According to an article in Housingwire, recent research has shown that many Columbia SC homeowners are failing to take advantage of lending programs that could be hugely beneficial to them. It's estimated that around 20% of households who could benefit from refinancing are potentially missing out on savings of over $10,000 each year, simply by failing to take action.
The study was done by the National Bureau of Economic Research and looked at a random sample of mortgages in December 2010 and found that while people are able to take action to buy and finance a property many Columbia SC homeowners are failing to take the next step which is to refinance the loan. While it might seem puzzling that Columbia SC homeowners are willing to miss out on such substantial savings, the National Bureau of Economic Research has identified three reasons why this occurs.
The first is that it is often difficult for borrowers to calculate the type of benefits available through refinancing. This is often due to the complex transactions required combined with the limited experience most borrowers have with this situation. In addition, sometimes the benefits of refinancing the loan aren't immediately apparent but tend to build up over a longer period of time. Some Columbia SC homeowners may be put off by the amount of upfront costs that must be factored in when refinancing a loan and which may include valuing the property and reevaluating their personal financial situation.
Columbia SC Homeowners Could Save $11,500 By Refinancing
According to the study, average Columbia SC homeowners could save around $160 a month for the remaining period of their loan, and the total savings for around 20% of borrowers were approximately $11,500.
The hope is that providing more targeted information could enable greater numbers of people to take advantage of these savings. Apparently Columbia SC homeowners who work with certified housing counseling agencies are far more likely to be able to make money-saving changes to their mortgage, and are around 60% less likely to default on their loan. When necessary these borrowers can also complete short sales more quickly compared to homeowners who don't work with housing counselors.
Fannie Mae recently announced that it is updating its policy concerning the minimum waiting period following a pre-foreclosure sale which should make it easier for these borrowers to purchase another home more quickly.
In the meantime, find more tips and articles regarding financing and mortgages in the Columbia SC Mortgage Info section to your right under our Columbia SC Real Estate Categories.
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Anyone who has applied for a Columbia SC mortgage recently knows how elusive the best interest rates, loan terms and ultimate mortgage loan approval can be. The good news is that steps can be taken to vastly improve the odds, but you need to take some of the steps for getting that Columbia SC mortgage before you even apply.
If you want to refinance your Columbia SC mortgage, a few key things are going to be expected of you. Find out what is expected if you want to refinance your Columbia SC mortgage in this video…
The report called it "a particularly large consumer financial mistake."
We recently told you about FICO score changes that were being made that could make getting a mortgage easier for Columbia SC home buyers.
Well, not so fast.
What nobody mentioned about the score, dubbed FICO Score 9, is that most Columbia SC home buyers aren't likely to see any direct benefit from it any time soon, very possibly not for years.
That's because the two dominant financing sources in the mortgage market — Fannie Mae and Freddie Mac — aren't planning to use the new score in evaluating loan applicants for the foreseeable future. And major banks and mortgage companies aren't jumping to adopt it either.
None of this detracts from the merit or potential value to consumers of FICO's new score. The company says that by separating out medical debt-collection issues — which are commonplace negatives in millions of consumers' credit files — from other types of collection actions, the FICO 9 model will more fairly rank the actual risks posed by some applicants compared with others. For borrowers whose sole major negative credit file account is an unresolved medical debt, Fair Isaac estimates that the new model will increase scores by a median 25 points.
FICO 9 also is designed to more fairly treat applicants who have limited accounts on file with the credit bureaus — often young, first-time Columbia SC home buyers or consumers who have made minimal use of credit cards and other forms of personal credit.
Columbia SC Home Buyers Not Likely To See Any Help
So on the surface, the advent of the new score is a big deal. But here's the real world: New FICO score models only matter in the mortgage market if lenders choose to use them to evaluate applicants. And, based on discussions with leaders in the mortgage field, FICO 9 is a long way off from adoption. It's not likely to help many Columbia SC buyers any time soon, despite the hype.
Among other reasons, it can cost substantial sums of money to retool complex automated underwriting systems, especially at Fannie and Freddie. Lenders have to weigh the costs and benefits.
Will the relatively small improvements be worth the expense and hassles? And with all the other regulatory changes mandated by recent financial reform legislation, do we have the time and manpower to devote to analyzing the effects of FICO 9?
The sobering answers for Columbia SC home buyers appear to be no.
But stay tuned. As with anything else, these things are subject to change. And if and when they do, we'll let you know right here.
Check out our other articles and news affecting Columbia SC home buyers when it comes to mortgages by clicking on the Columbia SC Mortgage Info link to your right under Columbia SC Real Estate Categories.
There are a lot of credit repair companies out there that promise to improve your credit score, for a price. But are they doing anything for you that you can't do yourself? Should you pay someone else to do these things?
To learn more and stay current on buying a Columbia SC home, and how your FICO score can play into your approval or denial of a mortgage, as well as tips and information on mortgages in general, check out our other articles by clicking on the Columbia SC Mortgage Info link to your right under Columbia SC Real Estate Categories.