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Three Refinance News Stories That Haven't Happened Yet, But Will Soon

[Mar 13, 2010.]


For borrowers and lenders, these winter months have been a time of measuring commitment to the process. For example, lenders attempting to decide which borrowers should be given loan modifications, and then borrowers wondering when, if a refinance isn't possible, their homes will be taken from them.

Many times, though, the cliches don't work for this crazy mortgage market. Lenders have amazingly escaped actual principal reductions of mortgages, while there are borrowers who undoubtedly deserve to be disassociated from the property whose debt is hampering or even destroying their financial life.

Now, the time for measuring is drawing to a close, the time for cutting may now begin. To that end, here are three refinance news stories that haven't happened yet, but may soon:

1. Investors Spot Rent-Positive Property

With the advent of short sales, foreclosures, and bank-owned property, property investors are starting to see some deals on homes that will rent for more than the mortgage costs. It has been a steep price decline to get to this point, but investors who can borrow at low mortgage rates can now find cash positive rental property.

As investors see opportunities in rental property, this could put a solid floor--as opposed to a government-imposed temporary floor--on housing prices. For homeowners hoping to refinace but worried about loan-to-value considerations, a solid floor on housing prices would be an outstanding development.

2. Loan Modification Programs Get Modified

Loan modifications are up overall according to the new numbers. Still, fewer than 200,000 homeowners have successfully modified their loan through either a refinance or some other method.

Expect some adjustments to these programs going forward. For example, closing costs are screwing up many loan refinances that in all reality should be able to happen. Congress may act to squeeze the lenders (who are, after all, receiving a government subsidy to refi troubled homeowners) by making lenders eat part of the closing costs for some mortgages in return for the government continuing to fund loan mod refis.

3. Mortgage Rates Stay Low for Good Credit Borrowers

The third major news story we're spying on the horizon is a non-story: the fact that mortgage rates should remain low throughout 2010 for good credit borrowers with equity in their properties.

Banks are still looking to lend when the security behind the loan is strong. And with home prices appearing to bottom in some areas, this test should be easier to meet, though still tight in many cases.


About Author:

Andrew Freiburghouse is a writer and businessman. He has worked as a magazine reporter, tax preparer, screenwriter, copywriter, and loan officer. He graduated from Santa Clara University in 1999 with a B.A. in English. Andrew was born and raised in the City of Los Angeles.

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