Never before has a 30-year fixed mortgage been as low as it is right now. The current rate for a 30-year mortgage stands at 3.55% while a 15-year mortgage is 2.88%. With this record low, it’s a shame that so many are still not able to take advantage of this. Since housing prices appear to have bottomed out, rising a little more than 1% in July, many homeowners are still underwater.
This means that most of us cannot take advantage of this amazing rate. If I could refinance now, I could save just under $300 month! That would be incredible. Unfortunately for me and many others, we cannot qualify for a refinance, even with new government programs.
The government has been trying to restore the housing market since it collapsed years ago. Nothing has worked. Somehow the government just can’t let the market correct itself, which is exactly what is needed. In my opinion, any sort of stimulus that they have applied to the housing market has just delayed the healing process.
First they tried to prop it up with $8,000 credits for buyers. Then they offered refi deals to some underwater homeowners. Recently, they have expanded that program. These have helped a few, but have left the other homeowners frustrated. Why do some people get special treatment but others do not? I called to get a refinance, and my lender told me they wouldn’t help me until I was 6 months late!
I’m OK with paying my mortgage at its current interest rate. But like I said above, I’d also love to refinance. But what message does it send when you are told you have to start missing payments? If I wasn’t as moral as I am, I might just decide to miss a few payments to get a lower rate.
We are basically telling people to not do the right thing. Mess up and don’t worry because there is a safety net there for you. But for many people that buy into this, they find out there isn’t a safety net after all. Just ask all those that have started the refinance process with a bank under a government program and haven’t heard from the bank in months. It almost seems as though you are damned if you do and damned if you don’t.
How do we fix this? My opinion is we don’t. We let things play out and let the pieces fall. If you are underwater in your house, you are there for one of two reasons: you either bought too much of a house/didn’t understand your loan or you were taken advantage of. It’s almost impossible to prove that you were taken advantage of.
I could claim that my realtor talked me into a bigger house than I wanted. But in the end, I decided to make the deal. I weighed the advantages and disadvantages. So it’s my fault.
I’m sure there are some out there who truly were taken advantage of, the only question is, how do we prove it?
Hi, my name is Jon and I run Penny Thots. I blog about many personal finance topics, but my specialties lie in investing, paying off debt, and achieving your financial goals. You can learn more about me on the Author Page.