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To: taxcontrol

The only “solution” that is being pushed right now is attempting to put some of these people into FHA backed loans that are going for around 5.25%, for now.

The catch is that there are enough people who are in dire financial straits that they do not qualify for even an FHA loan. The interest rate increases as the credit scores go down, and because property values have been slashed across the board, even the tax value on many properties is way overstated.

If you try to qualify and re-finance right now, you may get a lower interest rate, but you will also pay one year’s worth of FHA Mortgage Insurance up front, and depending on the size of your loan, an additional non-deductible mortgage insurance premium along with your monthly mortgage and escrow payment.

In addition, most borrowers who need this the most do not qualify for the lower interest rate, so they are given the “option” of “buying down” the interest rate by paying enormous bank fees and/or “points” up front. If you roll those fees into your current loan, it could easily wipe out several year’s worth of additional acquired equity in your home, and increasing the length of time you will be stuck with those insurance premiums. The only way to get rid of the Insurance is to retain in excess of 22% equity in your home, and even then you may well have to re-finance your house all over again to get rid of it.

The Administration and the Democrats are out bragging about how much help they are giving to Americans who are losing their homes, but it is stories like this one that bare that outrageous Obama lie for those who still have eyes to see...


10 posted on 08/06/2009 10:07:06 AM PDT by Bean Counter ( Shovel ready...)
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To: Bean Counter

Bean,

Since these are Prime notes I suspect most of the notes have fairly good rates already? Rates between 2004-2006 were in the 5 3/8 - 6% range most of the time? 5 1/4 wouldn’t have much impact?


16 posted on 08/06/2009 10:27:16 AM PDT by zek157
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To: Bean Counter
The interest rate increases as the credit scores go down, and because property values have been slashed across the board, even the tax value on many properties is way overstated.

This is the next big problem that's coming down the pike. When people get their property tax assessments and realize that the assessment is greater than the market value of their homes they will appeal the assessment - if they have any sense - and the revenues to city and counties, which have gotten fat,dumb and happy, on the back of the property boom will start to disappear. And it's not just the property owners with mortgages it will be every home owner.

17 posted on 08/06/2009 10:32:20 AM PDT by Timocrat
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