Despite all it's promises to the contrary, the Obama Administration has failed to stimulate the housing market in any meaningful way. While the attempt made with the home buyer tax credits did boost home sales a bit, home sales tanked after the tax credit ended.
Last month mortgage applications for new homes and refinancing hit a 13-year low despite record low interest rates (see below). It's also expected the number of foreclosures this year will be greater than last year despite the Obama Administration's attempts to "bully and wheedle banks into stopping foreclosures", an effort that's failed for the most part.
I ran the numbers for our present 30-year mortgage (at 5.75%) through their calculator and found we'd save $70 per month on our mortgage payment if we took out a 20-year mortgage for refinance. That means we'd take years off our remaining mortgage and still pay less than we're paying now.
Needless to say, we made the call and have started the ball rolling.
Last month mortgage applications for new homes and refinancing hit a 13-year low despite record low interest rates (see below). It's also expected the number of foreclosures this year will be greater than last year despite the Obama Administration's attempts to "bully and wheedle banks into stopping foreclosures", an effort that's failed for the most part.
Remember when the Obama administration announced its plan to spend billions of dollars to prevent foreclosures? The White House threatened banks that attempted to seize defaulted property and tried to get judges to reset the principal of the loans in court. None of that has helped stop the wave of foreclosures; it has only delayed and strung out the pain, ironically cresting just as voters go to the midterm polls.The housing market won't recover until the economy actually starts creating more jobs. Without jobs, nothing Obama does is going to fix the worst housing market we've seen in decades.
None of the stimuli and the rescue plans worked, because none of them addressed the core problem: joblessness. Without jobs, people lose their homes no matter how much the government intervenes to stop it.Obama has put the cart before the horse, trying to bolster one part of the economy (housing) without making sure another part has the means to sustain it (jobs). Maybe he's expecting the housing market to lead the way to recovery. If so he has made a major faux pas as the housing market tends to be a lagging indicator of economic recovery. It's a leading indicator only if the economy starts heading down into recession.
Until we get people back to work, these programs are simply futile. A homebuyer tax break doesn't help someone without a job qualify as a buyer, and restructuring plans for existing mortgages can't help an unemployed person make a mortgage payment.
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I took a look at today's finance rates from our local bank which shows a fixed 30-year mortgage at 4.375% and a 20-year fixed at 4.25%! That's the lowest I've seen, ever.I ran the numbers for our present 30-year mortgage (at 5.75%) through their calculator and found we'd save $70 per month on our mortgage payment if we took out a 20-year mortgage for refinance. That means we'd take years off our remaining mortgage and still pay less than we're paying now.
Needless to say, we made the call and have started the ball rolling.
Our local bank was more than happy to deal with us. We already have an equity line of credit with them so they know to the penny what our house is worth. That has saved us a bunch of time because they have most of the paperwork we would be required to fill out already on file.
Our 20-year mortgage won't take that long to pay off as we've always paid extra towards the principal (we actually have less than 22 years left on the mortgage after 5 years or making payments). I figured if we keep doing that for the new mortgage we can get it paid off in less than 15 years.
We are in the loop for refinancing to do work on the house (new roof and vinyl siding). We locked in the rate 9 days ago at 4.125% (15 yrs). Won't reduce the years we have to pay, but will make the exterior of the house maintenance free for the rest of our lives, and the work was going to have to be done in the next 3-5 years anyway.