Home Refinancings Move Too Slowly for Some Homeowners

Current mortgage rates are low, making it a good time for many homeowners to refinance. But many people continue to face troublesome obstacles to refinancing their mortgage loans. Here's what you need to know about getting approval for a home refinance.

Mortgage Lenders Are Overwhelmed

Part of the reason so many homeowners have had difficulty refinancing is that mortgage lenders struggle to keep up with the flood of inquiries from homeowners desperate to save their homes. Mortgage lenders have had to train enough people to handle problem loans and get up to speed on details such as how second mortgages should be handled. If you've tried to refinance but aren't getting very far, continue to contact your lender. If you think you're being unfairly treated by a lender, can contact a housing counselor or attorney.

Refinancing Stalled by Falling Home Values

The government's mortgage refinance plan has only helped about 85,000 homeowners so far. Some homeowners have been turned down for refinancing because they've lost too much equity in their homes. When the program began, Fannie Mae would only approve borrowers who owe up to 5% more than their home's value. But that cap has been raised, allowing borrowers who owe up to 25% more than the value of their home to refinance through the government's program. If you think your home's value is within the guidelines, contact your mortgage lender to discuss refinancing. You can get an idea of what current mortgage rates are in your area here.

Housing Market Recovery May Be Slow

Fannie Mae CEO Michael Williams recently said that the recovery of the housing market will take some time and has a tough road ahead. Foreclosures continue to rise as mortgage lenders work to catch up on all the applications for refinancing and loan modification, he said.