Lending Cafe

Homeowners who are confident in how to refinance were able to maintain or reduce their mortgage rates at a rate of 85 percent during the fourth quarter of 2011, according to new data released this week by Freddie Mac.

Lenders will offer homeowners multiple mortgage refinance options that are contingent upon whether they want to reduce the amount of money they owe or whether they want to tap the equity of the home for other purposes.

President Barack Obama followed through on a proposal he originally announced during his State of the Union address last week, as he unveiled the details of his plan to help jump-start the housing market.

The plan, which the president announced February 1, would make mortgage refinance available to more homeowners. One reason families have not been able refinance is because of tighter lender restrictions on who is eligible to receive financing.

The rate of Americans who own a home has fallen to levels - about 66 percent - not seen since the late 1990s.

According to U.S. Census Bureau data released earlier this week, the amount of Americans who owned a home during the last quarter of 2011 fell by about 0.3 percent from third quarter numbers. These figures have been in steady decline since mid-2004.

Even though newly built homes sold in record-low numbers last year - raw estimates place the figure at 302,000 units - the fourth quarter showed signs of improvement that could be an effective jumping-off point for 2012 sales.

The 2.2 percent decline in new home sales, to a seasonal adjusted rate of 307,000 units, followed three consecutive months of gains, so even though the year ended on a down note, the market had showed signs of improvement throughout most of the fourth quarter. Still, compared to 2010 levels - 323,000 units - new home sales dropped by 6.2 percent last year.

When homebuyers agree in principle to purchase a property from an owner, there still exists a possibility that the deal could crumble if certain provisions of the contract are not met by either party.

A December 2011 assessment of pending home sales by the National Association of Realtors (NAR) has found that this figure has fallen slightly - 3.5 percent - from the 19-month high of 100.1 it logged in November. One potential reason for the slight drop-off in pending home sales is the high rate of contracts that fell through after a deal was agreed upon.

The government's 2008 bailout of Fannie Mae and Freddie Mac represented an unprecedented degree of government intervention into the housing market. Now, as the industry still struggles to recover, President Barack Obama is prepared to insert the government's influence further into the housing market.

Unlike some Republican lawmakers, Obama does not think that homeowners need to wait for the housing market to bottom out before they can be extended relief. The president's plan, detailed during his annual State of the Union address earlier this week, follows a recommendation by Federal Reserve chairman Ben Bernanke that the U.S. government needed to intervene in the housing market.

Borrowers who owe more on their homes than they are worth may need to seek a mortgage refinance or another alternative after the regulator for Fannie Mae and Freddie Mac said his organization would be unlikely to offer widespread principal reduction to those borrowers.

Some struggling homeowners may not know when to refinance, but if they begin the process before their loan-to-value ratio becomes too skewed, they may be in the clear. The most recent housing data has found that nearly 11 million properties in the United States - almost one-quarter of all properties - were in negative equity.

Lower prices and an accelerated sales process may not be the only appealing factors to purchasing a foreclosed home - buyers who take out real estate investor loans for these properties could be helping to reduce crime rates in these communities.

When a home is foreclosed and its occupants move out, a vacuum could open up that is difficult to fill if the property lingers unoccupied for some time. In some communities, these vacant properties are becoming homes to criminals and individuals seeking temporary shelter.

Record-low interest rates on adjustable-rate loans and fixed-rate loans have compelled homeowners all across America to invest in new homes or conduct a mortgage refinance on their current properties. But, unless you're working with a mortgage lender that is willing to take on any level of risk a borrower may have, you may fail to meet certain stringent requirements for lending.

This blog has previously discussed the importance of maintaining a credit score in the mid-700s in order to qualify for most mortgages. The better your credit score, the lower interest rate you may be eligible for should you choose to seek home loans. Many lenders have tightened their qualifications in light of high foreclosure rates that have occurred in the last few years.

The American workforce appears to be more mobile than it had previously been, according to a new survey. This suggests that while a mortgage refinance is still a viable option for most homeowners trying to gain more money from their properties, about half surveyed are willing to purchase a new home in a different location.

The survey, conducted by CareerBuilder, found that 44 percent of workers are willing to move if a new job required them to do so or if they felt additional employment opportunities existed in other communities. About 20 percent of employees who were laid off last year and were successful in finding new jobs did so in a new location.