Mortgage Refinancing Up to 125% Loan-to-Value With Today’s Mortgage Rates Rising

Mortgage refinancing with up to an 125 percent loan-to-value ratio? Is it even worth it with today’s mortgage rates rising quickly? Fixed mortgage rates have increased almost one percent since last month alone.

The Making Homes Affordable program might be expanded to include mortgage refinancing for mortgage loans that are higher than 105 percent of a home’s value, according to a Bloomberg report this week.  The idea is to expand the program because only 80,000 mortgages have been refinanced since the program started. 

Current Mortgage Rates

Current mortgage rates have been increasing lately making refinancing not  feasible for many homeowners, including homeowners eligible under the Making Homes Affordable Program. The average 30-year mortgage interest rate is at 5.65 percent this week, a sharp increase since mid May, 2009 when the average rate was at 4.84 percent.

“We’re actively considering how to structure a program that makes sense over 105 percent,” Federal Housing Finance Agency Director James Lockhart said, according to Bloomberg. The story quoted him saying a limit of 125 percent was under consideration, but “not necessarily the number we’re going to end up with.”

Act quickly because the window will shut for more and more people if mortgage interest rates continue to rise this year which many people believe will happen when the ecomonic recovery takes hold and drives interest rates higher.

Jumbo Mortgage Rates

Even with an increase in loan-to-value ratios if you have a jumbo mortgage you still won’t be eligible to refinance since the program is designed for conforming mortgages.  Mortgages that are currently held by a government sponsored entities like Freddie Mac and Fannie Mae.