About Government Refinance and Home Purchase Programs

President Obama wisely counseled Americans to look into refinancing now while the federal government is still working hard to push mortgage interest rates to historic lows. Here is a quote from an AP article on his remarks:

Declaring “good news” in the midst of an economic meltdown, President Barack Obama on Thursday urged families to take advantage of near-record low mortgage rates by refinancing their home loans. “We are at a time where people can really take advantage of this,” Obama said, seated with a handful of homeowners who have already lowered their bills.

But he also warned people to watch out for scam artists, cautioning, “If somebody is asking you for money up front before they help you with your refinancing, it’s probably a scam.”

Rates on 30-year mortgages inched upward this week but remain near the lowest level in decades, allowing borrowers with strong credit and stable jobs to save money if they refinance.

The average rate on a 30-year fixed-rate mortgage rose to 4.87 percent this week, up from 4.78 percent last week, Freddie Mac reported Thursday. That was the lowest in the history of the survey, which dates back to 1971.

If you think a refinance would be useful to you, fill in the contact form in the sidebar and one of our refinance specialists will be in touch with you soon to go over your situation and get an estimate to you.

As we have noted here in the past, there are a lot of shady companies popping up these days claiming to be offering loan modifications. The problem with some of these companies is that they collect a few thousand dollars up front and too often fail to deliver any loan modification at all. The Obama administration is working to clamp down on these scams. See an LA Times article on today’s announcement here.

The best way to avoid being scammed is to work with your mortgage company to get a modification yourself. There is no charge to work directly with your own company.

If that approach fails though there are legitimate loan modification companies out there though. We even recommend such companies to people when their own efforts come up short. The key is to be sure you work with a company that actually has a track record of successfully modifying loans, has real attorneys who have helped with modifications before, and most importantly has a written money back guarantee if they are unable to secure a loan modification.

Nobody should be surprised but a study that came out recently showed that loan modifications that keep payments the same or result in higher payments end up going badly. By contrast, loan modifications that reduce monthly payments by more than 10% have a much higher chance of working. See some useful graphs here. Let’s hope lenders are paying attention.

The LA Times recently published a useful article on the new Obama loans that are set to go live this month. Here are some excerpts:

Here’s how it works. In the past, the federal Fannie Mae and Freddie Mac mortgage programs would only handle loans of up to 80% of your home’s value, unless you bought mortgage insurance. And if you owed more than your home was worth, you were flat out of luck.

As of this month, that has changed. Through June 2010, borrowers whose loans are owned or guaranteed by Fannie or Freddie may be able to get quick refinances for up to 105% of a home’s value. They must be current on their mortgage payments, but administration officials estimate that as many as 5 million homeowners qualify.

A new report came out today announcing that the US lost another 660,000+ jobs in March. The jobless total is at more than 13 million now. Every time someone loses a job another home is potentially in jeopardy of foreclosing. Every time another home forecloses all of the homes nearby fall in value.

If you still have a job, still have some equity in your home, and are interested in taking advantage of the record low mortgage interest rates available now contact us in the sidebar.

See the post over at Housing Wire here. It sounds like a housing price recover will trail a jobs recovery by several months.

Once again, if you have enough equity in your home to refinance still, you might want to contact us about it sooner rather than later. Rates are at lows not seen in decades and you might not have enough equity later on.

There are lots of ways to measure this but the report in the AP this morning said that home prices in Jan. 09 were nearly 20% than home prices in Jan. 08. Here is a excerpt:

The Standard & Poor’s/Case-Shiller index of home prices in 20 major cities tumbled by a record 19 percent from January 2008. It was the largest decline since the index started in 2000. The 10-city index dropped 19.4 percent, also a new record.

All 20 cities in the report showed monthly and annual price declines, with 13 posting new annual records. Prices dropped by more than 10 percent in 14 cities.

With housing prices likely to drop further and mortgage rates the lowest since the 1950s, now is the time to look into a refinance. Contact us in the sidebar if you think you are a candidate for a government-backed refinance.

As we noted earlier, the Fed announcement last week pushed mortgage interest rates to shocking lows. Rates have drifted up again this week a but but it is still a great time to refinance. Here is a great quote from Housing Wire on the subject:

A separate rates survey conducted by Bankrate.com found that mortgage rates this week actually hit their lowest point since the Eisenhower era — yes, the 1950s! According to Bankrate, the benchmark 30-year fixed-rate fell 10 basis points to 5.19 percent, while the benchmark 15-year fixed-rate fell 6 basis points to 4.8 percent.

The plunge in housing prices has not slowed quite yet. Recent numbers show that prices on average in the US in January ’09 were down 6.3% when compared to Jan ’08. See the story here.

Once again — if you have a mortgage in the 6’s or above and still have equity in your home, now would be a good time to look into refinancing. You can contact us in the form in the sidebar.

President Obama is rumored to be on the verge of announcing his nominee to be the new chief for the Federal Housing Administration. See the Bloomberg article on the subject here. It will be interesting to see if the new leader does anything to help re-ignite the housing market even further.

Here is a bit from the article:

David Stevens, president and chief operating officer of real estate brokerage Long & Foster Cos., is President Barack Obama’s choice to head the Federal Housing Administration, according to people familiar with the selection.

See the AP article on the Fed announcement here. We’ll see where rates go from here. They are already hovering in the low 5’s right now.

The reason that mortgage interest rates have been hovering at historic lows in the last couple of months (in the low 5’s) is that the Federal Reserve has been feverishly buying up mortgage backed securities (MBS). A MBS is basically a bundle of mortgages that banks put together and sell as investments. Banks sell mortgages because that gives them more money to lend to others. The easier it is to sell these MBS’s the lower rates can go. So with Uncle Sam willing to gobble up the MBS’s for sale rates stay low.

According to this article, the Fed is committed to keep at it as long as it takes to help turn around the economy. That is a good thing if you need a refinance.