Lawmakers are thinking of ways to help those who are struggling with high rates of interest.

One of the ways that they are working on is the Helping Responsible Homeowners Act.

This legislation was already submitted to the senate committee in the earlier months of the present year.

If it is approved, it can truly help those who are having challenges with their home mortgage and could even give them a good rate of interest.

As a loan officer in Arvest Bank, the low rates of interest at the moment have kept realtor Drew Stoner busy.

He said that a lot of individuals and families are currently refinancing and their bank is not rejecting those whose credit qualifies them for a refinance. He added that even those who have been unlucky in the past have options at the moment. This allows borrowers to refinance despite being at 125% of their loan’s property value.

However, those who have mortgages under Freddie Mac or Fannie Mae may not be able to take advantage of the historically low rates of interest.

Lawmakers are thinking the bill over to lighten the restrictions on homeowners under Fannie Mae and Freddie Mac. Most of these homeowners owe more on their mortgages relative to the total worth of their homes.

According to realtor Tammie Tucker, homeowners who have made on time payments must maintain their good standing. They must not allow their credit to get lower and ensure that their scores are in proper order.

If the bill passes the lawmakers, those struggling with their mortgages will be relieved with the lower rates of interest that they will get. For instance, a mortgage worth $150,000 will give them around $1,100 annual savings.

According to lawmakers, an additional $2.2 billion every year will be added to the economy if the bill is enacted.

But, there is also a concern that the bill’s approval will affect the Midwest. However, when all things are considered, the bill will help generate savings through refinancing.

One of the things that is continually asked these days is “Should I refinance my home mortgage?”

Things are moving so quickly with the economy, that it is no wonder that you may be confused and not sure whether or not to get a mortgage refinance.

The recent downgrading of the US credit from AAA to AA+ was a big hit to the nation and many people are trying to work out whether or not that is going to have an effect on home mortgage interest rates.

Keep in mind, Fannie Mae and Freddie Mac are part of the Government so the downgrade affects the two largest mortgage holders in the nation.

Additionally, the FED has announced that rates are going to stay low for the next 2 years. When the FED says low, that means close to zero.

I’m going to talk about things to think about before refinancing, but before I do, I want to say that it may be a good idea to refinance if you have great credit, and the interest rate you lock in can drop your monthly payments by hundreds of dollars.

Three Factors to Consider Before Refinancing

Recently, the Fed announced that they are maintaining the low interest rates until the year 2013. This is good news for those with good credit standing and for those with some home equity left because these individuals and families still have a chance to refinance their mortgage with the lowest rates. However, even if low rates are available at the moment, this does not mean that it is always a good idea to refinance. Here are the reasons why:

First, since low rates will continue for a little while, refinancing should not be rushed. Individuals and families can still make use of the time to build a strong credit so that when the decision is made to finally refinance, the lowest rates are obtained.

Second, it is best to consider the fees that come with refinancing. With this, it is best to keep the loan long enough to be able to justify the charges. Find out about the fees that you might potentially pay; those that you will surely pay; and those that you may or may not pay. Familiarity with these charges is important before refinancing in order to generate extra savings.

Third, note that points gathered from payments can be deducted in one’s taxes for the entire duration of the loan. With this, the cost of the loan will greatly decrease because of tax savings. For example, if an individual obtains a mortgage of $300,000 and pays 2 point or 2%, he or she has to make an upfront payment of about $6,000. If the person belongs to the 25% tax bracket, the savings will be 25% of $6,000 or $1,500 for the entire duration of the loan. When computing for the real after tax cost, the 2 points will generate a tax savings of $4,500. This is obtained from deducting $1,500 to $6,000.

Despite the low rates these days, it is best to think things through before refinancing. Consider and compute the costs and check if there are savings that can be obtained from it. Otherwise, postpone refinancing if after a thorough computation, it ends up as a bad deal even when the rates obtained are lower.

Whether or not to refinance is really a personal choice. I have friends that have refinanced 5 times in the last year. And, everytime they have refinanced, they have saved hundreds of dollars. Their current interest rate will be 4%. Now, their mortgage is close to 1 million. They live in a home in Hawaii.

The point is, you need to make sure that you do the numbers, do the research and make sure that you are comfortable with the numbers.

Positive Economic News Despite Wall Street Challenges

Although it may seem unbelievable, economists have some positive news despite the challenging week in Wall Street.

One of this is the chance of Americans with good credit ratings to obtain the best bargains in housing prices. In the latest survey of Freddie Mac, it showed that there has been a reduction in the average rate of 30-year fixed rate mortgages. Currently, it is only at 4.32%. Aside from this, home prices are even lower compared to the previous year. According to the S&P/Case Shriller 20-city composite, prices all over the country have become lower by 46.5%. Low mortgage rates and home prices will help more individuals and families afford their first home purchase. For those that already own a home, they can also benefit from low rates by refinancing their mortgages so that their monthly payments will become lower.

The impact of lower rates also extends to the retail industry. The data of the Commerce Department from the previous week shows that there is an increase of 0.5% in their July sales. This is one of their strongest numbers since March this year.

Moreover, another report from last week showed that state unemployment benefit claims declined by 7,000 resulting to only a total of 395,000. Although it seems high, this is still a better number than what most economists are expecting.

Also, a weaker dollar is a silver lining at this time. This means that U.S manufacturers can effectively and better challenge their competitors in countries with strong currencies.

Finally, there is no better news than oil price reduction. During the spring time, prices of oil and gasoline increased. Currently, the prices are more reasonable at around $85 per barrel. Compare this with the $114 high price that it reached several months ago. The lowering oil price is evidence that there is re-balancing in the economy. When oil is cheaper, gasoline is more affordable. This will help consumers save more money.

Related articles

• Freddie Mac’s Housing Outlook August 2011 (johnmurphyreports.com)
• Top Tips on getting a mortgage! (moneyexpert.com)

Why is it Time to Refinance? Is it the best time to get a Mortgage Refinance?

Interest rates on mortgages have continuously declined to reach its lowest level in recorded history. This is a strong proof that it is already the best time for homeowners to consider refinancing in order to generate some savings.

The rate for a 30-year fixed mortgage was at an average of 4.39% during the end of the Aug 4 week. Similarly, the rate for a 15 year fixed mortgage decreased to 3.54% despite the reduction in bond yields and signs that show a weaker economic standing than what is expected said the Primary Mortgage Market Survey of Freddie Mac.

The president of Metropolitan Boston Real Estate, Nebury Street brokerage, said that this is good news because this will serve as a motivation for anyone who is considering refinancing knowing that the low rates won’t stay very long.

Here are the possible savings that homeowners can generate: for a mortgage of $250,000 with 5% interest, they could save about $160 monthly and $2,020 yearly if they refinance the loan for 4.39%. These savings provide a guaranteed cash in the bank during these present times when traditional savings account have nearly zero percent in returns and the gyrations in the stock market have exhausted the investment accounts.

Bankrate.com’s senior financial analyst Greg McBride said that anybody who decides to refinance at these very low rates are sure beneficiaries of the economic concerns and Wall Street challenges.
The three lenders listed in Bankrate.com that offers 30 year fixed loans with less than 4.39% interest are AimLoan.com at 4.19%, Loan Depot at 4.25% and American Interbanc.com at 4.35%. All three are offered with zero points.

Albano said that even if the low rates are great news for most mortgage owners who pass the requirements of credit and equity to qualify for refinancing, potential buyers will still not leave the sidelines. He thinks that people who are observing the rates and decides that they are not ready to purchase at 4.5% will change their mind when the rates fall at 4.3%.

If you are looking to refinance your mortgage, then you may want to consider doing it soon. As you may know, last Friday, Standard and Poor’s downgraded US treasuries from AAA to AA+. This is the first time in history that the U.S. has had a downgrade.

Then, on Monday, Standard and Poors also downgraded Fannie Mae and Freddie Mac. While it is unclear as to the final effects of the downgrade, many financial experts are prediciting that the cost of money will go up, effectively raising interest rates.

If this happens, it could be problematic for an already sluggish economy,a nd could further depress the already lagging housing market. Higher interest rates would effectively make home ownership more expensive.

As for those with bad credit or poor credit, these changes could put you completely out of the market. While the agencies push to regain their credit ratings, they may be forced to be even more conservative with lending practices, and that would make credit or loans for people with bad credit almost out of reach.

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Related articles

• US debt downgrade could mean rate hikes for all (seattletimes.nwsource.com)
• S&P Downgrade Could Feed Home Buyer ‘Anxiety’ (blogs.wsj.com)
• Economy sends mortgage rates down to new 2011 lows (hsh.com)

Fixed mortgage rates remain unchanged while the average rate on a 30-year fixed loan stays close to 5%. According to Freddie Mac, the previous weeks have shown a rise in mortgage rates from 4.86 to 4.87%. In November of last year, it hit the lowest rate since the past 40 years of 4.17%. On the other hand, a 15-year fixed mortgage increased in average rate from 4.09% to 4.10%. Prior to this increase, the rate declined to 3.57% last November, the lowest since 1991.

Despite the decline in mortgage rates, home sales are not significantly improving. In fact, the latest homebuilder report from KB Home, a Los Angeles based company, showed a big decline in home orders for December to February. The company reported that there is a drop in their home orders by 32% compared to the previous year. Even the number of homes delivered also declined to 28%. This is also the case for Lennar wherein new orders decreased to 12% and home deliveries fell to 3%.

This decline in home sales and deliveries may be attributed to the reluctance of potential home buyers to move. This is because of stringent credit requirements, fear of unemployment and expectations for a further decline in home prices because of the rising number of foreclosed homes at the present time.

The average mortgage rates are calculated from the collected rates from different lenders all over the country every Monday to Wednesday of each week. This is calculated by Freddie Mac. The average mortgage rate of an adjustable rate for one year dropped to 3.22% from 3.26%. In the previous weeks, the rate fell to its lowest record since 1984 to almost 3.17%.

The calculation for mortgage rates excludes add-on fees or points. A point is equivalent to 1% of the total amount loaned. The average fee for a fixed loan of 30 years, 15 years and 1 year ARM is at 0.7 points according Freddie Mac’s survey. For a five year loan, the average fee is at 0.6 points.

Related articles

• Mortgage rates barely budge in latest week, stay below 5% (usatoday.com)
• 30-year fixed-rate mortgage ticks higher (marketwatch.com)