The housing boom-and-bust comes home.

Remember the early 2000s? Not so long ago, homeowners were basking in a superheated housing market replete with easy loan availability, low mortgage rates and soaring home prices. Such ripe conditions soon invited speculation and risk taking based on the mistaken notion that home prices would continue to go up. Borrowers and lenders were willing to take on more debt than they should, willingly gambling on adjustable-rate interest-only loan payments, reduced loan documentation, and "subprime" mortgages(i.e., loans to borrowers with lower than prime credit scores). They believed that the housing bubble—if there really was one—would not burst. Eventually, home prices reached their peak just as interest rates on many adjustable-rate mortgages reset. A large number of homeowners quickly found themselves with unmanageable increases in their monthly payments.

Before long, many financial institutions that had taken on some of this risky debt started to report large loan losses. Reports of an economic recession became official and served to exacerbate the slowdown in housing, putting additional pressures on a wider swath of homeowners. Families who previously had no trouble meeting their monthly payments started to find their homes threatened by job losses due to the recession. Others experienced distress, through no fault of their own, as a result of lower property values, leaving them with mortgage balances that exceed the value of their homes and a lack of equity to fall back on if needed.

But when is a crisis also an opportunity? Today homeowners may have that second chance, as recent moves by Congress and an historic drop in interest rates have combined to generate an unprecedented opportunity in mortgage refinancing.

The Treasury Department acts…

In March 2009, the United States Treasury Department put in place a series of initiatives under the President's Homeowner Affordability and Stability Plan. Designed to promote economic recovery, these initiatives include:

The Homeowner Affordability and Stability Plan is part of the President's comprehensive strategy to get the economy back on track. The U.S. Department of Housing and Urban Development (HUD) estimates that the plan will help up to 9 million families restructure or refinance their mortgages to avoid foreclosure, as well as assist other responsible homeowners on the verge of defaulting. At the same time, HUD believes the plan could prevent entire "neighborhoods and communities from being pulled over the edge too, as defaults and foreclosures contribute to falling home values, failing local businesses, and lost jobs."

...just as interest rates drop to historic lows.

Homeowners are finding support not only from the President's housing plan, but also from the recent decline in long-term interest rates to historic lows. Today, homeowners generally can refinance into 30-year fixed-rate mortgages below 5.00%—rates not seen even during the height of the housing bubble in 2003.

The accompanying chart provides an historical perspective as to why homeowners may wish to take advantage of the refinancing opportunity and lock in at current long-term rates. Today's 30-year conventional mortgage rates at below 5.00% stand in stark contrast to the 16.70% rate seen during the "stagflation" period of the early 1980s, for example. While this may be an extreme illustration, it serves as a reminder of how dramatically mortgage rates can change. Indeed, few experts believe today's interest rates will remain below 5.00% for too long. As the economy recovers, so will long-term interest rates, which move in tandem with economic growth.

Snapshot of 30-year conventional mortgage rates

Date	Rate
June 1, 1971	7.53%
June 1, 1981	16.70%
June 1, 1991	9.62%
June 1, 2000	8.29%
June 1, 2003	5.23%
June 1, 2006	6.68%
June 1, 2009	4.81%

Source: Board of Governors of the Federal Reserve System

Contending with declining property values.

Most homeowners are painfully aware of the effects declining home values have had on their available equity. Not only have they lost valuable financial resources, but if they attempted to refinance their home loans prior to March 2009, they may have been denied that opportunity due to those very losses.

Before the President's plan, homeowners who owed more than 80 percent of the present value of their homes generally could not refinance their mortgages, even if they owed less than 80 percent of the original purchase price. They may have been making their payments; however, they were still penalized due to the defaults of others which dragged down their property values and ultimately led to tighter lending standards.

To counteract the effects of declining home values, the President's plan aims to help 4 to 5 million responsible homeowners who took out loans owned or guaranteed by Fannie Mae or Freddie Mac to refinance through those two institutions. Funds allocated under the plan also provide incentives for borrowers to stay current on their loans. If qualified borrowers meet their payments, they may receive assistance of up to $1,000 each year for five years.

The bottom-line benefits of refinancing.

For many homeowners, low-cost refinancing could reduce their mortgage payments by thousands of dollars per year. For example, a family holding a 30-year fixed-rate mortgage of $200,000 with an interest rate of 6.50% would owe $1,264.14 (excluding taxes and insurance) per month. By refinancing at 4.80%, that same family would lower its monthly payment to 1,049.33 (excluding taxes and insurance), for a monthly savings of $214.81 and an annual savings of $2,577.72. Over the life of the loan, the total savings would amount to $77,326.71.

Another option, for those who are comfortable with maintaining their current monthly payments, is to refinance into a shorter-term loan. A 30- or 40-year fixed-rate mortgage, for instance, could be refinanced as a 15-year term loan. Again, the savings in interest on a shorter-term loan could amount to thousands of dollars over the life of the loan.

Our commitment at EverBank^®

At EverBank^®, we are committed to helping responsible homeowners achieve a level of security with mortgage payments that are not only sustainable over the life of the loan, but are also competitive and cost-effective.

If you're interested in refinancing your mortgage, we encourage you to learn more about our 15- to 40-year fixed-rate mortgage products. In addition, we are now offering a incentive of $500 off closing costs¹ when you apply for a loan.

Ready to get started? We invite you to get a quote and apply online or simply contact one of our Mortgage Specialists at 866.352.7283.