Refinancing Mortgages in Demand

Dramatic drop in mortgage rates has stirred interest in refinancing. According to Freddie Mac 30 year mortgages rates fell to an average 5.47 percent in the last week, as it was the lowest since March 2004.



Rates tumbled due to announcement from Federal Reserve that it was buying $600 million in mortgage-backed securities and debt to help the market. The sudden rate drop led to a 200 percent surge in mortgage refinancing applications.



The 30-year fixed-rate average was 5.47% with an average 0.7 point for the week ending Dec. 11, down from 5.53% a week ago. Last year the average was 6.11%.The 30-year average has not been lower since March 25, 2004, when it averaged 5.4%, Freddie Mac said.



For some rich equity refinances 4.875 percent interest rates are common. Treasury plans to slash mortgage rates on new loans as low as 4.5 percent to stimulate home sales.



How easy is it to refinance now?

You need at least 20% equity in your home, and with the most challenged market you may end up needing more than 20 percent.



When it comes to credit scores, a credit score of 720 is needed to get lower interest rates.



You must fully document your income and assets as well as your debt to income ratio need to be smaller now in a range of 43 percent or lower.



Should you wait for government to push rates lower?

A of today there are many homeowners who can already take advantage or lower rates. The more you wait, the quicker your property value may go down, squeezing your equity.



When and if government announced a new mortgage program, there will be many restrictions that homeowners need to qualify for.



Mortgage rates would have to fail in order to kick start the housing market and that is what Treasury department is thinking of to help housing market.



Many homeowners are doing very smart thing when they refinance. From paying bills to actually putting saving into retirement plans, savings account or anything that can be safe over a long period of time.



What is driving rates lower?

There few factors that have pushed mortgage rates lower. Stock market and gloomy economy outlook has triggered government to do something and with many actions taken by government it moved yields of 10 year treasuries.



Will rates jump back up? Yes they will rise from its lows and sometimes sooner than we may all think. If you are thinking of refinancing, now it is a time to do it.



Will government plans help boost the housing market?

In most cases what everyone can see the impact may not be as big as you might think. Lower rates can help homeowners from adjustable mortgages to fixed mortgages, but borrowers who desperately need to refinance may not qualify.



Higher lending standards prevent many to either purchase a home or refinance a home to get the most attractive interest rates.



What should I do?

Best approach is to get free mortgage quote and compare interest rate and monthly mortgage payment to see where you can save. Many websites offers such deals so therefore you have nothing to loose. Once you receive your quote you can simply decide if you are willing to wait for government to do something about mortgage rates.

Increased Foreclosure Rates In Us

The recent housing market boom has left many people in homes that they cannot afford with loans that they never should have been granted. This is resulting in a 72% increase in foreclosures from 2005 to 2006 according to recent reports. Foreclosure rates are increasing in 2007 due to lack of home sales and increasing mortgage rates. There is also a jump in the delinquency rate on US home loans. The biggest increase in delinquency is on sub prime mortgages where the current rate is up from 12.



56% to 13.33%. FHA loans are also not far behind with a delinquency rate of just over 13.46%



This increase in foreclosures has affected all areas of the housing market: from starter homes to luxury residences. Industry experts believe that there are several reasons for this increase in home loan delinquencies and the increase in foreclosures. Consumer confidence in the current market might make many first time homebuyers, especially couples, take on a larger mortgage that they can afford.



If they are unable to make payment due to a loss in employment for one of the partners, they usually lose their home to a foreclosure. Some experts believe that rising energy prices are also putting a strain on household budgets making it difficult for some consumers to make their mortgage payments.



Another important factor is the cooling off the housing market in some areas of the US. With the decrease in the rate of house sales in these areas foreclosure rates are on the rise.



A decline in the price of housing also leads to a loss of equity for the homeowner that makes it difficult for him or her to leverage their property in case of difficulty with payments. The states with the highest current foreclosure rates are Michigan, Mississippi and Louisiana.



Foreclosure rates are high among ARM borrowers. ARM or adjustable rate mortgages frequently offer a low introductory interest rate, which is very tempting to potential homebuyers. Once signed on homeowners might experience an increase in their monthly payments due to increases in current interest rates.



This might sometimes prove mortgage unaffordable to some homebuyers and lead to the loss of their property in a foreclosure.



The scenario is not one of doom and gloom however. This is a great time for those interested in purchasing foreclosed properties either as their primary homes or as investment properties. Foreclosure sales can allow one to purchase very desirable residences at a fraction of the real value providing one with instant equity and relatively low monthly payments.