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As the interest rate continued to fall, many people decided to wait and not refinance their mortgages. However, by 2012, interest rates had dropped even further, and almost 40 percent of homeowners who didn’t refinance two years earlier still hadn’t done so. Pope and her team teamed up with a nonprofit organization in Chicago to offer zero-cost pre-approved refinances to people who had missed the chance to do so.

Negative equity

According to a study published by the HUD’s Office of Policy Development and Research, almost two-thirds of Americans are underwater on their mortgages. The study found that one in five homes sold between 2007 and 2009 were distressed sales, meaning they were worth less than the mortgage they owed on them. It’s not surprising that the decline in home prices has left millions of borrowers stuck in a downward spiral.

Fees and closing costs

While a recent survey found that 20 percent of homeowners were eligible for refinancing, only a fraction actually did so. Most homeowners never responded to the offers, and another quarter did not open them at all. Another quarter said they intended to follow up, but never did. Regardless of the reason, refinanced homeowners would save an average of $26,400 over the life of their loan, or $94 a month.

Discrimination against minorities in the financial system

In the United States, there is ongoing discrimination against minority groups in the financial system. This discrimination has resulted in a self-protective behavior that mirrors a post-traumatic stress reaction. Minority-owned banks, for example, rely more on government deposits and hold fewer loans than their white counterparts. As a result, these banks have fewer loans and more liquid assets. This disproportionately impacts minority-owned banks.

Lack of savings

A recent study shows that millions of Americans should have refinanced their mortgages in 2012 noe å tenke på. However, two-fifths of those who could have benefitted from a refinancing never took advantage of it. Many never even opened the refinancing offer that came their way. Another quarter never even responded to the letter at all. This lack of response is often due to inattention. And those who did receive the letter are often less educated.

Strict underwriting

Strict underwriting for mortgages involves the examination of several factors in order to determine a borrower’s suitability for a mortgage loan. First, a borrower must demonstrate sufficient capacity to meet monthly payments. To determine this, an underwriter considers the borrower’s income and employment status, the type of employment, and current debt and assets. Once these factors are considered, a loan application is evaluated and a decision is made.