Refinance Loan Requests Pouring in to Zillow Mortgage Marketplace

Yesterday, President Obama announced his housing plan which, in part, aims to help homeowners who are current on their mortgage payments to take advantage of some of new lower mortgage rates. As soon as the plan was announced, we saw traffic surge on Zillow Mortgage Marketplace. By the end of the day, consumer loan requests ...

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Yesterday, President Obama announced his housing plan which, in part, aims to help homeowners who are current on their mortgage payments to take advantage of some of new lower mortgage rates. As soon as the plan was announced, we saw traffic surge on Zillow Mortgage Marketplace. By the end of the day, consumer loan requests had spiked 56% over the daily February average, with more than half of these requests for refinance quotes.

But there’s been a lot of confusion over exactly who will qualify. The efforts are aimed at helping “responsible homeowners” who are making payments but can’t currently get a refi because they don’t have at least 20% equity in their home.

Specifically to qualify, a homeowner must:

  • Owe between 80-105% of their mortgage. An analysis today of Zillow Q4 Real Estate Market Reports shows that 26% of mortgage holders, or 14.8 million homeowners, currently qualify to refinance under these specifications. One quarter (24.6%) of homeowners with mortgages (14 million) do not qualify because they are underwater and owe more than 105% of their home’s value. This is especially true in hard-hit areas of California or Florida, where home values have fallen 40% or more since the peak.
  • Have their loans backed by Fannie Mae or Freddie Mac. Approximately 60% of single-family loans are backed by Fannie or Freddie, but a homeowner may not know this about their own loan. If you don’t know, call your lender and ask.
  • Have a conforming loan. That means a loan under $417,000 in many areas — or up to $625,500 in high-cost areas like San Francisco, Boston or Washington, DC. Even still, the Zillow Home Value Index (median home value) for the city of San Francisco is $724,244, which says that lots of people have loans higher than the conforming limit.

More details are coming when the full plan is rolled out on March 4. Meanwhile, CNNMoney has a good overview of who will qualify for this part of the plan, as well as the plan’s second part — which tackles mortgage modification for borrowers who have fallen behind in payments or are at risk of doing so.

At this point, contact your lender so you can begin laying the groundwork for what to do once March 4 rolls around. Start learning and educating yourself. Ask questions about refinancing in Zillow Advice.

Here is some suggested reading: