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Thursday, January 24, 2008

Now is the Time to Refinance

Economic stimulus package: Tickle, tickle, tickleItems of interest:

Wall Street Journal:
Now Is the Time to Refinance -- If you haven't refinanced your mortgage recently, do it now.

Loan rates have slumped again in the past few days amid the world-wide stock market rout, but it's anyone's guess how long this opportunity will last.

Earlier this month I pointed out that rates on 30-year loans had fallen below 6%. But if that was a deal, what has happened since is a bargain. The rate on a typical 30-year fixed rate loan has now fallen to as little as 5.31%, according to Bankrate.com.

And you can find one or two rates down around 5% a year. That's for people borrowing $417,000 or less, with good credit, and a down payment of at least 20%.

The current averages are among the lowest seen in recent history, and they're a full percentage point or more below levels seen as recently as last fall.

Some borrowers are already taking advantage. Veteran mortgage broker Paul Sapienza, a partner of Boston-area Drew Mortgage Associates, says business has skyrocketed this week. "It's very busy -- it's night and day from a week ago," he says. Borrowers are grabbing 30-year fixed loans, he says. "I've written more [new mortgages] in the last day than I did in the previous three weeks." [...]
LA Times:
Homeowners deluge mortgage brokers
Bankrate: Mortgage Rates Lowest Since March 2004
Office of the Governor / Arnold Schwarzennegger Press Release:
Governor Schwarzenegger Lobbies Congress for California Homebuyer Assistance -- Governor Schwarzenegger yesterday sent the following letter to Congressional leaders to raise limits for government loan programs, which would help more Californians keep their homes and make additional homebuyers eligible for government-backed loan programs. The Governor also urged Congress to provide additional funding for credit counseling and foreclosure assistance to help distressed borrowers find their way out of further financial distress. [...]

Just when the safety and affordability of FHA-insured loans are needed most, they have virtually disappeared from the California marketplace. The current FHA loan limit is $362,790, well below the median-priced home in California. In testimony before the U.S. Senate Committee on Banking, Housing and Urban Affairs this summer, Brian D. Montgomery, U.S. Department of Housing and Urban Development Assistant Secretary for Housing, said California has "seen its [FHA] loan volume drop from 109,074 to just 2,599; that's a decline of 98 percent and a loss of $13.6 billion." This has been a significant factor in the increasing use of nontraditional mortgage products in California. The prospect of mounting losses on nontraditional mortgages has harmed the availability of home financing nationwide.

Increasing the FHA loan limit [conforming loan limit] would have a positive impact on expanding financing options for hardworking Californians hoping to obtain a piece of the American Dream [...]
Housing bailout: winners and losers -- Four plans are on the table. Who stands to gain, and who gets left out?
Financial Times:
Dodd seeks ‘ambitious’ financial rescue plan -- Mr Dodd also said he wanted the administration to raise the size of loans that the mortgage lenders Fannie Mae and Freddie Mac are allowed to buy – the so-called conforming loan limit – to ease liquidity in the mortgage market.
Merrill Lynch says U.S. nationwide home prices may fall 30% -- Merrill Lynch forecasts nationwide U.S. home prices could decline 25% to 30% over the next three years, as new supply and weak demand weigh on the market. "This sounds dire... but would only reverse part of the unprecedented 130% price surge from 2000 to 2006," wrote economist David Rosenberg in a research note released Wednesday. Rosenberg added the S&P 500 may decline an additional 20% to 25% to breach the 1,100-point level if the market follows historical precedents at times when the U.S. economy is in recession.

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