| More Risk for Fannie, Freddie?
Currently, FHA can't guarantee mortgages higher than $367,000. The plan, as outlined by Speaker Pelosi, also expands the role of FHA in assisting homeowners in trouble. In addition to raising the loan limits for FHA, Congress will permit more borrowers facing defaults to refinance through the FHA, and increase funding for housing counseling to $500 million to help home buyers who fall behind on their mortgage. Raising the loan limits should allow a larger pool of borrowers to qualify for lower-cost mortgages or to refinance existing mortgages, something that has been difficult to do since mortgage lenders pulled back from nonconforming loans. "This, along with the fact that interest rates have dropped, will give a big kick to the demand side of the housing market," said Nariman Behravesh, chief economist at Global Insight, an economic consulting firm in Lexington, Mass.
Australia will cope with sub-prime fallout: Swan
TREASURER Wayne Swan says Australia remains well placed to deal with the global economic fallout from the US sub-prime housing market crisis. US President George W Bush overnight unveiled a wide-ranging mortgage relief package which he said could help up to 1.2 million distressed homeowners. The plan, brokered by US Treasury officials with major industry participants, aims to help struggling homeowners refinance sub-prime adjustable-rate loans or freeze the current interest rates for five years. The program was unveiled amid fears a rising tide of home loan defaults would lead to a surge in repossessions and have a cascading economic impact. Mr Swan said the US sub-prime housing market woes remained a concern for Australia, primarily because it was causing liquidity in global financial markets.
Refinancing: Don't Waste Time Wondering, Just Do It
If you're not changing the term of your loan ... even dropping your rate by an eighth makes sense because you did not have to change anything to get a loan," says Bob Walters, chief economist for Quicken Loans. "It always pays to get a lower rate." Say the current balance of your 6.5%, 30-year fixed mortgage is $250,000 and you are making monthly payments of $1,580. If you refinance into a loan of the same size that's one percentage point lower, 5.5%, you've dropped your monthly payments by about $160 to $1,420. But let's say you want to take out extra cash to pay off $20,000 in credit card debt: You'll need a new loan of $270,000. And even with that higher amount, your monthly payments are still reduced about $50 from your current payments to $1,533 a month. To determine how your monthly mortgage payments will differ under a new loan, use a mortgage-refinance calculator to determine the savings you might receive.
CISD saves big with refinancing
Comal Independent School District will save about $500,000 when bonds sold in 1998 are reissued, or refinanced, this spring. The money is now eligible to be refinanced, according to a report from financial advisor Duane Westerman, and its preliminary interest rate will be about 3.11 percent, down from a current rate of 4.77 percent with an estimated savings of about $453,000. The life of the bond will not be affected.Trustees agreed Tuesday to refinance part of the nearly $18 million issue, which was approved by voters in 1995.I think anytime we can save almost half a million dollars, it's a great move, Vice President Frank Baker said at the meeting. Bond refinancing is comparable to reworking a mortgage. You pay off old bonds that are outstanding at a higher rate and reissue new bonds at a lower rate, Westerman said.But a bond's age, proximity to payoff and other factors play into its eligibility, he said, and unlike a mortgage, nine to 10 years must pass before it can be refinanced.
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