As of August 2011, it seems that the US has entered into a double-dip recession. Home mortgage refinancing lenders are caught in a bind – they want to lend to the best qualified borrowers at the best rates, but they have intense competition breathing down their necks. Moreover, foreclosures and the real estate downturn have hit them very hard. Then there are the new tough laws that require lenders to be transparent and be staffed with professionals. So, these lenders are with their backs to the wall now, and it does seem like things be as bad or worse for them in the coming days.

The Fed recently announced that it would keep its interest rates (0% to 0.25%) stable till 2013. This means that the interest rates will hold steady for the next 2 years, or maybe fall a tad. So now, though the new home mortgages may not grow, refinancing mortgages will see a spurt. Smart borrowers who have taken home loans at a high rate of interest will now switch over to a low fixed rate, which will give them stability and protect them from interest rates hike that may happen post-2013.

Home mortgage refinancing lenders are now gearing up for long refinancing loan queues. They are also debating whether the government will launch the QE3 (3rd Quantitative Easing). This Fed program will entail buying billions of dollars of treasuries, including maturing mortgage securities, and thereby release more money into the economy (by way of increased government spends). They also expect that the QE3 will create more jobs and boost the economy, thereby spurring on real estate markets and mortgages. However, there is some debate whether QE3 will happen. Economic advisors are of the opinion that it won’t, and it shouldn’t.

Whether QE3 happens or not, it is certain that mortgage interest rates will stay low and more home owners will refinance their home loans or leverage their home equity to pay off high interest unsecured debt. Fixed mortgage rates are between 4.5% and 5%, and this seems like the right time to bite into them. Alternatively, a 5/1 ARM is going at an average of 3.1% and some borrowers may like to take advantage of this low interest and then reconsider refinancing after the low initial rate lapses. Borrowers who plan to sell their homes by 2014-15 should go in for an ARM, while borrowers who want to stay in their homes for more than 5 years should go for a fixed mortgage.

Qualified borrowers must bargain hard with home mortgage refinancing lenders. They should demand a no-cost refinance – that means no lender fees, no appraisal/title fees, nothing! Remember that mortgage lenders are fighting with each other for new business, and can afford a fee waiver in their quest to remain competitive.

The time for refinancing is now. Borrowers must start negotiating with home mortgage refinancing lenders and pick and choose the best loan at the lowest rate so that they can save 1000s of dollars.

It is essential for borrowers to get acquainted with the cost-related jargon that is used by mortgage companies. Borrowers must also educate themselves about the current refinance mortgage rates, and staying on top of these rates requires borrowers to understand the economy and how the Fed revises interest rates depending on a host of economic factors.

Current refinance mortgage rates are currently (August 2011) hovering around 4.6% for a 30-year Fixed mortgage and 3.7% for a 15-year Fixed mortgage. A 1-year ARM’s (Adjustable Rate Mortgage) rate is around 3.15%, while a 5/1 year ARM’s rate is around 3.1%. As the Fed has recently announced that it will not raise its rates till 2013, it is expected that these mortgage and refinancing rates will hold out till then.

Borrowers already know that a high interest rate increases the monthly repayment. Borrowers with a decent credit score should be able to negotiate a low fixed interest rate. As mentioned upstairs, the interest rate regime is expected to be stable till 2013, after which the Fed will make a call. So, with current mortgage refinance rates being at an all-time low, it makes sense for borrowers to opt for a 30-year fixed rate mortgage, or convert their existing ARM (whose initial low rate of interest has lapsed) into a long-term fixed rate mortgage.

Borrowers must also factor in purchase points. Purchase points are also known as discount points, and represent an up-front fee that must be paid to the lender at closing. Buying purchase points helps reduce interest rates over the life of the loan. One purchase point typically equals 1% of the loan amount. Every point purchased helps reduce interest rates, but in turn increases the amount that has to be paid to the lender during closure. Borrowers can buy purchase points after calculating how long they plan to live in the house and how much they can afford by way of monthly repayments. Borrowers must buy purchase points if they plan to live in their home for more than 5 years. Borrowers can creatively reduce current refinance mortgage rates if they learn to play around with purchase points.

Another cost that buyers have to bear is the fees. There are fees to be paid for getting a refinancing loan. These fees cover the cost of appraising the property, verifying the title, underwriting costs, processing expenses, and land survey charges. Though the fees do not impact the interest rate, it is important to know about them and factor them in for future calculations (while arriving at the property cost or while switching a loan). Borrowers must quiz the mortgage company about the different fees charged and be clear about what they have to pay.

Well, that was about current refinance mortgage rates, purchase points and fees. Borrowers must tread cautiously and understand these fine points before saying yes to a mortgage refinancing loan.

The possibility of a double-dip recession in the US coupled with weak housing and strong unemployment numbers has managed to beat down house mortgage rates to a new historic low. If you are a home buyer, this is the time to get your old home mortgage refinanced and save some money. New home buyers stand to doubly benefit because they can take advantage of low home prices and low mortgage rates.

Even a 1-2% saving on the annual interest rate can translate to 1000s of dollars savings over the tenure of the loan. Also, a low house mortgage rate is good for the economy because the forthcoming new stimulus, QE3, will provide jobs and in turn, more jobs will generate a higher demand for homes. Home buyers and home loan refinancers will benefit from the new low rates and save some extra money every month, leading to a spurt in savings – which can be kept aside for home repairs or for a rainy day. So, in that sense, low mortgage rates help increase home sales, save money, increase savings and lead to a stronger economy in the long run.

This is the right time for borrowers to opt for a fixed rate mortgage. Opting for this type of mortgage will ensure that their low rate is locked in for many years and they will be safe from interest rate hikes, which will take place when the economy recovers. A low house mortgage rate offers 3 key benefits, which are:

1. Higher home equity: Home prices are probably at their lowest now, and there does not seem to be any possibility of prices going further down from these rock-bottom rates. So, if a borrower buys a home now by taking a low rate mortgage loan, he will start building equity in his home as and when the housing market starts to climb. He will be at absolutely no risk of living in a negative home equity scenario (when the mortgage outstanding is higher than the market value of the home). So, in the years ahead, he will be easily able to raise more money on his existing home.

2. Lower down payment: Low home prices and low mortgage rates help the borrower save money on a down payment. If the borrower takes advantage of low prices and makes a higher down payment (more than 20% of the mortgage), then he can even avoid paying Private Mortgage Insurance (PMI) and end up saving more cash.

3. Low property tax basis: Low home prices ensure that the property will be appraised at a lower value and so, the property tax will be low as well. This helps the buyer save cash and pay low property taxes for a long time because property values are not assessed frequently.

These are the advantages of low house mortgage rates. Finally, remember that the time to take a house mortgage or refinancing an existing house loan is now – when the market is down. History has proved that high borrowing costs can lead to the fall of nations. So, as an individual, you must act now – when the rates are low and the time is ripe.