Mortgage Refinance Now 2009
Rising unemployment and what seems like a shrinking U.S. economy has strapped consumers looking for relief by way of Mortgage Refinance. Those seeking lower monthly payments on current Loans seem to be raising the number of applications. The current percentage increase for this week ending January the ninth, of 2009, includes both mortgage refinance and original loans, which is the highest combined, percentage increase since 2003.
Although the purchase market shows growth much slower than that of the refinance market, everyone is hoping the low mortgage rates will boost demand for new Mortgage applications. And for Mortgage Refinance, applications jumped from 79.8 to 85.3 the previous week, which is the highest jump for the Refinance sector alone, since 1990, according to the Mortgage Bankers Association.
The Mortgage Refinance sector will show an increase in applications due to the weakening economy as consumers continue looking for ways to reduce their expenditures. Several factors including the climbing unemployment rate and its role in slowing the economy have contributed to shaky financial markets, keeping buyers from applying for mortgage finance.
With a good part of the World watching and anticipating positive change in a situation some call, “the worst housing downturn since the Great Depression”, there seems to be little sign of recovery even with a significant rise in applications for Mortgage Refinance.
According to some Analysts, including those with Wachovia Corporation, people are still not comfortable with the forecast of the housing market, no matter how low the interest rates are, if job security is in question, it will directly affect income stream. In order to benefit from low mortgage rates or a Mortgage Refinance, these factors have to be solidified before consumers can even think about taking out a loan for property.
When the Federal Reserve announced its plan to buy approximately $500 billion worth of mortgage securities in November of 2008, that were backed by Fannie, Ginnie and Freddie, The 30 year mortgage rates in this Nation dramatically declined. And the Federal Government, prompted by the dive of the finance market, has committed to keeping consumers borrowing costs down by buying mortgage-backed securities. Rates may stay low for a few months, but the future of rates will not stay down forever. If you are looking at a Mortgage Refinance, now is a great time to lock in at a low rate.
Loan requests are up over 200 percent from two months ago at one online real estate service company by the name of http://Zillow.com, mentioned chief financial officer, Spencer Rascoff. Similar companies offering like services have stated they are working twice as hard to handle the increase in volume of Mortgage Refinance papers, and they will avoid hiring more employees due to the normal rise in rates once the market starts to settle.
The Index came in well below its level from a year ago with a 35.9% drop and hit an eight year low in November of 2008. The Mortgage Bankers Association shows their seasonally adjusted purchase index fell 14.1% with applications for mortgage refinance jumping 25.6 percent. And last week’s mortgage applications helped their four week average by rising 10.8 percent.
Sara Vlazny
http://www.articlesbase.com/finance-articles/mortgage-refinance-now-2009-747831.html
Comments
I have a two year penalty on my mortgage. Can I refinance before the two year mark?
My two year penalty phase will be over 2/2009. Can I refinance now? Or will I still be hit with the penalty?
If you have a penalty phase until February of 2009, would you have to pay the penalty if you refinance now. Of course, that’s what it means to have a pre-payment penalty. If you refi before the time is up, you pay a penalty.
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Refinancing means that the new loan you’d be getting would pay off the old loan. Pay off the old loan before the two year mark, and you’ll pay the penalty.
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if you refinance you MAY be hit with the penalty – I had something similar but my loan papers said I could refinance before the penalty date was up if I did so through the lender I already had – otherwise I could still refinance but would get nailed with the penalty – so read your loan papers – you can most likely refinance but will also most likely get the penalty unless you can find a loophole
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You most likely would get hit with the pre-payment penalty unless the lender agrees to waive it.
Depending on how much the penalty is, you may or may not be at a disadvantage. For instance, if the penalty is 1% (it could be 80% of 1% if you can pre-pay up to 20% of the balance per year without penalty; look at your PPP rider in your closing package to determine how they calculate the penalty), but you could reduce your rate by 2% by refinancing now, you would still be advantaged in paying it off early as you would be saving more than the difference even in the first year.
If your pre-payment penalty is 5%, however, you would probably want to wait out the PPP period.
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7 years mortgage lending experience.