Mortgage Market 2009

With all of the home foreclosures taking place across the country, many people may feel that it is not a good time to refinance. This is actually not true. Lenders want to keep people in their homes because of the expenses they incur when they try to sell a foreclosed home. Most times, they will actually take a bit of a loss. If you are considering refinancing for a better rate or to clean up any outstanding debts, there are many reasons why this is a good time to refinance your mortgage.

Mortgage refinancing is when you take a second mortgage to pay off the first mortgage and possibly consolidate debt under one loan. Like the first mortgage, it is secured against your home. Today, because of the current market conditions, lenders are offering interest rates at record lows. A record low rate could reduce your monthly mortgage payments by hundreds of dollars. As well, a fixed interest rate will not be affected by any down turns in the economy.

Another benefit of refinancing your mortgage is President Obama's mortgage refinance stimulus plan. His plan has allowed millions of mortgage owners the opportunity to refinance their mortgage at a low fixed rate in order to get out of financial hardship caused by the housing crisis and a decline in the economy. If you are having trouble paying your current mortgage or you are seeking to refinance for a better rate, President Obama's plan may be the solution for you.

Highlights of the Homeowner eligibility requirements as outlined in the President's "Home Affordability Plan" include:

-  The house that will be refinanced must be the principal residence.
-  The amount remaining on the mortgage must be for less than $729,500
-  Income must be verified through tax returns or pay stubs.
-  Homeowners must provide a handwritten and signed letter of "Financial Hardship"
-  The mortgage loan must be through Fannie Mae or Freddie Mac
-  If monthly debts exceed 55% of the homeowner's gross monthly income, the homeowner must get credit counseling

There have been special incentives that President Obama's government has provided all lenders for performing loan modifications on existing home loans. Banks and mortgage lenders can now offer the following highlighted benefits as outlined in President Obama's "Home Affordability Plan:"

-  The bank or mortgage lender can lower monthly mortgage payment to 31% of one's gross monthly income.
-  Home interest rates can go as low as 2% in order to meet the Obama plan guidelines. The 2% and 4.5% mortgage interest rates are adjustable after a 5 year period
-  Home loan modification fees will be paid by the Government as part of the Home Affordability Plan.
-  Incentive plans are available to reduce the homeowner's principal over 5 years, up to a maximum of $5,000.

Mortgage refinancing has always been a popular method of getting better rates and consolidating debt. According to the Mortgage Bankers Association, "the average interest rate on a 30-year mortgage in April was 4.76 per cent."  Because of President Obama's new mortgage refinance stimulus plan, as well as lenders offering record low interest rates, this is a great time for you to refinance. It could save you hundreds of dollars a month.

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