If you'd like a lower rate on your mortgage, HARP might be able to help.
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Another cruel irony of the housing bust? While hundreds of thousands of mortgage borrowers have been able to squat in their homes without making a single mortgage payment in months or even years, many responsible homeowners who have good credit and consistently meet their monthly obligations haven't been able to refinance in order to avoid losing their homes.
Many of today's homeowners purchased their homes during a time of easy credit, when mortgage products, like interest-only loans and option adjustable-rate mortgages were issued to the marginally qualified. And many were told that — if they made their payments faithfully — they could easily refinance out of these products into affordable fixed-rate loans once the payments started to balloon.
But that day has never come for some borrowers — no matter how good their payment record or credit score.
Many lenders are refusing to refinance underwater mortgages — loans that are higher than the value of the home — because it would mean big losses for them if the borrower defaults.
According to data submitted to federal regulators and analyzed by the Wall Street Journal, nearly 27% of mortgage applicants were denied mortgages in 2010, up from 23.5% a year earlier.
The cruelest twist? Lenders typically wait until a homeowner is in default before they are willing to modify their mortgage.
For some homeowners, the clock is ticking. In 2011, $1 trillion in adjustable rate mortgages are scheduled to reset. And many are scrambling to refinance their mortgages while rates are still low — to no avail.
Senator Barbara Boxer (D-Calif) has co-sponsored a bill, the "Helping Responsible Homeowners Act," for borrowers who want to refinance but are in "negative equity," owing more on their mortgages than their homes are worth.
Boxer's legislation also requires banks to offer interest rates comparable to what they're giving to borrowers who are not underwater. And it bans risk-based fees for mortgages issued by Fannie Mae or Freddie Mac that can be as much as 2% of the loan principal.
Now, President Obama is pushing his revised HARP program. The mortgage non-sense just never seems to end. Stay tuned, we'll keep you updated on these programs.
More homeowners prefer to pay off their mortgages sooner as interest rates have stayed near rock-bottom and weak labor conditions have caused them to reduce their debt loads.
According to a recent survey, the current trend in refinancing into shorter-loan terms is a stark contrast to the one during the height of the housing boom, when families were taking out bigger mortgages against the rising values of their homes.
Of those homeowners who refinanced a 30-year fixed-rate mortgage during the second quarter, 37 percent moved into a 15-year or 20-year fixed-rate loan. This is the highest since the third quarter of 2003.
In the second quarter, interest on the 30-year mortgage averaged 4.65 percent, compared with a 3.84 percent average on 15-year mortgages.
Refinancing has comprised the bulk of U.S. mortgage activity since the housing bust that led to the 2007-2009 global financial crisis.
During the second quarter, the refinance share of mortgage applications, versus the share of applications for loans to buy a home, averaged 70 percent, according to Freddie Mac.
Great Benefits, Serious Risks – A loan secured by a homeowner's "equity" can be an economical way of borrowing money because the interest rate is typically low and, for many people, the interest paid will be tax deductible. However, there's a big risk…
Have questions about home equity loans not answered here? Use our comment link below to ask. We'll get back to you with answers.
The conforming loan limits are changing – what does that mean and why should you care?
For most borrowers, it probably means nothing at all, in fact the majority of the country falls into the standard conforming limit and they won't be affected at all.
Since 2006, the conforming loan limit has been set at $417,000. In 2008 Congress passed the "Housing and Economic Recovery Act of 2008" (HERA). HERA permanently increased the conforming loan limits to the lesser of:
- 115% of area median home price (which varies by county) or
- 150% of conforming loan limit ($625,500). If that amount is less than $417,000, $417,000 remains the conforming limit
For roughly 250 counties in the US (out of just over 3200) the amount folks can borrow will go down. If you live in an area where the cost of living is high, you are probably impacted.
Many of these areas will drop from a maximum of $729,750 to $625,500, but that's just the headline numbers. Any counties where the limit today is over $417,000 will probably be lowered down. The same goes for FHA loans – if you are considering an FHA loan, the limits will drop even further.
The "temporary" limits that are set to expire could still be extended again by Congress. Many people expect them to do so. But if Congress does not act to extended the temporary limits, any loan with the higher loan limit will need to close by 9/30/11.
We'll keep you updated here on these conforming limits, when and if Congress extends them, or not.
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