©David Andrades1 - flickr

©David Andrades1 – flickr

 If you are a homeowner with mortgage payments that are becoming hard to manage, or are in foreclosure, consult with a loan modification company today.  You may be eligible for a refinance or could be able to buy some time to get back on track.  The US government is encouraging lenders to work with struggling homeowners to help them stay in their homes.  With falling property prices in most regions in the United States, refinance is becoming more and more difficult for borrowers who could potentially owe more than what their property is worth, or more than what the price the property was purchased for as little as 3 years ago. 

This is a problem facing many American households, and even those not in or near to loan default are feeling the pain of the housing decline.  When a property goes into foreclosure, typically the bank or lender wants to sell it as soon as possible because they do not want to deal with the day-to-day management of the asset, and would much rather prefer to sell it to get it off its balance sheet.  When you have so many properties going into default in many neighborhoods across the country, even stable homes with owners that paying on-time are affected by comparable sales that are coming in far lower because of distressed sellers in the market.  This makes selling very difficult because those owners are competing with properties that are priced very aggressively by banks and lenders who are basically fire selling these assets. 

Because interest rates are now on the rise, the Obama administration is in an even more precarious position when it comes to limiting the amount of borrowers in default.  Although the US government is now encouraging banks to works with struggling borrowers, higher interest rates are making their job much more difficult.  With low interest rates, homeowners are more encouraged to refinance into more manageable monthly payments, thus making it easier to afford their homes and have time to get caught up on missed payments if they were behind.  It also makes it easier for real estate investors to have more deals make sense with cheaper money to be borrowed, instead of the increasing cost of money today.  Combine this with a credit market that is basically dried up and you have a very difficult environment with which to trade properties.  This makes things even more difficult on those homeowners trying to sell their properties – the buyer pool is virtually non-existent due to the difficulty of obtaining a mortgage, and on top of that they are competing with comparable properties that are selling for fractions of what they were purchased for earlier in the decade. 

Last week rates on the 30-year fixed rate mortgages rose to 5.79% from 5% just weeks earlier.  This spike in rates has cooled hopes of refinancing for thousands of homeowners, and for those with adjustable-rates, their monthly payments are now that much higher and hard to handle.  As bond yields continue to spike, mortgage rates have continued their upward trend.  Earlier in the spring mortgage rates fell below 5% which was the lowest decline in 50 years. 

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