Thursday, September 22, 2011

Refinancing Troubles

There is a heavy interest in lowering barriers that prevent homeowners from refinancing at the current low rates. Freddie Mac reports that the going rate on 30-year, fixed rate mortgages of 4.09% is a 50-year low. Approximately 28 million mortgages carry rates above 5.1%. More than half of these borrowers could each save an average of $2,600 in the first year by refinancing. These savings would sum up billions of dollars spent else where in the economy. The Fed's low rates normally would cause refinancing. However, that is not happening. Fannie and Freddie, in efforts to protect themselves, levy hefty fees and rules on borrowers that are riskier. These fees and rules can discourage homeowners from refinancing. For further reading see: Addressing Housing Troubles Will Speed a Slow Economy

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