A recent report released by Freddie Mac shows that half of the borrowers who refinanced their mortgage in the 3rd quarter of 2009 lowered the mortgage rate by an average of 1.1%.
This totaled a whopping $3 billion in dollars saved.
This is in large part due to The Home Ownership Affordability Refinance Program that allowed home owners with a Freddie Mac mortgage to modify the terms of their mortgages.
In perhaps the biggest change from the go-go days of cheap and easy borrowing, most of those refinancing did so without taking any equity out. In fact, 64% refinanced the same principal balance or less.
This is the most telling change since the real estate bubble. It used to be the norm that people would refinance 100% of what they were told was available and cash out an equity. This would essentially reset their mortgage payoff back to square one, and it’s a big reason why so many homeowners are underwater on their mortgage now and can’t refinance – they paid for yesterday’s lifestyle with today’s equity.
The fact that the majority (64%) are refinancing for the same or less is an indication of how this mindset has shifted since the bubble burst.
Time will tell if this trend continues, but I wouldn’t be surprised if we’ll see a generation of more conservative borrowers when it comes to mortgages.
Source: Monitor Bank Rates
Now I may be wrong, but due to my industry, I’d pick renting a house over financing one any day of the week. Our South Florida movers are overloaded with moving families in foreclosure out of state to somewhere where the real estate isn’t as suffocating.
[...] Mortgage Refinancing Saves Borrowers $3 Billion in 3rd Quarter.Joe says: This is in large part due to The Home Ownership AffordabilityRefinanceProgram that allowed home owners with a Freddie Mac mortgage to modify the terms of their mortgages. In perhaps the biggest change from the go-go days … Bookmark It Hide Sites $$(‘div.d185′).each( function(e) { e.visualEffect(‘slide_up’,{duration:0.5}) }); [...]