Refinance mortgage applications up January 17, 2007Posted by Jay Medina in News and Information.
It appears we’ve almost reached another boom era in applications for refinance mortgages. In recent weeks there has been a dramatic increase in applications for refi mortgages. One key reason is that many homeowners who have existing adjustable-rate mortgages (ARMs) are now experiencing the inevitable increase in rates and monthly payments. This is especially true with certain nontraditional types of ARM loans.
In some cases, homeowners are facing such serious financial problems they must either refinance their mortgage or sell their home to avoid foreclosure proceedings. And with mortgage insurance premiums being tax deductible in 2007, refinancing will be even more appealing to some families in coming months.
Also, the substantial decline in mortgage rates over the past six months has led to a significant increase in refinance activity, it was noted in a report from the Mortgage Bankers Association. “Additionally, we are seeing a steady increase in purchase applications,” said Mike Fratantoni, MBA’s senior economist. Refinance activity is at the highest level since September, 2005, while purchase applications are the highest since last January, MBA noted. The refinance share of mortgage activity is now up to 52.6 percent of total applications.
In addition to the need to refinance a problem ARM loan, many borrowers are applying for a refi mortgage to take advantage of today’s lowered interest rates. In many cases they want a cash-out refi loan, generating cash in the refinance process that can be used to finance home improvement projects, paying off up-to-the-limit credit cards, or other financial obligations.