My husband and I have been trying to refinance our home loan for well over six months now - reaching for that elusive 4.44 percent mortgage rate.  So far no luck.

Why?  Like many Americans today our loan is greater than the home is actually worth thanks to the great housing recession of 2007, 2008, 2009.  Will it stretch into 2010?  So far, yes.  Our credit score is pretty fantastic, but because we added a sunroom for $26,000 four years ago and did a refinance in 2006, the two liens on the property are for a greater amount than what the real estate is now worth to a tune of about $20,000.

As a result, we’re sitting for a few more years at the 6.5 percent interest rate.  What a tragic waste.

For us and for most of the rest of the country, the 4.44 percent interest rate is wasted according to CNN Money.

The fall in rates ostensibly means homeowners can lower their monthly loan payments by refinancing their existing loans. They’re certainly trying — the Mortgage Bankers Association reported last week that 78.1% of all mortgage applications fell under the refinance category, up from 58.7% in April.

But many of them are filling out all that paperwork only to get a rejection letter in response. The mortgage association does not quantify how many of those who apply for refinance actually get approved, but mortgage brokers say many homeowners are ineligible.

Yes, that’s us.  Just another middle class American tragedy.

Rates remain historically low in the U.S., so if home owners can refinance this is a great time to do so.  From my state association,

Freddie Mac reports that long-term mortgage rates moved south again this past week. Interest on 30-year fixed loans hit a new low of 4.49 percent, compared to 4.54 percent the previous week and 5.22 percent a year ago; and the 15-year mortgage landed at 3.95 percent, down from 4 percent the prior week and 4.63 percent a year ago. Five-year adjustable-rate mortgages reached a new low of 3.63 percent, down from 3.76 percent last week and 4.73 percent a year ago; while one-year ARMs fell to 3.55 percent from 3.64 percent last week and 4.78 percent a year ago.

In other news, loan modifications are under fire by some companies.  BlackRock Inc. says the government program HAMP is encouraging home owners into strategic defaults rather than loan modifications.  Instead, the company wants to see Congress pass a temporary bankruptcy that would eliminate second mortgages before addressing the first mortgages - which remain unmanageable when the second one remains.  This should prove interesting if Congress listens.

Have a great, debt-free weekend!

Loan rates are at historic lows, for those interesting in buying real estate today.  According to the Wall Street Journal through my own state real estate association,

The 30-year fixed mortgage rate fell to a new low of 4.54 percent this past week from 4.56 percent the prior week and an average of 5.25 percent a year ago. The 15-year fixed loan rate also hit a record low of 4 percent, down from 4.03 percent a week earlier and 4.69 percent last year. The five-year adjustable-rate mortgage averaged 3.76 percent, compared to 3.79 percent the previous week and 4.75 percent a year earlier; and one-year ARMs averaged 3.64 percent, down from 3.7 percent and 4.80 percent, respectively.

In addition to buying a home, these rates should be taken into account for people considering refinancing.  Refinancing may be a preferred option to trying for the faux loan modification programs, which seem to be stalling for millions of homeowners.

According to a letter to the editor published in the New York Times, the modification programs are not working.  From John C. Liu, New York City Comptroller:

The current loan modification process is plagued by bureaucratic runarounds. Homeowners are frustrated by the unanswered phone calls, lost paperwork and seemingly endless red tape. The status quo approach is clearly not working.

Have to agree with him from everyone I’ve spoken with regarding the modification program.  My verdict is the lenders are going through the motions to satisfy the administration, but are not sincere about actually helping.

Mortgage rates have been creeping up slowly, but are still fairly steady so far this year.  Right now the average mortgage interest rate is 5.07 percent for a conventional 30-year fixed rate loan.  Buyers are getting FHA interest rates at about 5.35 percent, with at least 3.5 percent expected for down payment.

Meanwhile stocks are on the uptick for home builders as we’ve seen a surge in new home sales int he last month.  From a personal level, my view is that we’ll see April as the best month we’ve seen in real estate in two years with home under contract.  Buyers are rushing to beat the deadline of April 30th to be under contract so they can receive the $8000 first-time home buyer tax credit.

In this past week alone, I’ve written three contracts and I’m not a mega seller like other agents.  However, once the deadline passes, it’s fair to say that lenders and real estate agents alike are very concerned about where the market will go next.

We’ve seen it in our local market.  Home sales are on the increase.  Real life multiple offer situations are occurring again (especially on homes priced right and nicely staged), the phones seem to be ringing again, and there are more agents coming in to the office.

We have a cork-board where new listings and new pending sales are posted for other agents to see a snapshot of the market.  At the worst, there would be maybe four or five posted in a two-week period.  From a company that regularly had $4 million in sales each week, taking a full quarter to reach that mark was painful.  Our cork board is filling up again, though, and it’s the same story nationwide.

Unfortunately, forecasters are talking about the “shadow” market that’s about to step out of the outer darkness.   According to NPR,

Shadow inventory comes in several forms. It includes homes in or close to foreclosure but not yet put up for sale — a number that’s increasing. It also includes homes that owners want to sell but are waiting to put on the market until it improves.

In a recent survey, Zillow found that nearly a third of homeowners would have considered putting their homes up for sale if the market were better. Nationally, that would mean between 11 million and 30 million homes that aren’t listed but are waiting on the sidelines.

I still believe the best time to buy may have passed.  With the federal tax credit due to expire in less than two weeks and interest rates creeping up, the very best time to buy may be gone.  However, homes are still very affordable AND compared to double-digit rates of two decades ago, the current rates of 5.1% to 6.0% (depending on the type of loan you get), are still excellent.

Interest rates are still hovering just under 5 percent for a 30-year fixed rate loan.  However, they are expected to increase at the beginning of April when the Federal government stops buying mortgage backed securities.

Many buyers are thinking they can wait to make their purchases and get into a binding contract until the end of April to gain the tax credit (which is true), but what they may miss out on is a lower interest rate.  As a result, we are staring down the count-down clock to when the best time to buy will be.

At this point - March 23, 2010 - you have EIGHT days in order to get the most optimal deal…

• Tax credit of $8,000 for qualified first-time home buyers
• Tax credit of $6,500 for qualified previous home owners
• Lower mortgage rate before interest goes up because of government no longer purchasing mortgage-backed securities
• Lower MIP for FHA loans if case number assigned before April 5th (MIP go increase from 1.75 percent to 2.25 percent after April 5th)

This is it, buyers.  The countdown is on and we’re T-minus 8 until time to launch!

When I read the article at CNN Money, I felt pretty good about it:  “No More Retroactive Credit-Card Rate Hikes” … sounds great, right?!  New rules for these companies that squeeze every drop of blood out of those of us who are foolish enough to use the cards (Yes, me. Probably you, too).

Then I read it again.  RETROACTIVE credit card rate hikes?  Say what?  Credit card companies were able to retroactively change your rates for purchases already made?  This is outrageous!  I guess it’s good news, then, that the practice is being put to a stop.

Also changing are random billing dates - they will now have to be billed at the same time every month.  In addition, the due date TIMES will conform to one time.  For example, one bill could be due at 1:00 p.m. EST on the 15th of the month, while another could cut it off at 2:33 p.m.  Ignorance on my part is not bliss… I had always been under the assumption that as long as something was postmarked by the day it was due, you were in the clear.

Personal finance editor Gerri Willis writes,

And although 45-days notice is required before making any changes under the new law, your card can still be closed or your limit lowered without your input.

Also watch out for fees! With credit-card companies trying to replace lost revenue, fees are everywhere. There are NO restrictions on the types of fees that credit-card issuers can charge, from dormancy fees to annual fees, and even fees to receive a paper statement.

She is right - READ EVERYTHING you get from your credit card company.

The housing market continues to struggle as home prices fall and mortgage applications drop. The Market Composite Index, which measures the volume of mortgage applications each week, dropped this past week. One of the biggest reasons is the fact that the refinancing portion of the index dropped.

Apparently, even though mortgage rates are low, people are reluctant to refinance their homes. This is causing mortgage applications to drop. Perhaps some are waiting to see if mortgage interest rates will drop back below 5%, since mortgage rates rose last week. Another issue is that home values have not been rising, and do get the 80% loan to value ration that many mortgage lenders are asking for is difficult.

Those with mortgages serviced by Fannie Mae or Freddie Mac, though, can take advantage of a refinance program from the government that allows a 125% LTV.

With signs of economic recovery showing, there are concerns that inflation could come with economic growth. This is a common thought, since economic growth often means that prices rise as well, eroding the purchasing power of the dollar. And, indeed, an economist at RBS Securities Inc. believes that inflation is on the way, reports BusinessWeek:

“Inflation will start to tick up again as we get stronger growth,” Stanley said today in an interview on Bloomberg Radio. “I don’t think the Fed is ready to own up to that.”

As a result, there are some expectations that the Fed will have no choice but to raise interest rates in order to combat inflation. It is possible that the Fed will raise rates to 3% by the end of 2010, from their current rate at between 0% and 0.25%.

For savers, this is good news, since it means that they will see a higher yield on their cash investments. For borrowers, though, it means that they will have to pay more in interest charges. If you have a variable mortgage rate, it might be time to refinance. If you have credit card debt, it is best to pay down as much as you can before rates move even higher than they already are.

When it comes to getting a mortgage, you want to make sure that you are getting a good deal, and that you are choosing a mortgage lender that can help you through the process. This can also be helpful when you are looking to refinance. As you choose a mortgage lender, it is a good idea to shop around a bit first. Chris Bibey, at the Bankruptcy & Foreclosures blog, offers three tips that can help you as you choose a mortgage lender:

1. Consider reputation: Look for a mortgage lender with a good reputation. You can usually find information on banks and brokers. Get references from friends and relatives.

2. Look for a low mortgage interest rate: This is probably the most important aspect of your home mortgage loan. Shop around for a mortgage lender offering a low rate. You can also look for other helpful amenities like reduced closing costs. You should also consider a mortgage lender that is knowledgeable about different programs.

3. Don’t be too hasty: Even though you may want to move through quickly, make sure you take some time to carefully review your mortgage financing options, and choose the mortgage lender you are most comfortable with.