Mortgage News – Page 8

Mortgage Rates Average Below 4% For First Time Ever

October 6, 2011 by admin

: Average Rates Break the 4% Mark For 1st Time

Although it might sound like a broken record mortgage rates have reached another all time low. Today Freddie Mac announced that the average rate for a 30 year fixed mortgage fell below 4% for the first time ever to an average of 3.94%.

Rates on a 15 year fixed loan, which is a popular option for homeowners who are refinancing, fell to an average of 3.26%, which is also a record.

Mortgage rates have reached lows that were last seen in the early 1950’s when the average 30 fixed rate dipped to 4.08% for a few months.

This offers yet another opportunity for buyers to capitalize on historically low rates. Low rates coupled with declining prices along with abundant home inventory offer buyers market conditions unknown in the past – the confluence of low rates and declining prices.

The establishment of recent lows in the recent past have not created any significant uptick in buyer demand, and real estate pundits and economists are skeptical about the efffect that lower rates have on the sluggish housing market. Rates are not seen as an impediment to buyers, but the sluggish economy, uncertainty about jobs, and meger pay raises are deterring many prospective buyers.

But if you are in the market, especially as a first time home buyer, conditions keep improving for you as a buyer. Take advantage of this opportunity!

Mortgage Rates At Lowest Level In 50 Years

August 24, 2011 by admin

Freddie Mac released the results of its Primary Mortgage Market Survey® showing mortgage rates, fixed and adjustable, reaching all-time record lows. The 30-year fixed averaged 4.15 percent, breaking the previous record low of 4.17 percent set November 11, 2010.

According to the survey, 30-year fixed-rate mortgage (FRM) averaged 4.15 percent with an average 0.7 point for the week ending August 18, 2011, down from the last week when it averaged 4.32 percent. Last year at this time, the 30-year FRM averaged 4.42 percent.

Additionally, 15-year FRM averaged 3.36 percent with an average 0.6 point, down from last week when it averaged 3.50 percent. A year ago at this time, the 15-year FRM averaged 3.90 percent.

Results also showed that the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.08, with an average 0.5 point, down from the previous week when it averaged 3.13 percent. A year ago, the 5-year ARM averaged 3.56 percent.

The one-year Treasury-indexed ARM averaged 2.86 percent with an average 0.6 point, down from the last week when it averaged 2.89 percent. At this time last year, the 1-year ARM averaged 3.53 percent.

Thirty year fixed mortgage rates are now the lowest in over 50 years. In comparison, the Bureau of Economic Analysis estimated the average effective mortgage rate was about 5.3 percent on single-family loans outstanding during the second quarter of 2011.

The environment of ultra low mortgage rates, lower home prices, and abundant inventory combine to make this an attractive time to buy a home.

Mortgage Corner – Mortgage Insurance

August 9, 2011 by admin

Private Mortgage Insurance (PMI) Options

PMI Options Private Mortgage Insurance also known as PMI is a lender requirement for any borrower who puts less than 20% down on a home purchase utilizing conventional financing. The purpose of PMI is to protect the lender in the event of a default by the borrower. The benefit to the borrower is that they can get a mortgage with 5% or 10 % down.

The cost of mortgage insurance varies based on the loan to value percentage, debt ratio, credit score, and property type. Much like homeowners insurance, the rates vary from company to company. Many lenders have contractual agreements with several mortgage insurance companies so that they can have flexibility in both product and pricing. One interesting thing to note about mortgage insurance is that there are options for a borrower that should be explored.

Lender Paid MI

Many borrowers can avoid mortgage insurance by accepting a slightly higher interest rate and having the lender absorb the cost of the mortgage insurance.

Single Premium MI

Borrowers can pay the mortgage insurance premium (instead of monthly) at the time of settlement. The cost of the insurance can be financed, and this often results in a significantly lower monthly mortgage payment.

Piggy Back Loan

In the industry, this is called an 80/10/10. A borrower puts down 10% of the purchase price. The lender makes 2 loans. The first loan is 80% of purchase price, and the second loan (typically a home equity loan ) is for 10% of the purchase . Mortgage insurance in not required in this scenario- as neither loan exceeds 80% of sale price.

Monthly MI

This exactly as it sounds. A borrower pays a monthly premium (with their mortgage payment ) until they have a 20% equity stake in the property.

So, how does one decide which path to take here ? It really depends on several factors. One big factor is projected time in the home. The best thing for any borrower to do is to sit down with a reputable lender who can customize a loan for you.

It’s a great time to buy a home in the Delaware Valley

Steve Madonna

Weichert Financial Services

smadonna@weichertfinancial.com

610-566-2045

NMLS # 140438

Many Home Buyers Lack Basic Mortgage Knowledge

May 5, 2011 by admin

In a recent a recent Zillow Mortgage survey a staggering number of home buyers demonstrated the lack of basic knowledge concerning home mortgages. When queried regarding mortgage basics, nearly half of the survey participants – 46 percent – did not know the correct answers about mortgage fundamentals. In fact, 44 percent admitted they are not confident in their knowledge of mortgages or the mortgage process.

57 percent of prospective home buyers who were polled do not understand how adjustable rate mortgages (ARMs) work. When asked if interest rates on 5/1 ARMs always reset higher after five years, the majority of home buyers answered yes. In fact, the interest rate will adjust to the prevailing rate after five years, even if rates have declined. Currently, many borrowers whose ARMs have recently reset have lower interest rates than they did when they took out the loan.

34 percent of the respondents who are prospective home buyers do not understand that lender fees are negotiable and that they vary by lender. They believe lenders are required by law to charge the same fees for credit reports and appraisals, when in fact home buyers can save money by shopping for the lowest fees.

Additional Survey Findings

• 45 percent of polled prospective home buyers believe that they should always buy mortgage discount points when obtaining a mortgage. However, because mortgage discount points are simply prepaid interest, the decision should depend on how long you intend to own the home. In some cases, you may not plan to remain in the house for long enough to break even after buying points.

• 55 percent of prospective home buyers in the study do not understand that mortgage rates vary throughout the day. In reality, mortgage rates can change rapidly, similar to how stock prices can change throughout the day. To get the optimum rate, it is important to monitor rates closely.

• 37 percent of prospective home buyers who were polled believe that pre-qualifying for a loan means they have secured financing. In fact, “pre-qualification” is used to describe the earliest step in the process when a lender approximates how much you can afford, performs a credit check, but does not request any sort of documentation to verify the information you provide. Although there is not a reliable industry standard definition of pre-qualification, it is not until a lender has approved your loan application without conditions that you can rest assured that the lender has committed to financing your loan.

• 42 percent of the polled prospective home buyers did not understand that Federal Housing Administration (FHA) loans are available to ALL buyers. Instead, they believe only first-time buyers qualify. FHA loans can cost less for many buyers, including repeat buyers with low to average credit scores and with down payments of less than 20 percent. FHA loans can provide many prospective home buyers the opportunity to achieve their goal of home ownership.

Your best plan of action for getting a better understanding of mortgage facts is to meet with a Realtor who can explain the basics and then put you in touch with a mortgage lender who can guide you through the mortgage process. There is much to gain by being an informed buyer.

Mortgage Corner – To Buy Or Not To Buy?

April 19, 2011 by admin

: To Buy Or Not To Buy?

Should I buy now or just wait? In the spring of 2011, those of us in the business hear that question frequently. There was the mortgage meltdown, foreclosure crisis, high unemployment and many other very unsettling economic issues. The country is still trying to work our way out of these problems. What does this mean to the average person today who might be contemplating a home purchase? I think it means opportunity. Home prices have come down from the record highs of 2006-2007. Interest rates are still near 40 year lows. There are still some great first time buyer programs out there. The real estate market in 2011 has both low prices and low interest rates which is a rare combination. In fact, the last published Home Affordability Index – Feb 2011 – was the highest on record.

Many people believe that you cannot get a mortgage today without perfect credit and 20 percent down. That is not true. You do need to demonstrate a steady income stream and a fairly decent credit history. However, it is not as difficult as many people believe.

Will prices fall further? No one knows for sure. Home prices have seen declines in prior decades. The 70’s & 80’s had price dips. Nationally, real estate prices have appreciated at an average of 6% a year for the past 50 years. Prices will go up once again. Real estate is a long term investment. If you keep a house for 18 months, you will likely lose money. However, if you keep it for 10 years, you should see the average historic appreciation. Remember that real estate is local. The Delaware Valley typically does not have the severe highs & lows like many other parts of the country.

In the past 18 months, I have done loans for people whose monthly mortgage payment was only $200 more than their rent. After you take the tax deductions into consideration, the cost of the mortgage is actually cheaper. Many renters are surprised to find out that the mortgage interest, property taxes and mortgage insurance are fully tax deductible.

If you are curious to find out about the current market, meet with a reputable lender and a licensed Realtor. Most will give you a free consultation where you can determine if the time is right for you.