Are California Refinance Loans Within Reach For Some Underwater Homeowners?

A September 12, 2012 report from suggests that some homeowners could be much closer to being able to qualify for home loan refinancing due to rising property values.

This report isn’t the only one telling the story, but the figures in the September 12 report make some feel the goal of refinancing—especially in housing markets such as California, Oregon and elsewhere—could be within reach.

The report, by Jann Swanson, says more than half a million homes reached positive equity in the second quarter of 2012, making the 2012 yearly total at that point approximately 1.3 million.

These statistics refer to homes that were underwater or in negative equity prior to the improved property values. According to the report, “27 percent of all mortgaged homes nationwide had negative and near-negative equity mortgages at the end of the second quarter, compared to 28.5 percent a quarter earlier.”

The report says rising house prices are the reason for the improvements.

What does all this mean for homeowners looking to refinance?

Many home loan refinancing options include a requirement for a new appraisal. In the case of some government loans, borrowers who wish to apply for refinancing must make six payments at a minimum before a refinancing loan application can be filed—those applying for refinancing in the first year of home ownership will find that some government backed loan guidelines state that an appraisal can’t be used again once the loan has closed, and regardless the six-month minimum would have some appraisals past their expiration date.

In recent times, a new appraisal brings with it the threat of decreased property values; the home’s value at purchase time may have declined due to market conditions or other issues.

But now, with property values and sale prices on the rise nationwide—however slowly those prices may go up—it’s an indication that homeowners currently underwater on their mortgages might not have as long to wait as they might have thought before they can attempt to refinance their mortgages on a California home.

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