Obama Mortgage Refinance Plan - Will It Help You?

The Obama Mortgage Refinance Plan has been given an extra boost recently. In the original refinance plan, home owners with a 105% loan-to-value on their mortgage were able to refinance at lower mortgage rates. Now that the economy remains in a recession and the housing market has yet to see a bottom, Obama has extended that loan-to-value ratio to 125%. This means that home owners that are 25% underwater are capable of applying for a refinance.

Making the prospect of refinancing even more alluring is the fact that mortgage rates continue lower. Average mortgage rates were around 5.2% last week and they were falling as the week concluded. Over the weekend, rates on the 30 year fixed rate mortgage have dropped to 5.1%. It is very possible that we will see daily mortgage rates below 5% in the very near future. If this does happen, look for a swarm off mortgage applications with most of them being for a refinance.

Another incentive that the Obama mortgage refinance plan offers is that it encourages lenders to actually lend money; what a novel idea! As many of you know, at the end of the Bush administration and the beginning of the Obama administration, many lenders were hoarding their money and not “lending” it. Financial institutions were so stingy with their money that the government had to step in and offer incentives to these lenders to actually give borrowers a chance.

Since March, many of my friends and family have had the chance to refinance under 5%. It is an amazing feeling to know that you will pay on a mortgage that has an interest rate of under 5%. It is hard to believe that this opportunity it coming again, but it sure looks that way. If the Federal Reserve Bank continues to buy up US debt, it is almost certain that we are going to see mortgage rates drop under 5% again in the very near future.

Even if rates are sure to drop in the future, it is a good idea to go ahead and start the refinance process. One of the biggest problems that Americans have is that they love to procrastinate. If an activity is outside of our “comfort zone” it is likely that we are going to wait until the last minute to do it and then we aren’t going to sink our total effort into it. Getting a mortgage was the biggest financial decision of your life, why not take the time and effort to refinance at a rate that could save you hundreds of dollars a month.

There are many great resources available to help you. If your local bank or mortgage lender is not being a great assistance I urge you to go to Making Home Affordable. You could search through that site for hours finding useful information. Doing google searches for anything mortgage related will also bring up many useful internet resources.