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December 3, 2009

Economy: Why NOW May Be A Good Time To Refinance A Mortgage

Why Now May Be a Good Time to Consider Refinancing a Mortgage

By JENNIFER SARANOW SCHULTZ

 

With mortgage rates hitting record lows, it may be time to think about refinancing.

The rate on a 30-year fixed mortgage with no points hit 5.01 this week, slightly up from 5 percent last week but down from 5.97 percent this time last year, and the 15-year fixed mortgage rate hit 4.46 percent, compared with 4.47 percent last week, according to the latest data released Wednesday from Bankrate.com. These rates are at, or close to, the lowest levels since the company’s tracking began in 1985.

At the same time, the Mortgage Bankers Association said interest rates on the 30-year fixed-rate mortgages it tracks fell for a sixth straight week, remaining below the 5 percent level, “widely viewed as a psychological tipping point” according to this article.

The record lows are thanks to a combination of the Federal Reserve showing no inclination to raise short-term interest rates and investors and foreign central banks maintaining a healthy appetite for debt issued or guaranteed by the United States government, said Greg McBride, Bankrate.com’s senior financial analyst. And they come as many homeowners are finding themselves owing more than their house is worth and are having trouble making mortgage payments.

There is also a limited-time government program that helps people to refinance if they are slightly underwater. The “Home Affordable Refinance Program” is not as widely discussed as the related loan modification program. And it has been criticized by some housing experts for helping financial players profit. Still, it aims to help homeowners who have a mortgage balance equal to or greater than the value of their home refinance and obtain more affordable monthly mortgage payments.

The program is available until June of next year to homeowners who meet certain qualifications, including having loans owned or guaranteed by Fannie Mae or Freddie Mac and having a first mortgage that does not exceed 125 percent of the current market value of the home. (See if you qualify and find out how to apply if you do here).

With the risk that rates may not stay this low for long and that the government program will end, “there is a window of opportunity” for refinancing that will not be available for long, Mr. McBride said. He recommended that those who think they may not qualify for the program to double check what their home is worth to confirm this. Then, even if you don’t ultimately qualify, he suggested considering trying to refinance anyway if you are paying a higher rate on a fixed-rate mortgage or have an adjustable-rate mortgage.

“Today’s record low mortgage rates represent an opportunity for homeowners to refinance at lower fixed rates or to trade out of an adjustable rate mortgage before an inevitable increase in rates and lock in permanent payment affordability,” he said.

Are you considering refinancing in this environment? Why or why not? If so, what kinds of problems and hurdles, if any, have you run into trying to refinance? (Find more information about mortgages here and more information about loan modifications here).

Original link: http://bucks.blogs.nytimes.com/2009/12/02/why-now-may-be-a-good-time-to-consider-refinancing-a-mortgage/

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March 24, 2009

Real Estate: Home Sales UP 5.1% Nationwide

happy-house Nationally existing home sales were up 5.1 percent according to the National Association of Realtors which equals to 4.72 million homes sold.  This is the largest monthly sales increase since July 2003.

This was an unexpected but pleasant surprise since economists were anticipating another drop in sales to 4.45 million units from the 4.49 million annual rate in January.

More than 40 percent of sales nationally were of foreclosed properties or properties in default that were being sold for less than the mortgage balance and most sales were for homes at the bottom of the price ladder. The more expensive homes aren’t selling as well, and median prices continue to drop. Half of all homes sold last month went to first-time buyers.  Single family sales are selling better than condos because of differing mortgage availability.

Region

February 2009 Existing Homes Sales Increased By:

Northeast

15.6%

South

6.1%

Midwest

1%

West

2.6%*

 

* Sales in the West are up a sharp 30.4% over the year due to strong sales in foreclosure heavy regions of  Southern California and Las Vegas.

Region

February 2009 Median Price

February 2008 Median Price

Percentage

 

Northeast

$251,200

$263,258

4.8%

South

$146,700

$158,143

7.8%

Midwest

$131,000

$141,218

7.8%

West

$204,600

$265,980

30%

 

Economists and real estate agents are watching carefully to see if low mortgage rates — which went below 5 percent last week — will boost sales.  An $8,000 federal tax credit aimed at first-time buyers already has brought new shoppers into the market.

New listings in the northeast region fell by nearly 10 percent in February.  This is an indicator that the flood of available homes might be drying up.  If there in fact is less inventory, then that will help rebuild the real estate market.  If there is less supply and more demand for homes then the value of real estate will start to increase again.

January 30, 2009

A Few Tips To Help Beat The Recession

1. Cut your spending. Make this a priority. Weigh whether you really need that new flat-screen TV, and maybe going on a luxurious overseas vacation can wait one more year. Making sacrifices this year and living on a tighter budget will leave you much better off in the long run.

2. Reduce your debts. Pay a lump sum on your credit card, and reduce any loan repayments. Make sure that you are paying the lowest rate possible on any loans you have including student loans.

3. Slash your household bills. Make sure you have the cheapest deals for your gas and electricity. If you have a cell phone see if there are cheaper options available. Chances are if you have been under the same contract for more than two years there might be a better deal out there for you.

4. Put money away for a rainy day and make sure you have a cushion of cash savings.  Try to have 6 months worth of total monthly expenses saved.

Normally, when a recession strikes, interest rates are cut. This can be good news for homeowners as it means the price of mortgages will fall.

There are some good mortgage rates available, but don’t take the risk if you cannot afford to. Taking a fix rate might mean that you miss out on a possible rate cut, but it does give you the peace of mind of knowing what your monthly mortgage payment will be.

5. If your budget gets really tight then there are some drastic options available for reducing your monthly repayments. You could move some of your loan to interest only for a short time. Or increase your mortgage term from 25 years, to 30 or 40. Don’t skip mortgage repayments.

6. Don’t change jobs. Companies make cutbacks when their profits get hit and staff is usually the first to be axed from the balance sheet. New employees can often be first in the firing line.

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