Updated Oregon Mortgage Bond Subprime ARM Refinance Savings Estimator Posted: Annual Savings Now $5,870 Per Family.

I have updated a previously posted estimate of the savings that a family would realize if Oregon begins a program to allow families with subprime ARM loans to refinance into an Oregon bond loan, as authorized by the summer 2008 federal housing legislation.

The update uses the current Oregon bond rate (4.5%), the November 2008 average subprime ARM rate for Oregon from Federal Reserve data (8.25%), and the November 2008 Oregon conventional to FHA average refinance loan rate (6.2%).

Using those rates, an Oregon family refinancing a $200,000 loan with an Oregon bond loan would save $5,870 annually compared to the average subprime ARM annual principal and interest payment. The same subprime refinancing using an FHA loan instead of the Oregon bond loan would save the family $3,331 a year.

Extrapolated to 1,000 families over a 30 year period, the savings would be $176.1 Million comparing the average ARM rate with the Oregon bond rate and $99.9 Million comparing the average ARM rate with the average FHA refinancing rate.

[In November 2008 in Oregon, 738 conventional mortgage loans were refinanced into FHA loans, these new lower rate loans totalled $159 million].

The PDF HERE shows these calculations AND includes alternative savings with the Oregon bond and FHA rates increased by 1/2% and 1%. comparing the average FHA refinance rate with the Oregon bond rate. Savings are shown on a monthly, annual, and 30 year basis.

The Excel workbook I created HERE was used to produce these updated estimates.