Monday, February 20, 2012
The New York Times
Customized mortgages aren’t new, but industry experts say they are seeing more and more borrowers opt for fixed-rate loans with terms other than the standard 30 or 15 years, especially when it comes to refinancings.
Read the full story
http://www.nytimes.com/2012/02/12/realestate/mortgages-loan-terms-made-to-order.html?_r=1&ref=realestate
Thursday, February 9, 2012
In the fourth quarter of 2011, 85 percent of homeowners who refinanced their first-lien home mortgage either maintained about the same loan amount or lowered their principal balance by paying-in additional money at the closing table, a 26-year high, according to Freddie Mac. Of these borrowers, 37 percent maintained about the same loan amount, and 49 percent of refinancing homeowners reduced their principal balance; this latter percentage reflecting “cash-in” borrowers was the highest in the 26-year history of the analysis.
“Cash-out” borrowers, those that increased their loan balance by at least five percent, represented 15 percent of all refinance loans, the lowest percentage in the 26 years of analysis; the average cash-out share during the 1985 to 2010 period was 46 percent.
The median interest rate reduction for a 30-year fixed-rate mortgage was about 1.4 percentage points, or a savings of about 26 percent in interest rate.
Monday, January 23, 2012
The Mercury News
Mortgage interest rates, near all-time lows, are likely to remain attractive throughout 2012. That means opportunities for new home buyers and for homeowners who want to refinance.
Read the full story:
http://www.mercurynews.com/real-estate/ci_19683720
Tuesday, December 27, 2011
The Wall Street Journal
Mortgage rates are expected to remain very low at least through mid-2012, while housing activity improves slightly, according to Freddie Mac’s economic and housing outlook.
Read the full story
http://blogs.wsj.com/developments/2011/12/14/freddie-low-mortgage-rates-to-hang-around-next-year/?mod=WSJBlog&mod=WSJ_Real Estate_BLOGSDEVELOPMENTSFEED
Thursday, April 7, 2011
NEW YORK (AP) — Fixed mortgage were essentially unchanged this week, as the average rate on the 30-year fixed loan stayed below 5 percent.
Freddie Mac said Thursday the rate on the 30-year fixed mortgage rose to 4.87 percent from 4.86 percent the previous week. It hit a 40-year low of 4.17 percent in November.
The average rate on the 15-year fixed mortgage increased to 4.10 percent from 4.09 percent. It reached 3.57 percent in November, the lowest level on records dating back to 1991.
Mortgage rates tend to track the yield on the 10-year Treasury note.
Low rates have done little to boost home sales. KB Home was the latest homebuilder to report this week a sharp decline in home orders for the December-February quarter. The Los Angeles company said Tuesday that its new home orders dropped 32 percent from a year earlier, while the number of homes it delivered tumbled 28 percent.
Last week, Lennar Corp. posted similar results. Its new orders fell 12 percent in the same period and home deliveries slipped 3 percent.
Would-be buyers are reluctant to make purchases because of strict credit requirements, unemployment fears and expectations that home prices will fall further largely because of the record number of foreclosures still on the market.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
The average rate on a five-year adjustable-rate mortgage rose to 3.72 percent from 3.70 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.
The average rate on a one-year adjustable-rate loan fell to 3.22 percent from 3.26 percent. Three weeks ago, the rate hit 3.17 percent, the lowest level on records dating back to 1984.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year fixed loan, 15-year fixed loan and the 1-year ARM in Freddie Mac’s survey was 0.7 point. The average fee for the five-year ARM was 0.6 point.
Wednesday, February 9, 2011
Getting a mortgage is no simple task: It’s a complex and time-consuming process, and perhaps one of the most significant events of our lives, at least in financial terms. Here are ten potential pitfalls to avoid:
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1. Not checking your credit: Long before you begin searching for a mortgage, you should know where you stand in the credit score department. After all, a bad credit score can bump up your mortgage interest rate several percentage points or leave you with no approval at all. Be sure you check your credit early on (several months in advance) in case any changes need to be made to get it back up to snuff.
2. Applying for new credit alongside the mortgage: In this same vein, be sure to avoid applying for any other type of credit before and during the mortgage application process. Whenever you apply for new credit, you’re seen as a greater credit risk, at least initially. If you happen to apply for a credit card or auto loan around the same time you apply for a mortgage, your credit score might get dinged enough to kill your eligibility or bump up your interest rate.
3. Failing to look at the total housing payment: A mortgage payment consists of principal, interest, taxes, and insurance (PITI). A common mistake made by prospective home buyers is not factoring in their property taxes and insurance premium into their overall mortgage budget. The debt-to-income ratio (DTI ratio), used to determine if a borrower will qualify for a certain mortgage payment, is calculated by dividing the proposed cost of PITI by gross monthly income. A $1,200 homeowner’s insurance policy would add $100 per month to an escrowed mortgage payment.
4. Not seasoning your assets: The bank or lender will want to see that you can actually pay your mortgage each month. But without seasoned assets, those that have been in your own account for at least a couple months, you could be out of luck entirely. Some borrowers seem to think they can transfer funds from a relative’s account days before applying, but this simply won’t fly once the underwriter uncovers the paper trail.
5. Job hopping: Another key to mortgage approval is steady employment and income. An underwriter will want to know that the income you bring in every month is consistent and expected to continue into the foreseeable future. So don’t jump from job to job too much before applying for a mortgage. If it’s in the same field, it shouldn’t be a deal killer, but a career change will lead to problems. If you’re thinking about jumping ship, wait until you’ve closed your mortgage first.
6. Not getting pre-approved: Good preparation is the key to a good mortgage. Before shopping for a home, make sure you can actually qualify for financing by getting a pre-approval. A mortgage pre-approval is more robust than a simple pre-qualification because the bank pulls your credit and looks at your income, assets, and employment. Your DTI ratio will also come into play to ensure you know exactly how much you can afford. With this pre-approval, you will also get a written commitment from the lender that will show home sellers you’re serious about the purchase.
7. Not shopping around: But just because you’re pre-approved with one bank doesn’t mean you need to obtain financing from them. Be sure to shop around with multiple banks and lenders and even consider a mortgage broker. A broker can shop your rate with a number of banks concurrently and find you the lowest rate with the best terms. Don’t be one of the many consumers who obtains a single mortgage rate prior to applying. Comparison shop as you would for anything else you buy. And don’t forget to factor in closing costs!
8. Chasing exotic loan programs: Shop around for the lowest rate and closing costs, but not at the expense of your mortgage. Anything that sounds too good to be true most likely is. If the payment seems too low, you might be paying interest-only or even negatively amortizing, meaning your mortgage balance is growing each month. It’s best to keep it simple and go with a loan program you can get your head around, like a fixed-rate mortgage.
9. Forgetting to lock your rate: Keep in mind that a mortgage rate means very little if it’s not locked-in. If you’re happy with your rate, lock it. Mortgage rates change daily and sometimes several times daily. All those mortgage quotes you obtain are just quotes until you actually tell the bank, lender, or broker to “lock it in.” Once locked, your rate is guaranteed for a certain period of time, be it 7 days, 15 days, or a month. But never assume your rate is locked until you get it in writing!
10. Not reading your loan documents: Finally, it’s your responsibility to read and accept the terms of your new mortgage. Sure, it might be a pain to go through all the loan documents at signing, but it’s a bigger pain to sign up for something you don’t want or agree with. Take the time at closing to ensure you understand everything you’re signing, and thereby agreeing to. And don’t be afraid to ask questions! Otherwise, you could wind up with a mortgage with predatory terms and no place to turn.
Colin Robertson is the author of several finance websites aimed at helping consumers save money, including The Truth About Mortgage and The Truth About Credit Cards, which includes his popular credit score range.
