Question by Kate373: Mortgage Finance Experts: How will the market affect homeowners who will be refinancing next year?
My parents bought their home 4 years ago at a 4% rate, which is due to change next year when their loan rate. With the market crunch and the new strict lending that’s bound to occur as a result of this, they are worried about what refinancing has in store for them. The good news is that they have flawless credit (they successfully removed their PMI, and they are early every month on their mortgage payments —and they pay an extra couple of hundred dollars than they should. Not to mention their credit card debt is very low (only a couple of thousand dollars). They’ve both been at their great paying jobs for over a decade; but they are still worried about whether they will be able to secure a decent fixed rate when their mandatory refinance is up. Any hope?
Answer by loancareer
The biggest impact on our market is the following:
1. – There is no longer any subprime lending
2. – Jumbo loan rates have been rising disproportionate to the rest of the market
3. – The ALT-A market has all but vanished
4. – FHA Loans have become increasingly attractive.
5. – Fannie Mae loans have for the most part remained unaffected.
While I certainly cannot predict what the market will be like a year from now (if I could I wouldn’t be writing loans and training loan officers for a living) I don’t see subprime on the radar for quite some time. Everything else will come around and normalize.
Here’s a point that everyone seems to be missing. For the most part this is a market problem – Given time the market will correct the problem. Not the Senate.
Know better? Leave your own answer in the comments!