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May 23, 2008 -- Lower interest rates open refinancing window
CLARKONOMICS: The slowing economy presents many challenges along with many opportunities. In a reprised edition of Clarkonomics, Clark focused on some of the latter.
The Fed's drop in interest rates has led to an opportunity to refinance. Here's the back-story: People who are skittish about the stock market right now are instead putting money into U.S. treasuries, which are like CDs for rich people. Clark recently saw a 10-year treasury trade going for around 3.6 percent. That low rate in turn affects what you pay for a mortgage.
Let's look specifically at how Countrywide is helping to make refinancing a smart move. The mortgage lender had gotten into all kinds of trouble with their undesirable liar's loans and option payment loans, which they hoped to sell off to investors. But there are no buyers willing to take the risk in these tough economic times. So Countrywide is stuck with them.
The Los Angeles Times reports that right now the mortgage lender may be willing to work with you if you're in one of their weirdo, exotic loans. They'll waive all kinds of requirements to get you into a good loan. Their goal is simply to package you up with other "safe" loans and sell you off to investors.
So keep asking what you can do to get into a better loan -- even if you've been turned down before. Meanwhile, what do you do if this scenario doesn't apply to you because you're in a relatively good loan? The Fed's interest rate cut still means that you may have the opportunity to refinance for an even better rate.
Unfortunately, Clark won't be able to answer any questions submitted via commenting. If you have a question, please try posting it to our message boards.
In a financial bind and need to lower my payments. I owe 800k on a house that is now worth 600k. do you know of anyway to refi this before I go into arrears?
Refinance while in Bankruptcy
I am presently in bankruptcy. It has been one headache after another. When I first starte in bankruptcy our monthly payments were 720 until our attorneys sent us a notice that our payments need to be raised to 1302 because we would be going over the 5 year limitation. I have been paying the 1302 (struggling of course) but within the last year of my bankrupcy I received another letter stating that I must monthly payments would have to be raised again to 2100. Without the increase I would be going over the 5 year limitation. This is awful now I'm really struggling. I am scheduled to complete my bankruptcy case in January. I don't see how I can do it. So with all that being said after all these years and being laid off in October my husband is really trying to do his best but its not going to happen.......what can we do...is their anyone that knows of a company that can help. We need to make the first payment by the 1st of June and I don't see it happening. How can your attornies do this to you. We are in this to save our home and now at the last stretch this happens. You think they care of course not so we may still be in the run of loosing our home because they can't calculate right thats not our fault it should be theirs and there should be something we could do.
Help!
option loans
I am not a loan officer, but I do have an option loan. I think you make great points about the negative aspect of optional payment loans. However, I think many, loan officers even, overlook one major benefit. If you make more than the 30 year fully amortized payment then the loan will reset at regular intervals, where one's home could be paid off quicker and more efficiently than overpaying with a fixed loan. If one can avoid the temptation of making a lower payment option, then one might be able to fair better with an option ARM, but do not forget that even the 30 year option can fluctuate with the dependent index.
