Historically Low Rates

Posted by Steph Kaye on Thursday, January 1st, 2015 at 7:41pm.

Refinance!!!!

Millions of homeowners could be saving big money -- and possibly their homes -- by refinancing to today's historically low rates. But most don't even apply. Nearly one in five homeowners who are behind on their mortgage payments have loans with interest rates of 8% and higher -- nearly double today's average rates of around 4%, according to nonprofit community development group NeighborWorks America.

 The government recently launched a campaign to convince those most at risk to take action. According to the Federal Housing Finance Agency, nearly 770,000 homeowners are eligible for cheaper loans through its Home Affordable Refinance Program (HARP). Refinancing through that program could save homeowners an average of $200 a month, or $2,400 per year, the agency said. Homeowners who aren't struggling to make payments could also benefit. Overall, there are 7.4 million mortgage borrowers in the U.S. with rates of 4.5% or higher who could qualify for -- and benefit from -- refinancing their existing mortgages, according to Black Knight Financial Services, a mortgage analytics company.

 So why aren't homeowners acting? It's a combination of both procrastination and fear, according to study from the University of Chicago and Brigham Young University. "Deciding to refinance is a complex decision," said University of Chicago professor Benjamin Keys, one of the authors of the study. Many borrowers have heard horror stories from friends and neighbors who have refinanced in the past, sometimes into predatory loans, he said. Some borrowers who have tried to refinance found the process "time consuming and confusing," said Jeanne Fekade-Sellassie, a senior vice president for NeighborWorks. "Others don't believe they qualify." For borrowers who manage to make their payments, the status quo seems to be working, so why risk change?

 And then there are the distressed borrowers who have been in and out of default for years, meeting with foreclosure counselors, dealing with unsympathetic lenders, compiling paperwork over and over. All of this to save homes that may be worth a lot less than the amount the borrowers actually owe. Still, no matter how difficult the process, the savings can be worth the effort.

 At 4%, borrowers who have a 30-year fixed-rate mortgage with a $200,000 balance would save more than $300 per month, compared to someone who has the same loan at a 6.5% rate. For those who are currently paying 8%, the savings would be more than $500 a month. Keys said the huge savings from refinancing may seem too good to be true to some. But the savings are real. "It's a real shame if people miss out on the opportunity," he said.

If you would like information on your local real estate market, or are first time home buyer not working with a Realtor and would like to schedule a consultation with a qualified Oakland County and Macomb County Realtor, please complete the Lang Premier Properties contact form to have a real estate agent contact you.

Lang Premier Properties are Birmingham Realtors specializing in Oakland County Real Estate. Stephanie is an agent with Max Broock in Birmingham, Michigan. See what past clients have to say about Stephanie Lang.  Lang Premier Properties looks out for your best interests when you purchase a new custom luxury home. We always recommend working with an experienced luxury real estate agent when buying a new luxury estate. you would like information on homes for sale, or are first time home buyer not working with a Realtor and would like to schedule a consultation with a qualified Oakland County and Macomb County Realtor, please complete the Lang Premier Properties contact form to have a real estate agent contact you.



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