Where Is Everybody?

I looked at the rate sheets today and I am almost astounded to see that 30-year fixed rate mortgages are back down to 4.5 percent. I wonder where everyone is. We just locked in one of those Jumbo Conforming loans that go up to $729,750 in high housing cost areas at 5 percent. A 5/1 ARM is at 3.75 percent and you can even get a $1,000,000 5/1 loan for 4.75 percent. These are terrific rates, and last spring when rates were like this, we were working on Saturday to keep up with the frenzy. Where did everyone go?

The industry was busy last spring, but there are millions of homeowners who didn't refinance at that time. According to one government survey, about one-third of all homeowners who still have a mortgage could benefit from a refinance at anything below 5 percent.

Now, I realize that there are problems out there. First, many people have no equity left. But both Fannie Mae's Refi Plus and Freddie Mac's Relief Refinance programs will allow you to refinance even if your home’s value has dropped to 80 percent of your loan amount.  That means if your loan is 20 percent greater than the value of your home, you can still refinance.

There are other requirements, but in most cases if you are not unemployed, you are likely to get approved. My sincerely held belief is that millions of people could be helped. The agencies are encouraging servicers to track down likely prospects. I have no faith in that, so if you think that this applies to you, the onus is upon you to get in touch with a lender and check.

I know that unemployment is a problem, but even with an unemployment rate of 9.8 percent, 90 percent of people are still employed. Maybe people have other problems, but one of the things I am sure about is that many, many people just are "out of touch" with the features of their mortgage and are rusty enough with the math that they have trouble calculating the benefits.

I know also that people get frightened about upfront costs, but I have never done a loan where the long term savings were not five or maybe even ten times the initial cost.

So why don't you give yourself a weekend chore. Get out that mortgage package, make notes about your current terms, consider how long you are going to be in that home, and see if a refinance at these current low rates couldn't help you.

Randy Johnson – Author of How to Save Thousands of Dollars on your Home Mortgage and Savvy Borrower articles, Randy is a mortgage broker who has financed over $1 billion in properties. He writes about home buying and real estate finance topics for CreditBloggers.com.

Comments

[John in AZ]

Where is everybody? Maybe people don't want to continue being a slave to the credit industry and the banks.