Mortgage Rate News

In the past few weeks, President Barack Obama has announced a couple of efforts to help prevent foreclosure. One is is a mortgage modification plan designed to help people refinance their homes in order to avoid foreclosure. The idea is for them to get some loan modification or a refinance before they slip into delinquency. Now, you can go to MainStreet.com and see a mortgage modification plan calculator that can help you figure out whether or not you are likely to qualify for help under this plan.

Of course, the calculator is not the be all and end all. Online financial calculators should be considered with a grain of salt. But it can give you a fairly good idea. You can also talk to your mortgage lender about modification, and your options.

Foreclosure prevention plan

I don’t qualify for this mortgage modification plan. However, the president unveiled a different foreclosure prevention plan before this mortgage modification plan was suggested. I have a much better chance of qualifying for this other plan, which includes incentives for helping people refinance who have less than 20% equity in their homes. Since my home is relatively new — and housing values have fallen — I fall in this category.

To receive this refinancing help, you have to have good credit and be in good standing with your mortgage payments. You also have to have your mortgage serviced by Fannie Mae or Freddie Mac. In any case, this is a plan that many people who made responsible decisions about home mortgages might be able to take advantage of.

Even if  you don’t qualify for special programs, now could be a good time refinance. Mortgage interest rates are near historic lows, so it could mean big savings over the life of your loan. You can talk to your mortgage lender about refinancing under federal programs — or even through more traditional channels. But you’ll never know if you don’t ask.

The big news right now is that mortgage interest rates are at lows not seen for decades. For those who have been fiscally responsible, now is the time to reap the rewards. And they could be big. CNN Money offers a look at what someone who has an average home with an average could save — if he or she can refinance with the best mortgage interest rate:

Look - there is opportunity here. 30-year fixed mortgage rates are at 4.6%. Historically, that rate is 8%. And that is significant.

Let’s take a look. 30-year fixed mortgage rates are at 4.6%. If you took out a 30-year fixed loan of $170, 300 (the average cost of a home) at 5%, your monthly payments would be around $915. And at 8% you would pay $1,250. The savings? $335 dollars a month or $4,000 dollars a year.

Getting the best interest rate

Right now, the difficulty is in getting approved. Many banks are reluctant to lend money to those with poor to fair credit. Additionally, the best mortgage interest rate isn’t available to just anyone who wants to refinance. You have to meet the highest qualifications. Here is what is expected if you want the best interest rate on your mortgage refinance:

1. Credit score of at least 720.
2. 20% equity in your home.
3. You can get an even lower rate if you refinance to a shorter term — 15 or 20 years instead of 30.

You can still refinance to a lower rate, even if you do not qualify for the best interest rate. If you have at least a 680 credit score, you can probably still get a reasonably good deal, depending on what your current interest rate is. If have less than 20% equity in your home and good credit, you might be able to take advantage of mortgage programs offered by the government — if your loan is serviced by Freddie Mac or Fannie Mae.

The rule of thumb is that it is worth it to refinance if you have at least a 1% difference in rates. Get your financial information together and do a little shopping around. You may find that you can refinance and save thousands on your home mortgage loan.

A profusion of scams has erupted since this financial crisis hit. With aid being promised from the government, and with people becoming increasingly desperate, it is no surprise that the unscrupulous are trying to scam many folks out of their hard-earned cash. CNN Money has information on foreclosure prevention scams that are cropping up:

She’s worried because many of the companies advertising their services charge or take up-front fees and then do little or nothing for their clients.

“There are many rescue scams that are after your business,” Rodriguez said. “They’re guaranteeing something they can’t and charging a lot. Even the legitimate for-profit services demand a high pay-out up front.”

Before you decide to agree to a foreclosure prevention plan, you should ask some questions. CNN Money has these questions to ask the organization offering foreclosure prevention help:

1. How much does the foreclosure prevention counseling service cost? Foreclosure prevention counseling should be free, from a non-profit. Don’t pay money up front to someone who presents him or herself as a “counselor.”
2. How long has the company been counseling? Watch out for new companies. Established companies are more likely to know what is going on — and more likely to be less fraudulent.
3. Does the foreclosure prevention counselor have knowledge of your mortgage servicer’s loan modification specialists? You want a foreclosure prevention specialist with access to your mortgage servicer. He or she will be better able to help you in this case.
4. Does the counselor stick around? Be wary of companies that shift you to other caseworker.

Of course, you should still be on the look out. Don’t sign anything you don’t understand, and don’t sign the title of your home over to anyone. When in doubt, have a trusted friend or lawyer go over the paperwork first.

There are resources out there to help with foreclosure prevention. But you have to be vigilant to make sure that you aren’t falling prey to a scam.