Okay, so here is how the refinancing protion of the bailout is supposed to work: Under the refinancing provision, homeowners with less than 20 percent equity (loan to value) in their homes, who now find it hard -- if not impossible -- to refinance, will be able to get new loans at lower interest rates provided the new note doesn't exceed 105 percent of the home's value. However, many homes in NJ for sale will not benefit from this because of such high values at one time.
During boom times Fannie Mae and Freddie Mac loans were only up to a maximum loan amount of $417,000. The limit was temporarily raised to $729,750 in 2008, when fewer people were buying. This year, the limit went back to $625,000. Supposedly, this is going back up in the near future. Houses in NJ for sale need this because the boom was very high here.
One economic expert reported that, "An estimated 45 percent of the home loans made in new Jersey in 2006 and 2007 were larger than Fannie and Freddie loan limits. During 2008 about 30 percent of home loans were above those so-called "conforming" levels. Other high-cost regions experienced varied levels of "non-conforming" loans.
There is another aspect of this plan called "loan modification" Let me explain further: The loan modification part of the plan targets 3 to 4 million "at-risk" home owners, those with a high mortgage debt-to-income ratio and those with mortgages larger than the value of their home or "under water."
A loan modification, different from a refinance, changes the terms of the existing loan without writing a new one and could serve higher-cost housing markets better than the refinance plan.
homes nj for sale
About the Author
Mortgage broker in NJ.
Wednesday, March 4, 2009
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