Discussion Forum

Fed Rate Cut….Should I refinance now?

Now that Fed has began cutting rates, is it time to refinance? This is answer is an emphatic, MAYBE!

Refinancing and the proper use the equity in your home is a decision that is unique to each homeowner. The answer for you depends on many other factors. Few mortgage “professionals”, and I use that term loosely these days, actually take the time to analyze a homeowners complete financial picture before making a recommendation regarding refinancing.

Yes, mortgage money is cheap, and we all know that credit cards and other unsecured debt is BAD, however, the costs to refinance need to be justified by the benefits to the borrower. Those benefits include not only monthly savings, but also the tax benefits of mortgage interest and many other factors.

Today’s economy is uncharted territory for all of us in the financial services industry. For most homeowners, there are great opportunities to reposition your finances while taking advantage of lowering mortgage rates. While so many mortgage companies are struggling to stay afloat in this turbulent real estate market, there are still a few of us who are very busy providing valuable insight to homeowners about their finances and how important the role of home equity is in planning for a comfortable future.

This roller coaster economy has many more loops to come. So trap in, hold on tight and enjoy the ride. If you play your cards right, you might have a pleasant surprise waiting for you when the ride is over.

Michael Sciavolino is a Financial Services professional with over 20 years of experience in Consumer Financial Services. He currently runs a mortgage company based in Old Bridge, New Jersey and is well respected in the industry for his comprehensive expertise in financial services. For more information contact Michael at 1-732-765-8300 (Ext. 11) or Michael@FortFunding.com

Here's an article about the new FHA Secure program. Contact Michael@FortFunding.com for more information on this and other Government programs! Manually underwritten FHA with FICO scores under 500!

Bush Pledges FHA Help for Subprime Borrowers
By Roger Runningen

Aug. 31 (Bloomberg) -- President George W. Bush today pledged to help people who've fallen behind in their mortgages keep their homes and to tighten safeguards against predatory lending, while rejecting a bailout for ``speculators.''

“I plan to help homeowners, the government's got a role to play,'' Bush said in a statement at the White House. But, he said, ``it's not the government's job to bail out speculators, or those who made the decision to buy a home they knew they could never afford.''

Bush said he will let the Federal Housing Administration, which insures mortgages for low- and middle-income borrowers, guarantee loans for delinquent borrowers, allowing them to avoid foreclosure and refinance at more favorable rates.

Tighter credit and higher borrowing costs threaten the housing market, which has been an engine of U.S. economic growth. At the end of last year, there were 7.5 million subprime mortgage borrowers with $1.4 trillion in loans, according to the Center for Responsible Lending, a research organization in Durham, North Carolina. More than 2 million Americans will lose their homes as introductory interest rates on mortgages reset to higher levels in coming months, according to the center.

Rising Foreclosures

The number of U.S. homes under foreclosure almost doubled in July from a year earlier as homeowners with adjustable-rate mortgages struggled to meet their rising monthly payments, RealtyTrac Inc., a seller of foreclosure data, said on Aug. 21.

Subprime and Alt-A mortgages made up 40 percent of loan originations last year. Alt-A mortgages are available to borrowers with good credit who can't or choose not to verify their income with pay stubs or tax forms. Subprime borrowers make up 13 percent of the total U.S. mortgage market, according to Federal Reserve Chairman Ben S. Bernanke.

Democrats in Congress and the party's presidential candidates have criticized Bush for not taking action to prevent the spread of foreclosures.

Senator Chuck Schumer of New York, a Democrat, said U.S. Treasury Secretary Henry Paulson indicated interest in allowing Fannie Mae and Freddie Mac, the two largest U.S. mortgage finance companies, to exceed federal limits on their combined $1.4 trillion mortgage portfolios so long as they channel the extra financing to help borrowers refinance and avoid foreclosure.

“Paulson said he would be interested in that,'' Schumer said in a news conference today in Washington. He said he talked to Paulson today about housing and mortgage finance. Under the proposal, the federal government would raise the companies' portfolio limits ``but only for specific loans for homeowners about to go into foreclosure.''

FHA Program

Bush said that ``in the coming days'' the FHA will begin a new program called FHA Secure that will permit homeowners who have a good credit rating but can't afford their current payments to refinance into FHA-insured mortgages.

“This means that many families who are struggling now will be able refinance their loans, meet their monthly payments and keep their homes,'' Bush said. “We going to start reaching out and make sure people know this option is available to them.''

Henry Savage, president of PMC Mortgage Corp. in Alexandria, Virginia, said, ``It's very well-timed that FHA emerge as a viable alternative to conventional lenders.''

“They're stepping in and providing mortgage products that they used to offer but had been taken over in the last 20 years by conventional lenders,'' he said. ``Now that private lenders are dropping out of that, FHA is stepping in.''

Help for Cities

“It will especially help the bigger cities where home prices are highest, but it will help almost any area,'' Savage said.

In the first quarter of this year, FHA serviced about 3 million mortgages, 12 percent of which were delinquent or in foreclosure. Nationwide, the Washington-based Mortgage Bankers Association reported about 34 million mortgages in existence with an overall delinquency rate of 2.6 percent.

For the first quarter there were about 5.9 million subprime loans outstanding, about 14 percent of which were delinquent or in foreclosure, according to the Mortgage Bankers Association

Bush's plan would affect borrowers who are at least 90 days behind in payments and let them stay in their homes. He also said he'll propose changing the tax code to aid refinancing.

The president gave no estimate on the cost of his proposals. He said he also will support proposals in Congress to provide tax relief for homeowners who refinance.

U.S. home resales fell in July to an annual pace of 5.75 million, the slowest since November 2002, the National Association of Realtors reported on Aug. 27. Sales have declined for five consecutive months.

About 14 percent of banks raised standards for mortgages to their most creditworthy borrowers and 56 percent made it more difficult for people with limited or tainted records to get loans, according to a Federal Reserve survey of senior loan officers in mid-July.

To contact the reporter on this story: Roger Runningen in Washington at rrunningen@bloomberg.net ;

Last Updated: August 31, 2007 12:35 EDT

For more information on FHA Score and other Government sponsored Mortgage programs contact Michael @ 1-732-765-8300 (Ext. 11) or email Michael@FortFunding.com.