The Loan Lady Blog

Refi Madness

April 21, 2009

With interest rates ranging between 4.5% and 5%, former clients have been calling to refinance their loans.  Many people plan to stay put in their current homes and want to lock in a low interest rate on a 30 year fixed loan.  But in cases where the value of the property has decreased, I am often unable to do anything.  There's just not enough equity in some properties to qualify for a refinance.

Now that I have the 105% refinance loan to offer courtesy of the new stimulus plan, I can at least do refinances of up to $417,000 on properties with limited on no equity. The rates are comparable to standard loans at 80% loan-to-value, but will finance up to 5% above the appraised value.

One of the things I love about the mortgage market is its adaptability.  As the real estate market moves through cycles, the mortgage market moves too, providing the tools needed to support home ownership.  Of course, sometimes this adaptability backfires, such as when free and easy money was extended on escalating property values.

With all of the challenges lenders have faced in the last couple of years, new legislation is bringing us tools and programs with the goal of turning the real estate slump around. Real estate often leads the country into a recession, but also leads it out as well.