Best Efforts Archives – Refinance – Mortgage Refinancing Rates And Information

The Good Side of Loan Modification’s Failure, A Buoyant Foreclosure Market

March 9th, 2010 No comments

Despite the Government’s best efforts and greatest intentions the wave of foreclosures continues to increase. The borrowers that are now defaulting on their mortgages and not qualifying for loan modifications are no longer people with subprime loans and bad credit rating. The fastest growing demographic in foreclosures are prime borrowers with prime loans that have lost their jobs and cannot afford any kind of deal on their mortgage.

This is a tragedy for the millions of families that face losing their homes. However there is a flip side to the crisis in the housing market. The flip side is that the foreclosure market is doing great. More and more buyers with cash in their pockets are looking for bargains among the millions of homes that are going through a foreclosure.

Many have the idea that the only homes that are on the foreclosure market are located in crime-ridden areas and are run down shacks. This is simply not true, during economic crisis like the one we are now going through all kinds of homes can be found, from beachfront luxury homes to shacks in the ghetto.

There is another myth a serious buyer must forget about as soon as possible. You are not going to find a great property selling at pennies on the dollar. Sometimes you can find amazing deals but this is probably because there are other circumstances that reduce the value of the home besides being on the foreclosure market.

However, you can get some great deals and discounts. A typical discount is probably around 5% less than the market value, although you can sometimes pay up to 30% or 40% less.

If you are savvy enough, this could only be the beginning of your savings. If you buy the property from the lender you could ask/demand for some of the buying costs to be waivered. If you ask nicely you might even get a discount on the interest rate or a break on the down payment.

Buying a home, whether on the foreclosure market or not, is a huge investment for most of us. It is therefore worth us spending some time doing our research and due diligence before we spend tens or even hundreds of thousands of dollars.

The foreclosure ball begins to roll when a borrowers falls behind on mortgage payments. A homeowner that loves his home will try his best to keep his home, making some payments, looking for a loan modification, or any other measure he can. However, if the home still forecloses the chances are that maintenance has not been carried out for some time on the home. Include the costs of bring maintenance up-to-date in your investment research.

What this might include will depend on the property. Some just need some gentle manicuring, while others have underlying structural damage that is prohibitively expensive to fix. It is true that homes in need of some tender lover and care will come at a discount, but it is important to make sure you can afford the cost of providing it.

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Mortgage Requests Continue To Drop Despite Mortage Relief

July 9th, 2009 No comments

Mortgage Requests Continue To Drop Despite Mortage Relief

The efforts of Governments worldwide to rescue the credit and Housing industry from the pit they have dug for themselves are truly amazing. Banks have been bailed out, loans are guaranteed, interest rates are kept low, mortgage refinancing relief programs are set up. However despite the best efforts the market is yet to find a bottom it can bounce back from. One of the indicators that give no reason for immediate relief to the crisis is the fall in mortgage requests since Feb.

This drop is, as we mentioned, despite the great efforts from the Obama administration to turn around the housing market. This article will have a look at some of the indexes that provide us with snapshots of the housing market economy and try to decipher what they tells us about how things will be in the short and middle term.

The MortgageBankers Association Index
One of the indexes that housing market analysts keep a close eye on is the Mortgage Bankers Association index of applications, this index dropped a further 19 percent down to 444.8 by June 26, a drop of more than a hundred points from the previous week. The refinancing gauge of the Mortgage Bankers Association fared even worse with a 30% drop to the lowest level in 7 months.

Unemployment levels
Unemployment has hit a record high that has not been experienced since 1983. Unemployment and the fear of unemployment has further slowed down the effects of revival packages from the government as buyers are scared to commit to further spending when they feel their source of income is in danger. This is accentuated by the fact that prices don’t seem to have stop dropping making it a rather difficult market for buyers to assess if they are getting a good deal or not on the property they want to purchase.

Mortgage rates
One of the measures governments, United States included, have carried out to massage the housing and credit industries back into action is to keep interest rates low as an incentive for buyers and investors to borrow cash. This had substantial results, especially in countries like Australia where the crises did not hit quite so hard causing an actual shortage in cash to lend, causing banks to search for money to feed demand. In the United States low interest rates has encouraged and allowed some to refinance their how to either save it or reap substantial savings when refinancing at a lower interest rate.

The drop in interest rates reached record lows of 4.25% for 30 year fixed interest loans creating a window of opportunity for large savings. However interest rates are now rising which seems like a rather bad move when the market seems to not have reached rock bottom yet.
An interesting index that also puts a somber shadow on the current housing market is the percentage of people who are planning to buy a house in the short term. A recent poll indicated that only 2.7% (a slight drop from 2.8%) are planning to buy a house soon.

Foreclosures
All of this occurs with a very large and sharp Damocles hanging over our heads, foreclosures. Some analysts predict 7 million foreclosures this year and next, 4.5 million of them as distress foreclosures. If the government can’t turn around the current trend these foreclosures would drag the prices of homes further which by itself would be enough to nullify any measures the government tries to carry out.

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