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Should You Consider Lease Options

With the drastic decline in home prices in the last year, people are now speculating if housing prices have bottomed out or if it will fall further. Economic experts say that things are looking better. However, with recovery so fragile, any shake-up in the market can make matters worse. Because of these uncertainties, average Americans should need to be more prudent in their investing, particularly in buying a house.

For individuals who aren’t looking to buy immediately but are contemplating home purchase in the near future, a good option may come in the form of lease options. In many cases, the terms of lease options are negotiable. If you’re looking for more information about this alternative, a few helpful articles can be found below.

JD @ Get Rich Slowly provided a very detailed account of what a lease option is and what you situations you need to be wary of. His article titled “Use a Lease Option to Lock in Low Home Prices” informs potential buyers that it is usually not a good idea to deal with desperate landlords. Likewise, if you’re a desperate tenant, lease options may not work because you might not be able to get a loan to buy it.

Noon @ SDB Club uploaded an informative post titled “How Lease Options Benefit Sellers.” While the title sounds like this is an article for sellers, it contains the different benefits buyers and realtors can expect from the lease option as well. Basically, you can expect basic data about lease options and some tips that will let you know if this is a good alternative for you.

Chris @ Syracuse Real Estate Blog wrote a recent post titled “Lease Purchase Options.” It is a relatively helpful post that talked about knowing all your financing options before buying a house. He stated that buyers who can’t afford to pay the whole price at this point for a house should consider the lease purchase option. There are also detailed practical tips in this post. For example, the blogger tells his readers to ask the real estate agent for advice before paying.

How the Making Homes Affordable Program Fails Consumers

For individuals like Mark and Angela Kollar, the Obama administration’s Making Home Affordable program is their only hope. The debt help program is designed to be a win-win situation that will let homeowners keep their homes while letting the nation avoid another foreclosure at the same time. The problem is, the banks that are supposed to implement this measure aren’t cooperating. The Kollar couple has done everything possible to keep their house; they changed their jobs, used their savings, and drained their 401 (k). Still, all their efforts aren’t enough. They need help.

Similar to what countless Americans went through though, the Kollars also got the runaround when they tried to get assistance from banks. Consumer advocates, housing counselors, and struggling homeowners all tell the same story. Most of the banks will decline eligible applicants, pressure them into getting loans they can hardly afford, or tell them to waive their legal rights even if the Making Home Affordable program explicitly prohibits it. As if declining homeowners applications isn’t bad enough, a lot of bank employees also drop their calls or lose their paperwork as the foreclosure clock ticks on.

Statistics from the Treasury Department reveal the same thing. Out of the qualified four million qualified homeowners, only 230,000 benefited from the program. Treasury Secretary Tim Geithner has already informed the bank about the problem. In their defence, the banks say that they are still training their staff to handle these applications because it took 90 days to get the new program’s rules ironed out. However, desperate homeowners have no time for excuses.

The Kollers, whose repayment should have been reduced to 31 percent of their some $3000/month income were asked to repay $2,892/month. While this is certainly far from ideal, the Kollers are actually quite fortunate in a certain sense because the bank did not sell their house under their noses. Other homeowners had their house foreclosed even when their load application was being considered. The Treasury Department is now working with the banks to make the program strong. For individuals who have had their house foreclosed, the only option is to go to the courts.

When to Refinance Your Mortgage

During tough economic times, a lot of homeowners are having a hard time making their monthly mortgage payments. They inevitably look for sources of funding in order to keep their homes. Unfortunately, the economic crisis today caused millions of people to lose their jobs and their cars. Most are afraid that their home is next to go.

It is a good thing that the government, together with the lenders they tapped, is now trying to find ways to help people keep their homes. Although it may not look that way, today might be the best time to refinance your home. There are certain considerations to look into though.

Home Mortgage Loans Online wrote a post titled “Home Loan Remortgage: Is Refinancing Your Home Right for You?” The blogger basically suggested that home loan remortgage might be a viable alternative because it can offer better terms and lower interest rate on your mortgage. Likewise, some guidelines are offered about timing.

Amy Nutt @ Family Finance Help has written a post, “When is the Best Time to Refinance Your Mortgage” that is closely related to this topic. She talked about assessing your current financial condition to know if refinancing is a good solution for you. Also, according to her, now might be a good time to refinance if you have a high mortgage rate.

Prasusit @ Flixya offered some tips on how a person with poor credit can still refinance his home. The blog post titled “Refinance Home Mortgage Loan with Poor Credit” outlined 3 tips that can help a struggling homeowner keep his own. The tips included checking out the rates, doing some preventive measures on the credit report, and opting for easier terms.

All these sources can provide you with sufficient tips to get your mortgage refinancing application approved by the bank or other financial institutions.

Mortgage Rates Increase to 5.2 Percent

Despite the federal government’s best efforts to lower borrowing costs, the US mortgage rate rose to 5.2 percent, the first time in about a month. According to Freddie Mac, the average 30-year rate went up to 5.2 percent from 5.14 percent.

Mortgage rates are actually at its lowest point since May a week ago. It was lowered by the Federal Reserve’s $1.25 trillion package that was set aside for buying mortgage-backed securities. The low rates boosted purchase and refinancing applications from aspiring home owners. However, the record-low of 4.78 percent was actually in April, twice, because of the Central Bank’s announcement to boost spending on Treasuries and mortgage securities.

According to a senior economist from the Huntington National Bank, George Mokrzan, if the increase becomes too big, the recovery of the housing industry will be threatened. Delinquent mortgages were the prime culprit in the global financial crisis; it has cost firms around $1.5 trillion in asset writedowns and losses.

With the government’s push for recover, a lot of positive developments are being seen in the market. For the third consecutive month, the number of home resales increased last June because of lower borrowing cost, significant tax benefits, and even dramatic declines in home prices.

Increase in Home Purchases

The National Association of Realtors has many reasons to be happy these days. The number of home purchases increased to 3.6 percent (4.89 million) despite the still-gloomy economic condition. This is the highest level since October. However, median prices have fallen to 15 percent. Still, Mokrzan said that “overall, it’s positive”. The industry will bottom out this year and recovery will start.

Given all these developments, it is easy to pinpoint to source of the increase in mortgage rate. If borrowing costs were controlled because of government intervention, it seems that this is also becoming the reason why it’s not increasing. Investors are concerned that the high level of government debt will fuel inflation. It counters the sign that the housing market is stabilizing; and if it goes uncontrolled, it might become more damaging to the economy.

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