There was an interesting article over at Forbes recently titled “All-Time Low Mortgage Rates: Time To Refinance?”. Here are some highlights:
Your breakeven period is one of the most important considerations in a refinance. To determine your breakeven period, you need to look at the monthly savings you’ll create by refinancing and the total cost to refinance your loan. Let’s say that by refinancing, you’ll save $200 a month, and that the cost to refinance is $4,800. To determine your breakeven period, divide your refinance cost by your monthly savings. In this example, the breakeven period would be 24 months, or two years.
If you plan to stay in your house for longer than the breakeven period, refinancing might make sense. Now, if you’re only planning to stay there for 26 months, will that $400 you save be worth the time and hassle of going through the refinancing process? Maybe not. But if you’re planning to stay in the house for another 10 years, the refinance would save you $2,400 a year for eight years, or $19,200 (less the cost of the refinance).
Contact us in the sidebar in order to find out if you can qualify for a refinance. If you can qualify for a refinance we can help you get the estimates/information you need to figure out your breakeven point.
There was an insightful article published recently at Patch.com on the question of whether you should look into a refinance. Here are some highlights:
If you’ve ever asked yourself if refinancing your home is a good idea the answer is, you should look into it. Not only could it give you more to live on month to month, but it could also save you thousands on your mortgage in the long run.
A recent survey produced some disturbing results on the state of mortgages in the United States. The report showed that more then half of homeowners are either paying too much for their mortgages or are locked into mortgages that are clearly unsuitable for their needs, income level or financial goals. Research also indicates that the average percentage of some ones income that goes to mortgage payments has risen 12.6 percent from nine years ago, which is not leaving today’s homeowners much left to live on for themselves and families.
If you don’t relate to these circumstances, there are plenty of other reasons why refinancing could still be in your best interest. Things have probably changed in your life since you signed your original home loan. What were your priorities then might not be what’s most important to you now. Refinancing allows you to change the terms of your mortgage, to suit your lifestyle now.
Refinancing your mortgage can benefit you in many ways like saving money, increasing cash flow, reducing the time of your mortgage and being able to lock in the low interests of today (4.375 percent, at some banks). But there are certain facts you need to know before deciding on refinancing.
Contact us in the sidebar to look into refinancing with a government-back loan.
There have been some speculations that interest rates on government-backed mortgages could creep even lower this coming week. A writer over at BankRate.com said the following:
For the fourth week in a row, we are going to set a record for the lowest rate in the nearly 25-year history of Bankrate’s weekly mortgage survey.
Last week the 30-year fixed averaged 4.75 percent in Bankrate’s survey. When the survey is conducted today, I expect it to fall to around 4.66 percent.
Contact us in the sidebar right away if you would like to refinance to a lower interest rate while such rates are still available.
The new financial reform law includes a provision that is specifically designed to provide relief to homeowners who have lost their jobs. We get this from a recent MarketWatch piece on the subject:
More help is on the way for unemployed homeowners struggling to make their mortgage payments, thanks to funding tucked into the financial reform legislation signed by President Obama on Wednesday.
Although the U.S. Department of Housing and Urban Development hasn’t released the details of exactly how the $1 billion emergency homeowners’ relief fund will be distributed, legislation dictates that the program start by Oct. 1.
HUD is reviewing the language to determine the best method of implementation, said Lemar C. Wooley, a HUD spokesman.
The bill also includes $1 billion for redevelopment of abandoned and foreclosed homes.
The relief-fund program is similar to a Pennsylvania program that provides financial assistance to out-of-work homeowners so they can keep up with their housing costs, said John Dodds, director of the Philadelphia Unemployment Project. The money has been available to residents since the 1983 recession, he said. …
Currently, unemployed homeowners are granted at least three months’ forbearance on their mortgage loans through the Home Affordable Unemployment Program. Some states hardest hit by the foreclosure crisis received extra federal funds for foreclosure prevention, and some states offer assistance for unemployed homeowners.
But the new funding in the bank-reform bill extends help for unemployed homeowners to all parts of the country.
“In this economy, getting that next job hasn’t been a very quick thing,” said Julia Gordon, senior policy counsel for the Center for Responsible Lending. For many, a three-month forbearance period isn’t enough, she said.
“For the most part, these are people whose loans are sound, 30-year fixed-rate loans. The person is in a bad situation because they’re underwater in terms of equity and they can’t make payments. They can’t borrow against their house and in many cases can’t sell their house,” Gordon said of the new group of homeowners who could be helped. “We don’t know how many people are paid for with a billion dollars, but it is a great start.”
There was a news release recently outlining some of the details of the new help for unemployed borrowers program. Here are some of the highlights:
By August 1, all mortgage servicers participating in the Making Home Affordable Program will offer extra help for homeowners struggling to make their monthly mortgage payments because of unemployment. The Unemployment Program will offer homeowners a forbearance period to temporarily reduce or suspend their monthly mortgage payments while they seek re-employment.
The minimum forbearance period is three months, although a mortgage servicer may extend it depending on the investor and regulator guidelines. If a homeowner becomes re-employed in that time, the forbearance period will end and the homeowner will be evaluated for a mortgage modification under the Making Home Affordable Program. Unemployment benefits will no longer qualify as income for the mortgage modification program.
During the forbearance period, a homeowner’s monthly mortgage payment must be reduced to no more than 31 percent (or less) of their gross monthly income. The servicer can decide to temporarily suspend payments in full. The payment amount and due dates will be decided by the servicer depending on investor and regulator guidelines.
To qualify, a homeowner must meet the following eligibility criteria:
* The mortgage must be a first lien mortgage, originated on or before January 1, 2009, and the unpaid principal balance must be equal to or less than $729,750 for a one-unit property.
* The property must be the homeowner’s principal residence.
* The mortgage has not been previously modified through a Home Affordable Modification.
* The homeowner was ineligible for a Home Affordable Modification.
* The homeowner is either behind on payments (but not by more than three consecutive months) or it is reasonably forseeable that the homeowner will fall behind.
* The total monthly mortgage payment is greater than 31 percent of the homeowner’s gross monthly income. If the payment is less, it is up to the servicer’s discretion if they will offer the program to the homeowner.
* The homeowner will be unemployed at the start of the forbearance period, and is able to document this because they will be receiving unemployment benefits in the month the forbearance period begins (even if the benefits expire before the forbearance period ends).
A mortgage servicer may require that, based on investor and regulator guidelines, homeowners have received at least three months of unemployment benefits before they begin a forbearance period.
There is no cost to apply to the Unemployment Program, although late charges may accrue while the homeowner is being evaluated for the program or in the program. A mortgage servicer may not collect late charges from the homeowner while they are still in the forbearance period.
Servicers may not initiate foreclosure proceedings or conduct a foreclosure sale while a homeowner is being evaluated for the Unemployment Program or in the forbearance period.
If you have considered a refinance now is the time to contact us in the sidebar. Interest rates on government-backed mortgages are the lowest they have been in 50 years right now. Here are some excerpt from a recent AP article on the topic:
Mortgage rates have sunk to the lowest level in more than five decades, but consumers aren’t rushing to refinance their loans or buy homes.
Mortgage company Freddie Mac said Thursday the average rate for 30-year fixed loans sank to 4.58 percent this week.
That’s down from the previous record of 4.69 percent set last week and the lowest since the mortgage company began keeping records in 1971. The last time they were cheaper was the 1950s, when most long-term home loans lasted just 20 or 25 years.
Rates have fallen over the past two months. Investors wary of the European debt crisis and the stock market have shifted money into the safety of Treasury bonds, driving down yields. Mortgage rates tend to track the yields on long-term Treasurys. …
Rates on 15-year fixed-rate mortgages fell to an average of 4.04 percent, the lowest on records dating to September 1991 and down from 4.13 percent a week earlier.
Rates on five-year adjustable-rate mortgages averaged 3.79 percent, down from 3.84 percent a week earlier. That was also the lowest on Freddie Mac’s records, which date back only to January 2005.
Average rates on one-year adjustable-rate mortgages rose to 3.8 percent from 3.77 percent.
The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for all types of loans in Freddie Mac’s survey averaged 0.7 a point.
Refinancing is generally considered worthwhile for homeowners who can shave at least three-quarters of a percentage point off the rates they pay now and plan to stay in their homes for a long time.
Besides the fees for the mortgage broker or lender, there are fees for title insurance, a new appraisal, document processing and other charges. In “no fee” mortgages, costs are often added to the loan amount, or the interest rate is higher.
