Mortgage applications increased 4.1 percent

Data from the Mortgage Bankers Association's Weekly Mortgage Applications survey for the week ending December 9 found mortgage applications increased 4.1 percent compared with the week prior. The survey cites the surge in applications were driven by an increase in refinance applications.

The refinance index from the survey increased 9.3 percent compared to the previous week, reaching its highest level since November 4. The purchase index, however, decreased 8.2 percent from the week prior. Refinancing accounted for 79.7 percent of total applications, up from 76 percent the previous week, marking its highest share for 2011.

Government programs and lender incentives are helping homeowners achieve refinancing to avoid foreclosure. In a piece for Fox Business, Bankrate's Don Taylor outlined the options available to homeowners with underwater mortgages looking to refinance. The federal government has revised its Home Affordable Refinance Program, enabling homeowners that are severely underwater to qualify for refinancing.

However, if the mortgage is not conforming, the home loan is not eligible for the HARP revision. The source reported homeowners can also try to take funds from an IRA to the closing to help the refinance process and qualify for a conforming loan.

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