| Lenders' pitches aiming higher
Despite the mortgage meltdown, the blizzard of advertising for home loans continues.
With the subprime market in tatters in the wake of record defaults and foreclosures, fewer pitches scream "Bad credit? No problem!" Instead, lenders struggling to remain profitable are targeting people who have good credit and plenty of home equity.
With fewer homes being sold -- and, therefore, fewer loans taken out to finance purchases -- mortgage firms that have survived the subprime shakeout are focusing their marketing on persuading homeowners to refinance.
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Home equity loan avoids fees of refinancing mortgage
Q. I would like to refinance my adjustable-rate mortgage to lock in one of today's low rates. But I don't want to pay a lot of fees for a new mortgage that would actually make my monthly payments bigger over the next year. Refinancing would cost thousands, which seems like an awful lot for a loan of only about $80,000. What should I do? A. You might consider a home equity loan instead of an ordinary mortgage. Many home equity loans are unusually attractive now. Yours is a dilemma that confronts many homeowners with adjustable mortgages, or ARMs: They may be happy with the low interest rates they're paying today - in many cases only 4 percent or so - but they worry their rates will rise in the future. It would be nice to lock into a low fixed rate, but refinancing fees can total thousands.
Low Interest Rates Spur Mortgage Refinancing
Homes sales may get a boost when the fed's recent interest rate drop translates into mortgage rates. The cut will make it easier for many people to get into a new home and will also enable people to refinance to avoid future hardship. Several loan officers and mortgage lenders all say the same thing -- now is the time to refinance your home. But before you do, consumers need to understand the process is not cut and dry. Loan officers around the valley say more and more homeowners need to look into refinancing to take advantage of the low interest rate. Different loans can either lower your monthly payment or even shorter your term But it's not that simple. In order to refinance, you have to have decent credit and have some equity built up in your home.
Blame abounds for housing bust
Of four homes for sale last week on Henry Watts Loop at Rippon Landing in Woodbridge, Va., two were foreclosures. As house prices fall, home equity is lost, making it hard for owners to sell or refinance adjustable loans that reset to reflect higher rates, rendering owners unable to pay their mortgages. That dilemma has sent defaults and foreclosures to historic levels.
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