NEW YORK ( TheStreet) -- Today's amazingly low mortgage refinancing rates and the Federal Housing Finance Agency's (FHFA) expanded refinancing program give millions of "underwater" borrowers a chance to lock in an excellent deal. President Obama and the FHFA -- which regulates Fannie Mae ( FNMA) and Freddie Mac ( FMCC), which were placed under government conservatorship in September 2008 and together hold roughly half of all U.S. mortgage loans -- late last month announced an expansion of its Home Affordable Refinance Program, or HARP, so that beginning in early 2012, a borrower could refinance their entire mortgage loan balance, even if the home has declined so much in value that the loan-to-value ratio (LTV) would be above the current limit of 125%.
This means that you could easily cut your monthly outlay for mortgage principal and interest in half, without ponying up extra cash in order to make up for the lost value of the home and bring the LTV down to 125% or even the traditional 80% level. When announcing the expansion of HARP, the FHFA said that additional details to participating mortgage lenders and servicers would be made available by Nov. 15. This means you should call your loan servicer tomorrow to discuss refinancing possibilities. The FHFA's expanded HARP program also provides an incentive to refinance to a shorter-term, say a 15-year fixed-rate loan, which would also feature a much lower interest rate. Of course, as you face the daily onslaught of sales pitches, media reports and financial advice, you're unlikely to hear too many voices pointing the way to escaping the debt trap completely, but the numbers speak for themselves. By looking beyond the monthly payment, and considering all of the interest you would pay over the life of your current loan and a refinancing, you can make a much more informed decision, while saving oodles. This is a radical notion in a society that always tells you to borrow more. While offered rates can change on a daily basis, Bank of America ( BAC) on Monday was offering a "conventional" 30-year mortgage refinancing for $200,000 at a rate of 4.25%. The bank charges 1.125 "points" at closing, or a fee of $2,250 to lock in that rate. Factoring-in the points and loan amortization, the Annual Percentage Rate, or APR for the 30-year fixed refinancing, is 4.401%.