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Refinancing
June 15th, 2009 1:54 PM

There are two primary reasons to refinance a mortgage: to get more desirable rate and terms, or to extract cash from the home's equity.

Rate-and-term refinancing
Rate-and-term refinancing pays off one loan with the proceeds from the new loan, using the same property as collateral. This type of loan allows you to take advantage of lower interest rates or shorten the term of your mortgage to build equity faster. (Use this mortgage calculator to see how you can pay off your loan faster.)

Rate-and-term refinancing refers to myriad strategies, including switching from an ARM to a fixed or vice versa. For example, if you have an ARM that is set to adjust upward in a few months, you can refinance into a fixed-rate mortgage. Or if you have a fixed-rate loan and you know you'll move in two or three years, you could refinance into a lower-rate 3/1 hybrid ARM.

Cash-out refinancing
Cash-out refinancing leaves you with additional cash above the amount needed to pay off your existing mortgage, closing costs, points and any mortgage liens. You may use the additional cash for any purpose.

Source: Bankrate.com

Posted by Tara Patton on June 15th, 2009 1:54 PM

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Mortgage Rates Reach 7-Month High
June 14th, 2009 9:49 AM
Mortgage Rates Reach 7-Month High
Higher interest rates put the brakes on mortgage refinancing this week, according to Freddie Mac.

The firm's weekly survey pegged interest on 30-year fixed mortgages at an average of 5.59 percent -- up from 5.29 percent last week and the highest rate since November 2008.

Other rates also climbed:
  • Interest climbed to 5.06 percent from 4.79 percent for 15-year fixed loans;
  • 5.17 percent from 4.85 percent for five-year, adjustable-rate mortgages;
  • 5.04 percent from 4.81 percent for one-year ARMs.

Freddie Mac chief economist Frank Nothaft says the gains are not affecting home purchase loans.

Source: Boston Globe (06/12/09)
Posted by Tara Patton on June 14th, 2009 9:49 AM

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First-time Home Buyers Grabbing Houses and Tax Credit
June 14th, 2009 9:46 AM
First-time Home Buyers Grabbing Houses and Tax Credit

Generation Y is getting jazzed about a new $8,000 federal tax credit for first-time home buyers-jumping at the opportunity to move up and out of their rentals.

"The last 90 days I've seen it go crazy," Kevin Foster, a real estate agent with Reece & Nichols in Lee's Summit, said Tuesday. "Every conference room has been full with agents working on offers, and many are people in their 20s."

Peter Abbey, 26, and his girlfriend, Abigail Barnett, 27, were among them.

Abbey, bar manager at Avenue Bistro in Kansas City, and Barnett, a hospital administrative assistant, had been saving to buy a house the past couple of years but weren't quite there yet. Until Congress approved the expanded tax credit in February.

Now they're leaving their rented home in the city for their own place in Roeland Park.

"We were saving money and waiting for the right time, and that definitely helped give us a push," Abbey said. "We were able to buy a little bit earlier because of the government tax credit."

The Kansas City Regional Association of Realtors® said April sales of new and existing homes were up 10% from March, with almost 2,500 homes sold. "We're seeing a lot of first-time buyers back in the market again," said Chris Collins of Keller-Williams and president of the association. "The tax credit along with historically low mortgage rates is affecting the market."

The tax credit was part of President Barack Obama's $787 billion American Recovery and Reinvestment Act. It's available to people buying their first home in 2009 as long as the purchase is completed by Dec. 1.

Because of the one- to two-month lag between a contract and a done deal, many home buyers are making offers on homes now.

As opposed to a $7,500 tax credit available in 2008, the latest incentive doesn't have to be repaid if the taxpayer remains in the home for at least three years.

At the national level, a report Tuesday said pending home sales in April were up 6.7% from March, the biggest monthly increase since October 2001, according to a seasonally adjusted index of sales contracts kept by the National Association of Realtors®. Continue reading on RISMedia.com...

by Kevin Collison

More Tax Credit Resources

Posted by Tara Patton on June 14th, 2009 9:46 AM

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