Home Loan Refinancing Relief Increasing from Government Pressure
by admin ~ July 2nd, 2009.The Obama administration has projected that 4 million to 5 million borrowers with home loans they can’t afford would be helped. A Treasury official Tuesday said that the figure applied to those who would be eligible, not necessarily those who would participate. Administration officials do not have an updated figure of how many people would be eligible or participate now that the criteria has been widened. The recent rise in home loan prices has blunted the plan’s benefit, as well.
The Federal Reserve has been buying bad credit mortgage-backed securities and long-term Treasurys in an effort to lower rates. It worked for a while. Rates hit a low of 4.84% on April 28, but are now at 5.45%, according to HSH Associates.
Since mortgage rates have been in the 6% range in recent years, refinancing to the mid-5% range may not be worth it, said Keith Gumbinger, vice president at HSH Associates. A homeowner with a $200,000 mortgage at 6% would see a savings of about $64 a month if he refinanced at 5.5%, and that’s before closing costs. “Are interest rates for home equity loans and mortgage refinancing low enough to warrant getting into the process?” he said. The administration’s announcement comes on the same day as an industry group reported that the demand for refinancing dropped 30% last week. In addition to higher rates, rising unemployment is contributing to the decline.
Borrowers with Freddie Mac loans who refinance through their current servicer can apply right away, but those who want to go through a different lender must wait until Oct. 1. Those with Fannie Mae mortgages can’t use a different lender and they’ll have to wait until Sept. 1 to refinance if their home loans are more than 105% of their home’s value. Unfortunately for thousands of homeowners struggling with rising home equity line rates, second mortgage liens are not eligible for this government mortgage program.
Category: Government Mortgage Relief, Home Equity News, Mortgage News, Mortgage Rate News | Tags: home equity line rates, home equity loans, home loans, mortgage refinance, mortgage relief, refinancing, second mortgage