Oct.12

Refinancing During Bailout

Many homeowners are facing difficult time to get approved for mortgages. If you have an excellent credit there should not be a problem for you. If you have bad credit you may face difficult times to get approved. Also, your home value may have drop slightly or significantly during this year. So are you stuck?

Bailout plan was approved and signed into law where government will be buying directly bank stocks to help lending institutions. This however, should unlock lending so more banks can make loans. If you currently own a home, it will not make a huge difference in your home price, if any.

There are still many homes for sale that have been on the market for more than 120 days. Buyers are staying away of buying these homes because negative response on Wall Street led many 401K's and portfolios drop in value. Not many customers are able to afford down payment on a home of 20% and not many customers have a good credit. Those who do become pickier and try to negotiate even lower prices of homes.

If your neighbor home sold for even less that it was advertised, your home value will go down as well. If there is a foreclosure in your neighborhood, usually within 5 mile radius, your property value drops. This is tough time not only for homeowners as they have to sit and wait until property value increases but also for home buyers who are waiting to get qualified for loans or simply waiting out this financial storm.

Congress is making plans to purchase bank stocks directly and with this plan of $700 billion dollar bailout plan, it should prompt banks to start making loans to home buyers who have some bruises on their credit. Not necessarily bad credit. Nowadays, you need to have 660 credit score to qualify for a home, a year ago it was 620 score.

If banks will be more than willing to lower their requirements, we will see more buyers coning into market and buying lower priced homes. With this slowly we will see increase in home prices and therefore higher chances of refinancing your current home.

If you already have an equity and you need to get cash out, than, there is no problem for you to get what you need. But if you are upside down on your property, you will need to wait until financial crises gets better.

We will not see any significant increase in home prices even congress injects capital directly to banks. In fact, there might be drop of 10% - 20% next year and recovery should come early 2010.

If you are not sure what your property value is and even if you qualify, just apply online and see what your options are at this moment if cash is needed.

Financial crises continue and until we will see any positive results it may take your investments deeper down. If you are trying desperately to refinance and save your home, try to first work with your local bank. This would be the first step to negotiate better rate for your home or modify your current loan program. You can also try online companies to help you with your modification program.

There are many things ahead for our economy, and this difficult task of savings banks lends in hands of Congress with $700 billion plan. If this works, banks would be most likely working with homeowners to save their properties or even negotiate lower interest rates.