Articles & Tips
Can every Homeowner take advantage of Lower Mortgage Rates
With all of the recent news about the decline in the value of homes in many geographic areas, the focus has shifted somewhat from the low interest rates that have been in effect for the past few years. In fact, many homeowners are upset to find themselves looking at a situation in which they have negative home equity, which means that they owe more on their mortgage than their home is currently worth. In many cases, there are ways in which homeowners who find themselves in these circumstances can still take advantage of today's lower mortgage rates.
One of the best methods by which a homeowner can refinance their mortgage even if they owe more than their home's market value is through a government-sponsored refinance program that allows for loan to value ratios up to 125 percent. While most traditional lenders won't approve mortgage refinance transactions where the ratio of the new loan amount to the home's current market value exceeds 100 percent, this government program recognizes that it makes sense to assist a homeowner who wants to keep their home by finding ways to reduce their monthly mortgage payment through accessing lower mortgage rates. Although there are a number of stipulations in conjunction with this program, it has helped many homeowners to successfully refinance their mortgage loans and achieve lower mortgage rates on the remaining mortgage loan balance.
Of course, there are situations in which the difference between the mortgage amount and the home's market value is too great, and the ratio of these figures exceeds 125 percent. In such cases, even though homeowners are hoping to refinance their existing mortgage in order to take advantage of lower refinance rates, there's really no chance that they will gain approval for a refinance transaction. It may be an extreme decision, but some homeowners who find themselves in this situation are choosing to enter into a voluntary foreclosure by simply walking away from their existing mortgage loan and their home itself.
As many areas in the country begin to show small signs of recovery from the recent devastating drops in market values, homeowners are hoping that the current lower mortgage rates stay around long enough for their home's value to catch up to enable them to reach a satisfactory loan to value ratio. After several years of declining market values, it may be that this much-anticipated turnaround is just up ahead.
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