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Mortgage applications continue to be on the rise with mortgage refinances still in the lead. This past week mortgage refinance applications reached their highest level in 3 years as low mortgage rates continues to draw in borrowers looking for a better deal. According to the Mortgage Bankers Association, refinance applications rose 0.8% and accounted for 81% of all mortgage application activity.

Government refinancing fell 6% while non-government refinancing was up 2%. FreeRateUpdate.com's survey of wholesale and direct lenders shows that mortgage rates continued to remain steady this past week with 30 year fixed mortgage rates at 3.375%, 15 year fixed mortgage rates at 2.750% and 5/1 adjustable mortgage rates at 2.125%. These low mortgage rates are available with 0.7 to 1% origination fee for well qualified borrowers.

According to the latest S&P/Case-Shiller Home Price Indices for the month of May, home prices have increased for both the 10 city and 20 city composite indices by 2.2% as compared to April. This could very well be an indication of some housing market stability. The popular refinance program HARP 2.0 has been helping many underwater borrowers stay in their homes with cheaper mortgage payments, thus avoiding foreclosure or default. HARP, the Home Affordable Refinance Program, was developed for underwater borrowers who have loans that were sold to Fannie Mae or Freddie Mac prior to June 1, 2009.

When using HARP, many borrowers do not need an appraisal or other documents to receive approval. With a HARP refinance, it is hoped that borrowers will be able to see equity grow faster which may help them in the near future. Many borrowers have found they are turned away from a HARP refinance due to lender restrictions and overlays. The fastest and easiest way to obtain HARP is by submitting an online inquiry that returns a response almost immediately. There are indeed many lenders available who are willing and waiting to assist borrowers with a HARP refinance.

Remaining stable this week, FHA 30 year fixed mortgage rates are at 3.125%, FHA 15 year fixed mortgage rates are at 2.625% and FHA 5/1 adjustable mortgage rates are at 2.625%. FHA mortgages continue to remain popular with first time home buyers because of the low down payment requirements and easier credit qualifying. Although there are not many first timers purchasing homes right now, there are many FHA borrowers who are refinancing their existing FHA mortgages.

For FHA mortgages that were endorsed prior to June 1, 2009, the latest FHA streamline refinance now offers the upfront mortgage insurance premium at .01% and the annual mortgage insurance premium at .55%. Under normal circumstances, FHA closing costs (APR) are high because of the upfront mortgage insurance premium and other FHA fees.

This FHA streamline refinance does not allow for cash out, but there is also no need for an appraisal or any other documentation. Some lenders are only assisting their current customers with the FHA streamline leaving many eligible borrowers left out. Through an online inquiry, borrowers will be able to find many FHA approved lenders who are willing to help with this program.

Decreasing this past week by .125%, jumbo 30 year fixed mortgage rates are at 4.125%. Remaining the same, jumbo 15 year fixed mortgage rates are at 3.125% and jumbo 5/1 adjustable mortgage rates are at 2.250%. Available with 0.7 to 1% origination fee, these are the lowest jumbo mortgage rates available to well qualified borrowers.

The jumbo mortgage market has been fairly quiet lately, although more lenders are beginning to offer these loans because, although they can be risky, they are also profitable. Jumbo mortgage borrowers generally have very strong qualifications which makes these loans attractive to lenders. With more lenders entering this arena, borrowers need to thoroughly search for the best deal for both jumbo mortgage rates and guidelines that they can get.

MBS prices (mortgage backed securities), which move mortgage rates in the opposite direction, have fluctuated over the past week. Investors continue to watch the Euro zone and what, if anything, the European Central Bank plans to do. In the U.S., the Fed meeting last week did not reveal anything new except that they are becoming more concerned over the economy that has slowed down since the first quarter.

The Fed's are prepared to take action if it becomes necessary. Personal Income increased 0.5% from May and the Conference Boards Index rose to 65.9 from June as a result of a better housing market and a decrease in fuel prices, which are both helping consumer sentiment. The Labor Department reported that unemployment claims increased by 8,000 to a seasonally adjusted 365,000 which was close to expectations, but the unemployment rate also increased to 8.3%.

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