Industry NewsMortgage

Refis not an option for many who would benefit most

22M borrowers have less than 20% stake in their homes

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Nearly seven in 10 homeowners with loan-to-value ratios of 80 percent or more are paying above-market mortgage rates and may be unable to refinance in order to take advantage of today's lower rates, a new report by data aggregator CoreLogic shows.Homebuyers who made small down payments when purchasing their property or who took cash out when refinancing or obtaining a home equity loan are also more likely to find themselves "underwater" -- owing more than their home is worth because of falling home prices. Most homes that go into foreclosure are underwater, with LTVs exceeding 100 percent. A homebuyer making a 5 percent down payment starts out with an LTV of roughly 95 percent, while a homeowner making 20 percent down payment has an LTV of about 80 percent.So a homebuyer making a 5 percent down payment on a $200,000 home would find themselves underwater if the value of that home suddenly dropped by 10 percent, increasing their LTV to 105 percent. A homebuyer who made a 20 pe...