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Key Factors for Mortgage Refinancing

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As millions of homeowners contemplate refinancing their mortgage, it is important to consider potential factors for home refinancing loans going forward in 2012.  In many ways, the loan refinance has helped assist homeowners with affordable housing solutions by extending opportunities for increased cash flows and offering the ability for people to get quick and cost effective access to money.

1. When will the Federal Reserve begin raising key interest rates? Economists all seem to agree that it is just a matter of time before the Fed starts hiking rates to curb inflation. Consumers in the U.S. have grown accustomed to record low rates.  Millions of homeowners will be astonished when the refinance rate climb to 5% and 6% on the 30-year terms.  Presently, qualified borrowers can get a thirty-year mortgage refinance at 3.5% (APR 3.5%)  with no closing costs.  When the Fed begins raising rates it will have a negative impact on affordability and likely the housing recovery because consumers will be less motivated to invest in higher cost housing..

2. Will FHA continue to raise insurance premiums for FHA home loans? Every time HUD increases the insurance premium it has a profound impact on the monthly payment for borrowers refinancing or purchasing a new home.  This could have a negative impact on homeowners who do not have equity, because FHA is the most aggressive loan programs for non-military borrowers seeking mortgage refinancing assistance.

3. Do lenders continue to tighten refinance guidelines in 2012? If we examine the trend over the last 5 years it would be hard to argue against tighter loan guidelines for mortgage refinancing in 2012. Each of the last five years we have seen underwriting guidelines get more restrictive for government and traditional refinance mortgages.

4. Will private money reappear and replenish the mortgage industry in 2012? Rumors have been swirling the home financing sector this year that private money investors are poised to return as a viable option for mortgage lenders.  Loan companies have relied heavily on government loan programs like FHA and VA for mortgage refinancing programs. The fact that private lenders like Cash Call have reintroduced 125% loans recently is a good sign that investors should be reviving the private money portals soon. The fact remains that consumers in the U.S. want fixed refinancing loans because at the end of the day they know what to budget for their housing expenses.

5. When will the housing crisis end?  It’s no secret that he housing sector has been battered over the last six years. Nearly a quarter of the country is strapped with an underwater mortgage. That rivals the housing woes of the Great Depression. If foreclosures and short sales continue to drive the house market then it is unlikely we will see any rebound in the housing sector in 2012.  Realtors and politicians can dress it up however they want, but with millions of homeowners behind on their mortgage, growing fears of a double dip global recession and tight lending guidelines, the housing sector will get worse before it gets better.

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