There have been bills passed and government rhetoric about helping out those stuck with subprime loans.
But actual help has been slow to arrive.
And if your home is worth less than what you owe on your mortgage, nothing will help. If you are deep under water, there’s no solution.
And housing prices show little sign of stopping their decline. Defaults are still high, dragging down values.
Today’s mortgage rates are a steal at an average of 4.82 percent, according to Freddie Mac. A person with a $200,000 mortgage taken out two years ago could save nearly $200 a month by refinancing today.
But such homeowners often run into a problem: Their homes aren’t worth what they once were. They don’t have the 20 percent equity needed to get the best rates and avoid costly private mortgage insurance. Sometimes, the value of the home is less than the amount of the loan.
Enter Uncle Sam, the new boss at Fannie Mae and Freddie Mac. The government took control last summer, and it’s dictating easier terms for refinancing.
If your mortgage is owned or backed by Fannie or Freddie, you can refinance at up to 105 percent of the value of your home.
About half the nation’s mortgages are owned or securitized by the two giant mortgage makers. Your mortgage may qualify even if you make the check out to another company. To find out, call your mortgage servicer. You can also try www.fanniemae.com/loanlookup or www.freddiemac.com/mymortgage, or dial 1-800-7FANNIE or 1-800-FREDDIE.
Money coach Bill Stanley says it depends.
“Ask yourself the big question: ‘Why am I refinancing?'” Stanley said in a segment that aired Tuesday on FOX21 Morning News.
For those who want additional money over and above the existing mortgage to pay off debt, don’t refinance, he recommended. Homeowners who throw “windfall” money at debt without first solving the problem (overspending), statistics show that problems will return in two years and be worse.
For those owners who want to reduce monthly payments, a refinance may be good. But, if you are one of the many who don’t track your expenses, you will find that the mortgage savings money will disappear just like much of your income. If you save $200, invest that $200. If a homeowner is trying to avoid foreclosure, this may be the window of opportunity, according to Stanley.