mortgage These loans offer a means to borrow against equity in your home without opening a home equity line of credit. These loans usually offer fixed interest rates and a set monthly payment amount. Interest rates on second mortgages are typically higher than traditional mortgages but much lower than home equity loans.

Adjustable Interest Rate Mortgage These mortgages have interest rates that are periodically adjusted to the current market interest rates. This occurs at regular pre determined time periods. Adjustable Rate Mortgages (ARM) often have lower payments and greater flexibility than fixed interest rate mortgages.

Balloon Mortgages These loans have fixed payment mounts for a specified time. At the end of the loan tern the remaining balance is due in one payment.

Fixed Interest Rate Mortgages The interest rate is unchanged for the duration of the mortgage loan, often 15 to 30 years. Your fixed interest rate does not increase regardless of changes in market interest rates. This mortgage is great for homeowners on a budget or those with low risk tolerance; with a fixed rate mortgage you will always know what your monthly payments are.

Graduated Payment Mortgage These loans start with lower monthly payments that gradually increase over the term of the mortgage loan.

Interest Only Mortgage These mortgages offer interest only payments for a specified term. This results in a much lower monthly payment. The downside is no principal is being paid on the mortgage. When the principal becomes due the monthly payment will increase dramatically.

As a homeowner wanting to refinance your mortgage you are looking for the lowest possible monthly payment. To find this you will need a mortgage with the lowest interest rate and the longest term. Interest only mortgage loans can offer this; however, you are not repaying any of the principal balance in the early years of the loan.

Another option is Adjustable Rate Mortgage loans (ARM). In the current market these loans are not the best bargain; however, Hybrid loans can offer a low fixed interest rate during the initial period, giving you time to refinance later down the road.

If you have a poor credit score your only option for refinancing your mortgage may be a sub-prime mortgage lender. These lenders specialize in poor credit lending. Because you have a poor credit rating you will be considered a credit risk by your mortgage lender. If a sub prime lender is willing to approve your mortgage you will be charged a premium interest rate. This could significantly reduce any potential savings you would realize from refinancing to the point where you could be losing money.

If refinancing today is not an option because of your credit you may be able to improve your score enough in a year or two to become eligible to refinance. Making your monthly payments on time and keeping your credit card balances low will do wonders for your credit score over the course of one to two years.

Mortgage Interest rates are down again this week for the second week in a row. This is according to a survey of one national mortgage lender.

Freddie Mac stated that mortgage interest rates for a traditional, fixed rate, 30 year mortgage are down to 6.24% this week from 6.26% last week. The highest this rate has reached in 2006 so far is 6.28% in February. Most industry analysts believe the Federal Reserve has finished dinking with interest rates for the remainder of the year.

Freddie Mac is predicting mortgage interest rates to remain near six percent for the remainder of 2006.

Mortgage interest rates for 15 year, fixed rate mortgages remained unchanged at 5.89%. The 15 year fixed mortgage is a popular choice for homeowners looking to refinance their current mortgage. One year adjustable rate mortgages (ARM) are up slightly this week to 5.34%. Last week the one year ARM was 5.32%.

Hybrid adjustable rate mortgage loans are up slightly to 5.97% this week from 5.96% the previous week.

There are many advantages to being self-employed; however, when it comes to refinancing your mortgage being self-employed could make qualifying difficult. You could consider a no-doc or low-doc mortgage where you do not have to verify income. The problem with these types of mortgages is that they typically come at a premium interest rate.

When you are qualifying for a mortgage loan, your lender will typically want to see two years of income history. Some will even require three years. You can document your self-employment income using bank statements or tax returns.

There are mortgage lenders that will accept anywhere from one to two years of bank statements to verify your income. This practice of income verification is becoming more common as lenders become more flexible. Using bank statements will often allow you to document more income than you would be able to using tax returns. Lenders will often adjust the income from your business tax returns and remove certain categories of income.

If you have trouble proving your income a no-doc loan may be your only option to secure financing. No-doc loans are very common and allow homeowners to borrow without documenting their income. Applying for a no-doc loan will force the lender to rely heavily on your credit rating, so qualifying could be more difficult. Keep in mind that no-doc and low-doc loans come at a higher interest rate because the risk to the lender is higher.