If you have been considering a home refinance recently, the decision was most likely based on the current historic low refinance mortgage rates, yet there may be another big reason to refinance now. Home values.
Home values have plummeted over the past several years, causing many homeowners to miss out on the current low mortgage refinance rates bonanza. For many individual homeowners refinancing loan scenarios, the drop in home value has placed their current mortgage underwater, or in other cases, caused the loan-to-value (LTV) ratio to rise into non-beneficial refinancing territory.
For instance, consider a home purchased in 2006 for $100,000 with 20 percent down (80 percent LTV) at 6.50%. The initial $80,000 mortgage balance is now at $77,000, but the home is now valued at $70,000. The mortgage is underwater and any beneficial refinancing options are gone, unless the borrower comes to the closing table with an ample amount of cash.
Now consider the same scenario, except that the home value dropped to only $85,000. The qualifying LTV is now 90 percent, so monthly PMI will be added to the monthly loan payment and most likely squeeze all the benefit out of refinancing into a nice low 4.50% fixed rate.
Prices of single-family homes fell for a second straight month in August, hovering around recent lows after the expiration of popular homebuyer tax credits, according a Standard & Poor's/Case-Shiller home price report on Tuesday.
Home prices are falling further, suggesting a bottom hasn't been reached, as Millions of foreclosures are expected to pour onto the market in the coming years. That's likely to force prices down and hurt even cities that had begun to rebound. Banks' foreclosure paperwork could further deter buyers and weigh down prices.
In a nutshell, the housing market is still awful, and those currently sitting on under-80 percent LTV mortgage refinance loan scenarios could be bumped into PMI-Land territory in short order, if they wait too long to refinance.
Homeowners that find themselves in an over-80 percent LTV refinancing scenario and still want to take advantage of today’s low refinance mortgage rates can give us a call at (888) 850-9888. We can check to see if you are eligible for a streamline refinancing program that will allow homeowners to refinance at the best available refinance rates with a loan amount up to 105 percent of the home’s value with no PMI, if the current mortgage does not have PMI.
Many felt that the drop in home values across the US over the past 3 years was finally beginning to stabilize, but recent sales data, along with the foreclosure overhang suggests that we may be in for more home price drops in the coming months to years. All the more reason to take advantage of the current low historic mortgage refinance rates while the getting is good
If you are considering a home mortgage refinance now and need some help, have questions, or need some competitive refinance rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.
May the Mortgage Refinance Rates be with You!
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