Mortgage Refinancing

The interest rate your mortgage attracts is linked directly to your monthly payments. And lower interest rates mean lower monthly payments. With the fed lowering interest rates, the number of mortgage refinancing applications has increased. Mortgage refinancing that has been taking place all these days involve conventional mortgages where homeowners have been refinancing to avail a lower interest rate. However, the mortgage bail out program announced by President Obama has just taken off and the concerned authorities have started working on it.

Obama’s mortgage bail out program takes off-

Reports suggest that under the new relief plan introduced by President Obama, Fannie Mae, one of the entities sponsored by the fed has already started accepting automated requests from lenders. During the last week a little less than 1000 applications have been refinanced already. Officials are anticipating that the number is likely to rise still further.

Mortgage Bankers Association (MBA) statistics indicate-

The MBA or Mortgage Bankers Association is expecting that in 2009, mortgage originations will amount up to USD$2.78 trillion after steps taken by the Federal Reserve and the 2 government sponsored entities to lower interest rates. In 2008, refinancing summed up to USD$765 billion. The main reason for the increase in the incidence of mortgage refinancing is due to rates that are attaining a historic low. As of April 10th 2009, the rate of interest was 4.87% for a loan term of 30 years. Earlier, the interest rate was 4.98% and prior to that it was 4.96% (as of January 15th). According to Freddie Mac, 4.87% is perhaps the lowest rate attained since 1971. The President is also urging homeowners to make the best use of the current low mortgage rates. The Federal Reserve has also put in efforts to lower mortgage rates by buying mortgage-backed securities. It started the buying mortgage-backed securities in March 2009.

Homeowners are banking heavily on Obama’s mortgage relief program and it was found out that as many as 200,000 consumers had visited websites that provides information on Obama’s mortgage bail out program.

It may be recalled that Obama’s mortgage relief program aims at helping homeowners protect their homes from foreclosure. The loan modification program introduced by Obama administration is also helping borrowers to modify their existing loan terms making the mortgage more affordable for the homeowners.