Low Chance of Recession--Still

Forbes Magazine ^ | 02/05/2008 | Rich Karlgaard

[Freedom_Is_Not_Free]

BULLISH!

http://money.cnn.com/2008/02/08/real_estate/who_can_refi/index.htm

The good news: mortgage rates are down. The bad news: it’s much harder to qualify for a refinanced loan these days.

“I’m turning away about 60% to 75% of the clients who come to me for a refi,” said Bob Moulton, president of Americana Mortgage Group on Long Island, N.Y.

The make-or-break metric for anyone looking to refinance right now is home equity - the difference between what is owed on a house and what the house is worth. But with home prices down, many homeowners have little of that precious commodity left.

“If you have an 80% loan, with a 10% home equity loan, you may not be able to refinance,” said Peter Grabel, a mortgage broker in Connecticut - especially in down markets.

Consider a homeowner who bought in Miami a year ago with 20% down. Home prices have fallen 15% there in the past year, wiping out three-quarters of the equity. Lenders, who want collateral that’s worth more than the value of the loan, are wary about having so little cushion.

Indeed, appraisals are another tool that lenders are using to eliminate unqualified applicants.

“It used to be a formality,” said Grabel. “Now it’s, ‘Lets do the appraisal first and see what value comes in.” Lenders are scrutinizing them to a degree unheard of during the boom. They don’t want to lend $160,000 on an appraised value of $200,000 unless they’re sure the house is truly worth that.

[quack]

Yep.It’s so tough right now that I got my home refinanced in 1.5 hours,instead of the usual 1 hour.I think the lenders are seeing government insurance increasing and still are lending money with little problem.

[Freedom_Is_Not_Free]

Did you read my post and the article linked?

Please confirm that you have little to no home equity and mediocre credit. Because that is why 60-70% of the applicants referred to in the article are being denied for loans.

I’m reasonably certain you will turn out to have great credit and a home having more than 20% equity. The article stated that people like you aren’t the ones having problems getting credit. Doh!

[quack]

My credit isn't great(by my standards anyway),although I do have equity in the home.I qualified for the lowest rate though.

Fannie Mae and Freddie Mac, the government-sponsored mortgage finance companies, will be allowed to buy loans worth as much as $729,750 for loans made between July 31, 2007 and Dec. 31, 2008, an increase over the current $417,000 loan limit, a move that could help struggling homeowners to refinance large mortgages at a lower interest rate. It will also allow the Federal Housing Administration to insure loans as high as $729,750 in expensive markets.

This is what is going to ease the ability of refinances.It's included in the "stimulus bill".Why turn customers away when the government is backing the loan?