Applications for U.S. home mortgages fell to its second-lowest level of the year last week as interest rates rose, an industry group said on Wednesday.The Mortgage Bankers association said its seasonally adjusted index of mortgage application activity fell 7.8 percent to 621.6 in the week ended May 16. The index touched its 2008 low in the week of April 25, when it hit 567.

The MBA’s seasonally adjusted index of refinancing applications declined 8.7 percent to 2,210.5 last week, the MBA said. The gauge of loan requests for home purchases dropped 6.9 percent to 352.5 in the period.

Applications for refinancings fell 8.7 percent to 2210.5 from 2422.1 the previous week.

Fixed 30-year mortgage rates averaged 5.9 percent in the week, 8 basis points higher from the prior week.

Relatively low interest rates have been among the few supports to housing, where soaring foreclosures have sparked unprecedented moves by lawmakers to stabilize the market.

The Senate Banking Committee on Tuesday approved a bill that aims to refinance borrowers whose home values have fallen below the balance of their loan into a government-backed program.

Falling home prices have made an increasing number of U.S. homeowners more vulnerable to default. Nearly a third of subprime borrowers owed more than their home was worth at the end of last year, and that figure will double to 63 percent in 2009, according to Credit Suisse. (Reporting by Al Yoon; Editing by Theodore d’Afflisio)

Source : http://www.reuters.com/article/bondsNews/idUSNAT00405220080521

There are two primary reasons to refinance a mortgage: to get more desirable rate and terms, or to extract cash from the home’s equity.

Rate-and-term refinancing pays off one loan with the proceeds from the new loan, using the same property as collateral.

This type of loan allows you to take advantage of lower interest rates or shorten the term of your mortgage to build equity faster.

Rate-and-term refinancing refers to myriad strategies, including switching from an ARM to a fixed or vice versa.

For example, if you have an ARM that is set to adjust upward in a few months, you can refinance into a fixed-rate mortgage.

Or if you have a fixed-rate loan and you know you’ll move in two or three years, you could refinance into a lower-rate 3/1 hybrid ARM.

Cash-out refinancing leaves you with additional cash above the amount needed to pay off your existing mortgage, closing costs, points and any mortgage liens. You may use the additional cash for any purpose.

You can easily calculate the equity in your home.

For example, say you bought your house for $150,000 a few years ago and borrowed $120,000.

Now the house has an appraised value of $250,000 and you owe $110,000.
With a cash-out refinance, you could get a mortgage for $150,000. You would pay off the $110,000 you owe and pocket the $40,000 difference, minus closing costs.

Source:http://www.heraldnews.com/business/southcoast_homes/x165092635/Refinancing-puts-your-money-to-work

There are two primary reasons to refinance a mortgage: to get more desirable rate and terms, or to extract cash from the home’s equity.

Rate-and-term refinancing pays off one loan with the proceeds from the new loan, using the same property as collateral.

This type of loan allows you to take advantage of lower interest rates or shorten the term of your mortgage to build equity faster.

Rate-and-term refinancing refers to myriad strategies, including switching from an ARM to a fixed or vice versa.

For example, if you have an ARM that is set to adjust upward in a few months, you can refinance into a fixed-rate mortgage.

Or if you have a fixed-rate loan and you know you’ll move in two or three years, you could refinance into a lower-rate 3/1 hybrid ARM.

Cash-out refinancing leaves you with additional cash above the amount needed to pay off your existing mortgage, closing costs, points and any mortgage liens. You may use the additional cash for any purpose.

You can easily calculate the equity in your home.

For example, say you bought your house for $150,000 a few years ago and borrowed $120,000.

Now the house has an appraised value of $250,000 and you owe $110,000.
With a cash-out refinance, you could get a mortgage for $150,000. You would pay off the $110,000 you owe and pocket the $40,000 difference, minus closing costs.

Source:http://www.heraldnews.com/business/southcoast_homes/x165092635/Refinancing-puts-your-money-to-work