Lower Mortgage Rates Lead to a Bona Fide Refinance Boom
Compare mortgage rates now!
* Loan Purpose:
Refinance Home Buying
Your Current Mortgage
* Current Loan Amount:
* Current Payment:
* State:
Select State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington Washington DC West Virginia Wisconsin Wyoming
Can you reduce your mortgage payment?
* Purchase Price:
* Down Payment:
* State:
Select State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington Washington DC West Virginia Wisconsin Wyoming
document.getElementById( "purchase_widget_container" ).style.display = "none";
Our Favorites
That’s right folks, you read that correctly. Right now, as a result of the lowest 30-year fixed-rate mortgage rates since 1971, we are officially in a refinance boom.
According to Marketwatch.com, “The benchmark 30-year fixed-rate mortgage tumbled to a national average 5.17% this week, the lowest level since Freddie Mac began its weekly rate survey in 1971.”
Good news for the economy. Good news for homeowners wanting to refinance. Good news for folks wanting to sell or buy a home. Good news for just about everyone.
The lowest mortgage rates in almost 40 years
With mortgage rates dropping to levels not seen in over a generation, the doors for refinancing have opened wide. And we mean "wide." In fact, it’s hard to not find someone talking about refinancing. It seems refinancing is on the tips of just about everyone’s tongues.
And the reasons are obvious. For example, lowering your mortgage rate just 1% on an average $200,000 30-year fixed-rate mortgage (from 6.5% to 5.5% for example) will save you an estimated $125 a month or $45,360 for the 30 years of your loan. And the more your rate drops (going from 6.5% to 5% for example), the more money you save. That’s about all there is to it. Not much more complicated than that.
Refinance Boom is upon us
So, as you can see, there are many reasons to refinance your mortgage right now if you have equity in your home. Even if you think you won’t keep your loan for the entire 30 years, you still may be able to save money if you refinance. All you have to do is figure out your break even point. For example, let’s assume you will save $300 a month on your new mortgage payment after you refinance. Let’s also assume your refinance will cost $4,000 in various fees and costs.
Based on these numbers, you would need to keep your refinanced mortgage a minimum of 14 months to break even. After that, it’s all profit. Each month you’ll be able to put the $300 you save with your new mortgage payment to something other than your mortgage – something important to you, like your family, a vacation, a charity, or just plain old savings. The point is, you’ll have this extra money to do with as you please.
Waiting for lower mortgage rates could be costly
Word on the street is that some people are waiting for mortgage rates to drop even further and are holding out for a “dream rate” that is yet to come. Good luck on that. Unless you have a crystal ball that the rest of us don’t know about, it is impossible to predict future rates and you are gambling by waiting. It’s true, mortgage rates could go lower, but it’s not likely. In fact, history tells us they will most likely rise. That’s the truth, if you believe in history as a predictor for the future. If you sit on the sidelines waiting for the bottom mortgage rate, you might find yourself locking in after rates have started rising. Just ask yourself the question – “how much can you lower your payment and are you willing to lose that amount by waiting for an even lower rate?”
If you are comfortable paying a higher payment now on the slight chance that mortgage rates will drop further, get out your crystal ball and wait. If you want a lower payment today and are content with the fact that average mortgage rates on 30-year fixed-rate mortgages are at or near a 37-year low, get started refinancing now.
It’s up to you!Tag : quickenloans.com
Details of $75 Billion Loan Modification & Refinancing Programs Released
Compare mortgage rates now!
* Loan Purpose:
Refinance Home Buying
Your Current Mortgage
* Current Loan Amount:
* Current Payment:
* State:
Select State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington Washington DC West Virginia Wisconsin Wyoming
Can you reduce your mortgage payment?
* Purchase Price:
* Down Payment:
* State:
Select State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington Washington DC West Virginia Wisconsin Wyoming
document.getElementById( "purchase_widget_container" ).style.display = "none";
Our Favorites
The details of the federal government's $75 billion loan modification and refinancing plans were released this morning. According to Housing Secretary Shaun Donovan, the plan could help financially stabilize up to 9 million homeowners.
The plan is outlined as 2 parts: one to modify loans for struggling homeowners and the second to refinance loans for homeowners with little or no equity.
The first is to aid homeowners currently struggling to make their payments, as explained below. These will be handled by loan servicers and are considered loan modifications, not refinances.
The second part of the plan is to refinance homeowners into low-cost fixed loans, even if they have little or no equity. Under this portion of the plan, loans held by Fannie Mae and Freddie Mac could be eligible for a refinance to lower payments for homeowners with loan-to-values up to 105%. Interested borrowers should be warned that it could take servicers and lenders up to a few weeks to implement new guidelines. Continue to check back with Quicken Loans Mortgage News for updates if you are interested in refinancing, but don't qualify under today's conventional guidelines because of the lack of equity in your home.
Eligibility for the $75 Billion Loan Modification ProgramTo be eligible for a loan modification, borrowers must demonstrate they are at risk of defaulting. Payment delinquency is not required (as in some previous plans), but clear documentation will be required for a homeowner to qualify for a modification. Some of the guidelines are as follows:
Homeowners must:
Sign a document stating financial hardship.
Receive financial counseling if homeowner’s total debt equals more than 55% of their current income.
Currently live in the property (Primary residences only).
Have a mortgage originated before January 1, 2009.
Document their income with pay stubs and tax returns.
Only loans within the conforming county limits ($729,500 for 1-4 unit homes, nationally) are eligible.
How the $75 Billion Loan Modification Plan Works
The loan modification plan intends to bring together all parties for the greater good – the government, lenders and borrowers.
From Treasury.gov, the government's $75 billion loan modification plan will work as follows:
The lender will have to first reduce interest rates on mortgages to a specified affordability level (specifically, bring down rates so that the borrower's monthly mortgage payment is no greater than 38% of his or her income).
Next, the initiative will match further reductions in interest payments dollar-for-dollar with the lender, down to a 31% debt-to-income ratio for the borrower.
To ensure long-term affordability, lenders will keep the modified payments in place for five years. After that point, the interest rate can be gradually stepped-up to the conforming loan rate in place at the time of the modification.
Other options to reduce the monthly mortgage payment include: reducing the mortgage principal, extending the loan term up to 40 years, or moving part of the principal to the end of the loan with no interest at all. Any modified payments will be in place for 5 years or could become permanent, depending on the client's situation.
Where does the $75 billion go?
Part of the $75 billion will be plugged into incentivizing the servicers who currently hold these loans. For coordinating an eligible modification, a servicer could be paid an upfront $1,000 and additional $1,000 per year (up to 3 years) if the borrower remains in the loan without defaulting. The government will also assist by subsidizing (paying the difference) interest rate reductions.
Borrowers can also see some incentive for keeping up with payments on their newly modified loans. They can accrue up to $1,000 per year for up to 5 years - a total of $5,000 if they make payments timely. The "payment" will be directed to their servicer who will reduce the principal balance by that amount.
The home loan modification plan will be effective until the end of 2012, but homeowners will only be allowed one loan modification under this particular plan. As of today, homeowners who think they may be eligible are encouraged to call their servicers (the lender who currently has their loan) to initiate a modification.
While this plan may not help everyone, we continue to experience historically low fixed mortgage rates. Refinancing to current mortgage rates could significantly aid many more homeowners. Also keep in mind the perfect storm for buying a home today – the new $8,000 first-time home buyer tax credit and home prices at historic lows.Tag : quickenloans.com