Homes Regaining Equity as Home Prices Move Higher, Time to Refinance?

Millions of homeowners haven't been able to refinance their mortgage even though refinance rates made record lows in 2012. If you bought a home during the height of the housing bubble, it's likely you haven't been able to refinance your loan because you don't have enough equity in your home. Watching mortgage refinance rates move lower the past 4 years without being able to refinance has frustrated many homeowners whose homes are "under water." Conforming 30 year and 15 year refinance rates made a series of record lows in 2012 as many homeowners were left seething on the sidelines.

A report released by Corelogic shows 1.7 million homes regained equity in 2012 and if home prices increase another 5 percent, an additional 1.8 million homes will regain equity. While homes are more valuable now, prices have to move much higher in order for millions of more homeowners to refinance.

23.2 percent of all properties with a mortgage have positive equity but not the required equity of 20 percent in order to refinance. That amounts to 11.3 million home loans that can't take advantage of lower rates and refinance.

Loan Type

Purchase Refinance with Cash out Refinance

State

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District Of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

FICO Score

Superior (780-850) Exceptional (760-779) Excellent (740-759) Very Good (720-739) Good (700-719) Above Average (680-699) Average (660-679) Fair (640-659) Need Improvement (620-639) Poor (350-620)

Loan Amount

$

Points

Up to 0 points Up to 0.5 points Up to 1 points Up to 1.5 points Up to 2 points Up to 2.5 points Up to 3 points

LTV

%

Loan Term

 15-Year Fixed  20-Year Fixed  30-Year Fixed  5-Year ARM  7-Year ARM  10-Year ARM

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The lenders whose rates and other terms appear on this chart are MRC's advertising partners. They provide their rate information to our data partner RateUpdate.com. Unless adjusted by the consumer, advertisers are sorted by APR from lowest to highest. For any advertising partners that do not provide their rate they are listed in advertisement display units at the bottom of the chart. Advertising partners may not pay to improve the frequency priority or prominence of their display. The interest rates, annual percentage rates and other terms advertised here are estimates provided by those advertising partners based on the information you entered above and do not bind. Any lender Monthly payment amounts stated do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Although our data partner RateUpdate.com collects the information from the financial institutions themselves, the accuracy of the data cannot be guaranteed. Rates may change without notice and can change intraday. Some of the information contained in the rate tables including but not limited to special marketing notes is provided directly by the lenders. Please verify the rates and offers before applying for a loan with the financial institution themselves. No rate is binding until locked by a lender.

Lender

APR / Rate

Fees / Points

Payment

NMLS #2473786

4.894%

15-Year Fixed

4.750%

$3,839

Includes 0.686 points for $2,744

Lender Fees: $1,095

$3,112 /mo

Next >

NMLS #757416

5.005%

15-Year Fixed

4.875%

$3,436

Includes 0.859 points for $3,436

Lender Fees: $0

$3,138 /mo

Next >

NMLS #1025894

5.011%

15-Year Fixed

4.875%

$3,608

Includes 0.902 points for $3,608

Lender Fees: $0

$3,138 /mo

Next >

NMLS #2473786

5.104%

5-Year ARM

5.000%

$4,755

Includes 0.915 points for $3,660

Lender Fees: $1,095

$2,148 /mo

Next >

NMLS #1928741

5.106%

15-Year Fixed

4.990%

$3,052

Includes 0.763 points for $3,052

Lender Fees: $0

$3,162 /mo

Next >

NMLS #6606

5.398%

15-Year Fixed

5.250%

$3,884

Includes 0.971 points for $3,884

Lender Fees: $0

$3,216 /mo

Next >

NMLS #2473786

5.719%

30-Year Fixed

5.625%

$4,127

Includes 0.758 points for $3,032

Lender Fees: $1,095

$2,303 /mo

Next >

NMLS #757416

5.828%

30-Year Fixed

5.750%

$3,404

Includes 0.851 points for $3,404

Lender Fees: $0

$2,335 /mo

Next >

NMLS #1025894

5.921%

30-Year Fixed

5.875%

$2,004

Includes 0.501 points for $2,004

Lender Fees: $0

$2,367 /mo

Next >

NMLS #1928741

5.923%

30-Year Fixed

5.875%

$2,092

Includes 0.523 points for $2,092

Lender Fees: $0

$2,367 /mo

Next >

NMLS #399799

6.086%

30-Year Fixed

6.000%

$3,831

Includes 0.626 points for $2,504

Lender Fees: $1,327

$2,399 /mo

Next >

NMLS #6606

6.091%

30-Year Fixed

6.000%

$3,904

Includes 0.976 points for $3,904

Lender Fees: $0

$2,399 /mo

Next >

Rate data provided by RateUpdate.com. Displayed by Mortgage Research Center, NMLS #1907, Equal Housing Opportunity. Payments do not include taxes and insurance premiums. Actual payments will be greater with taxes and insurance included. Rate and product details.

There are, however, government programs that allow a homeowner to refinance if a loan is held or guaranteed by the government.  The Home Affordable Refinance Program (HARP) allows homeowners to refinance even if they don't have the required 20 percent equity.

HARP only helps homeowners whose mortgage is owned or guaranteed by Freddie Mac or Fannie Mae. There are also other requirements in this program, including that the borrower must be current on the loan and the mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.

There is another program that allows homeowners to refinance to an FHA loan with a maximum loan amount of 97.5 percent of the value of the home. The FHA Short Refinance program is designed to help homeowners refinance if their current lender agrees to participate in this refinance. The lenders are required to reduce the amount owed on your first mortgage to no more than 97.75 percent of the home's current value.

While these two programs are helpful, there are still millions of homeowners who don't quality for refinancing.  In that case, the only way they will be able to refinance is when home prices move higher. The Corelogic report breaks down LTV (loan to value) by state and there are some states that have a long way to go on higher home prices. For example, in the state of Nevada, the average LTV is 103.7 percent.

Whether or not you're in a position to refinance depends primarily on when you bought your home. If you bought during the height of the market in 2006/2007 and bought in California, Florida, or Nevada, you probably still don't have the required 80 percent LTV to refinance. The only way to find out if you qualify to refinance is to start the process of refinancing.

The only costs you'll have to pay upfront before you find out if you can refinance is the appraisal fee and possibly a mortgage application fee, depending on the lender. The appraisal fee varies by lender and state but you can expect to pay anywhere between $200 to $500.

When refinancing, the general rule is that it pays to refinance if the current refinance rate is at least 1.00 percent lower than your current mortgage rate. Another general guideline is that you should be planning on staying in the home for at least a few more years to recoup the cost of refinancing.

Refinance rates today on 30 year conforming loans can be found as low as 3.25 percent with points. 15 year refinance rates can be found as low as 2.25 percent with points. If you are refinancing, you should consider refinancing from a 30 year loan to a 15 year loan. The monthly payments are more but you'll be shocked at the amount of money you'll save in mortgage interest by refinancing to a 15 year loan. Use our mortgage calculator to see the savings.