Mortgage Rates Are Low, but Homeowners Are Still Having Trouble Refinancing

[Feb 27, 2009.]

 

Today's mortgage rates are at historic lows. But mortgage lenders continue to tighten lending standards, making it tough for even people with good credit to get approved for a home loan or refinance.

Brian Wickert, of Accunet Mortgage in Butler, Wis., told Bloomberg that he had a client with good credit who couldn’t get approved for mortgage refinancing by three large banks. He said the problem was that there hadn’t been enough comparable sales within a 1-mile radius in the previous six months.

The business has gotten tougher than I’ve seen it,” Wickert said. “The person who has decided he wants to give himself his own personal economic stimulus package by refinancing at low rates is being stymied by the rules and the fees. Too many people are being excluded.”

Mortgage refinancing is difficult because of rising default rates and bank losses, which have led to higher fees and insurance rates. Because the economy is still suffering, mortgage lenders are reluctant to make new loans. That means many people who want to take advantage of today’s mortgage rates are out of luck.

Some homeowners who are having difficulty refinancing may receive help through President Barack Obama’s housing plan, which takes affect March 4. Under the plan, about 4 million homeowners who are near foreclosure may be able to modify their mortgages. Also, about 5 million homeowners who are underwater on their mortgages may be eligible for refinancing.

Only people who have mortgages owned or insured by Freddie Mac and Fannie Mae will be eligible for help through the Obama plan. Homeowners who think they qualify for aid should contact their mortgage lender. But anyone seeking help will still need to prove that they have enough income to make monthly mortgage payments.

 

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.