Tampa Homeowners and Refinancing – Fix or Fiddle?

Tampa homeowners are no different than many across the country that are finding they are not having any luck getting refinanced even with interest rates at the lowest in years. The Wall Street financiers would like to see this happen. Refinancing for many would add more money to the economy and by refinancing the more the homeowners would have to put into the economy. Tampa homeowners are becoming frustrated with the process especially when advertisements constantly tell them how easy this is to do.

Those calling for the government to start a mass mortgage modification, saying that the government already controls Freddie Mac and Fannie Mae say this could help immensely. Tampa homeowners as well as others across the country could benefit if lenders would compromise somewhat on the underwriting standards and allow homeowners a break when it comes to the fees that have to be paid. If this would happen, there are definitely more people who could qualify for a refinance.

Not everyone however thinks that this would be a solution to the problems being faced by Tampa homeowners and others. They believe this would be a short term fix and that the looser lending standards are what caused the problems now being faced. Dean Baker, the co-director of the Center for Economic and Policy Research in Washington believe this is an unfair burden put on taxpayers.

The Obama administration does not believe this would help either because a short term solution is not going to be the answer and could backfire for the economy which is already in enough trouble. The problem many people are having at this stage is they owe more on their homes than they are worth. The housing market has declined to the point that many people do not have equity in their homes even though they have been making payments on them long enough that they should have equity.

Thus they cannot qualify for refinancing. Then there are others that are discouraged from refinancing due to the lending standards being quite strict and the fees that are charged can be quite expensive. Economists say the refinance could work for many. If for example, someone who has a mortgage of $200,000 at a 6% interest rate could refinance their loan to 4.5%, the result would be $3,000 each year that could be used to pay the bills and for other things. The major advantage is this money would be put back into the economy and when you multiply this amount by who knows how many million the amount that could be put back could make a huge difference.

The government has tried to help, but the program in existence now is not doing well. This is why some people on Wall Street believe if the government would loosen restrictions on mortgages, it would help. The Treasury Department says they foresee no changes to be made in that area.

The refinancing could actually make things worse for borrowers who are so far in debt now that the possibility is there that they still could not afford to keep their homes. There are those that feel paying money on a home that keeps losing value is not worth the effort no matter what the interest rate is.