Mortgage Rates & Trends: Mortgage Blog

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  1. Pending Home Sales Up in July

    By Michael Kraus on September 2, 2010

    This morning the National Association of Realtors released its Pending Home Sales Index.  The index was up slightly, increasing 5.2 percent for the month of July, but still nearly 20 percent below the level it was at in July 2009 (and if you recall, homes were not exactly flying of the shelf back then, either).

    Let’s take a look at the quotes in the release from Lawrence Yun, NAR’s chief economist:

    Lawrence Yun, NAR chief economist, cautioned that there would be a long recovery process. “Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” he said. “But the recovery looks to be a long process. Home buyers over the past year got a great deal, and buyers for the balance of this year have an edge over sellers. For those who bought at or near the peak several years ago, particularly in markets experiencing big bubbles, it may take over a decade to fully recover lost equity.”

    Yun added, “Affordability could reach a generational high in the second half of this year because of rock-bottom mortgage interest rates, helped partly by the Fed’s very accommodative monetary policy. The loan underwriting standards are tighter, but home buyers can improve their chances of getting a loan by staying well within their budget.”

    I don’t take issue with much of what Yun is saying here.  The recovery is going to take a long time, and many people will not recoup the money they put into their homes for many years (analysts predict home values in the sand states will not get back to peak levels until 2025).

    I do have an issue with the statement about affordability.  While prices are down significantly from their peak in 2006-7, they are still high compared to income on a historical basis, which is really what we should be looking at.  It is likely that home prices still have further fall, with many analysts predicting somewhere between 5 and 20 percent based upon locality.  I believe the idea that affordability is at a generational high is incorrect, unless you define a “generation” as the last seven-ten years or so.  It’s also worth noting that the NAR has a record of somewhat dubious predictions when it comes to housing, as can be noted here, here, here, and here.

    As always, you need to take these types of metrics with a grain of salt, and make purchase decisions that best fit your present needs and personal situation at this moment.

    Category: Mortgage Rates
  2. Do You Know If You Have A Fixed-Rate Or Adjustable-Rate Mortgage?

    By Michael Kling on September 2, 2010

    Homeowners are smarter about their mortgages than in the past. Only 8 percent said they don’t know if they had a fixed-rate mortgage, an adjustable-rate mortgage or a more unusual type of loan, reported a poll commissioned by BankRate. If that sounds bad, consider that two years ago 26 percent of borrowers said they didn’t know what type of mortgage they had. In 2007 an incredible 34 percent said they didn’t know if they had a fixed-rate or an adjustable-rate mortgage.  Compare fixed mortgage here.

    Fixed-Rate Or Adjustable-Rate Mortgage?Homeowners also typically have no regrets about buying their home despite the increasing number of foreclosures and drop in housing values. Only 9 percent of homeowners in the poll said they regret buying their current home, compared to 90 percent who had no regrets.

    Of those who had regrets, 31 percent said they felt unhappy because they could not sell their home, and 22 percent said they couldn’t afford their monthly mortgage payments. Others said they were unhappy because their home’s value had dropped, or they didn’t like their home’s location, or because of other reasons, according to the poll done by Princeton Survey Research Associates.

    Blacks were far more likely to feel sorry about buying their home and were more likely to report difficulty meeting monthly mortgage payments. They were also slightly more likely to have an adjustable-rate mortgage or an option ARM.

    Not surprisingly, fixed-rate mortgages have become more popular, the survey indicates. Almost 80 percent of homeowners said they have fixed-rate mortgages, compared to about 65 percent in 2008. Wealthy homeowners were more likely to have fixed-rate mortgages. Roughly 85 percent of households with income of more than $75,000 opted for a fixed-rate, compared to 70 percent of households with income under $30,000.

    A survey by Fannie Mae earlier this year agreed that people generally see homeownership as a good choice. The Fannie Mae survey found that about two-thirds of Americans want to own a home, despite the economic slowdown and decline in home prices. Safety and quality schools were top reasons for wanting to buy a home.

    “Despite the recent downturn in the housing sector, Americans continue to value homeownership and think about their homes in ways that go much deeper than the financial investment,” said Mike Williams, president and CEO, Fannie Mae.

    The public is more cautious, however. For instance, almost a quarter of renters said were postponing buying a home despite low mortgage rates.

    Category: Fixed Rate Mortgages
  3. Fixed Mortgage Rates in Newark, New Jersey

    By Staff on September 2, 2010

    Newark, New Jersey Fixed Mortgage RatesTotal Mortgage is currently offering some of the lowest mortgage rates in Newark, New Jersey. Newark is the largest and the second most diverse city of New Jersey. With the prices of homes declining, Newark has become a buyer’s market and demand for fixed rate mortgages are rising. Total Mortgage is here to help your dreams come true with affordable and some of the lowest mortgage rates in NJ.

    Fixed mortgage rates are popular among borrowers because the terms of the loan remain constant over the period of the loan. There are a number of fixed mortgage products available at Total Mortgage. A 30 year fixed conventional mortgage is available at 4.125% interest rate with a 4.323% APR. A 20 year fixed conventional and a 15 year fixed conventional mortgages are offered at a rate of 4.000% (4.273% APR), and 3.625% (3.972% APR) respectively.

    Other popular fixed mortgage rates are 30 year fixed FHA mortgage, 30 year fixed jumbo mortgage and 15 year fixed jumbo mortgage.

    If you want to grab one of these best mortgage interest rates available in NJ or would like a complete list of our mortgage products, please call 877-868-2509 and speak with a licensed mortgage professional today.

    Mortgage rates constantly change, rates are quoted at 10:30 A.M., September 02, 2010.

    *All rates shown are for 30 day rate locks. Longer locks available. The APR for conventional loan amounts is calculated using a loan amount of $417,000, 2 points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for jumbo loan amounts is calculated using a loan amount of $500,000, two points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for FHA loan amounts is calculated using a loan amount of $295,000, two points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. Some rates and fees may vary by state. All interest rates listed are for qualified applicants and are subject to mortgage approval. All rates are subject to change without notice.

    Category: Mortgage Rates
  4. Today’s Mortgage Rates at Total Mortgage For Thursday, September 2, 2010

    By Staff on September 2, 2010

    That's a mighty big cantilever you've got there.

    It’s Thursday already, and the weekend is only two days away.  Before Hurricane Earl blows your holiday plans away, take a look at the mortgage rates we are posting at Total Mortgage today.

    Mortgage rates continue to hit all time lows, and many people are taking advantage of this unique opportunity to lock in some of the lowest rates in 50 years.  If you are paying more than one point above any of the currently listed rates, you may want to seriously consider refinancing your current mortgage.  You could potentially save thousands of dollars in interest payments over the life of the loan, and hundreds of dollars in monthly mortgage payments.

    If you are a first time homebuyer you might want to explore the possibility of getting an FHA mortgage, especially if you don’t have a lot of money to put down on a home.  FHA mortgages only require down payments of 3.5 percent and are insured by the Federal Housing Administration.  Presently, we are offering 30 year fixed FHA mortgages at 4.000 percent with a 4.349 percent APR. FHA mortgages have become incredibly popular over the last several years as private mortgage insurance has become increasingly difficult to procure.  Getting an FHA mortgage can be a difficult process, but we are experts with years of experience.

    If you are looking for consistent monthly payments, a fixed rate mortgage could be the way to go.  Total Mortgage has some of the best fixed rates in the country.  A 30 year fixed rate mortgage is available to a qualified buyer at 4.125 percent with a 4.323 percent APR. For borrowers with extra income or who would like to retire their mortgage more quickly, 15 year fixed rate mortgages are available at 3.625 percent with an APR of 3.972 percent.

    Continue Reading…

    Category: Mortgage Rates
  5. Low Rate 15 Year Mortgages Help Pay Off Debt

    By Michael Kling on September 1, 2010

    More homeowners are taking advantage of low interest rates to refinance into shorter terms, such as 15 year mortgages, to pay off their mortgages sooner, sometimes even if it means higher monthly payments.

    During the first half of the year, 26 percent of homeowners who refinanced opted for a 15 year fixed rate mortgage, compared to 18.5 percent last year, according to data from CoreLogic, a financial data provider.

    With interest rates at all-time lows, many people finding that they can afford higher monthly payments of shorter terms. But even if their monthly payments are significantly higher, some homeowners will bite the bullet, planning to pay as little interest as possible and owning their home free and clear of mortgage debt as soon as possible.

    Paying the mortgage is like putting money into a required savings account for them. In better times, leveraging your home to get a mortgage as large as possible was popular. When the stock market was booming homeowners preferred putting money into stocks for bigger gains. After the stock market crashed, investors became disillusioned with stocks and a more frugal savings ethnic is again popular.

    Moving from a 30 fixed rate mortgage to a low-rate 15 year mortgage term is the most popular refinancing move, but homeowners also use 20 year terms. Although homeowners pay off their mortgage twice as fast with a 15 year term than 30 years, their monthly payment is not twice as much because of the lower interest rate.

    The average 15 year rate was 3.86 percent compared to the 30 year rate of 4.36 percent, according for the week of Aug. 26, according to Freddie Mac.

    A 15 year mortgage of $200,000 at 3.84 percent would have a monthly payment of about $1463, while a 30 year mortgage of the same amount with a 5.5 interest rate would have a monthly payment of $1135.

    “While homeowners are choosing the safety of fixed-rate mortgages in large numbers, at the same time many borrowers are now looking at paying down their mortgage balances faster by choosing a shorter mortgage term of 15 or 20 years instead of 30,” said Frank Nothaft, vice president and chief economist for Freddie Mac.

    “When you can only earn a very low interest rate on your CD or money market accounts, and returns on other investments remain extremely uncertain,” Nothaft said, “it can make sense to pay yourself 4.5 or 5 percent by eliminating some mortgage debt whether by making extra payments or going for a shorter loan term.”

    Category: Fixed Rate Mortgages, Mortgage Interest Rates
  6. Should Fannie and Freddie Become Landlords?

    By Michael Kraus on September 1, 2010

    Dude, uh, tomorrow's already the tenth.

    In the ongoing debate over housing finance reform, people have floated a variety of proposals aimed at solving the foreclosure problem and developing an improved securitization and finance system.  Today we have another new idea, this time from Federal Reserve Governor Elizabeth Duke, via Bloomberg’s James Tyson.

    Duke said one of the best ways to stabilize areas hurt by foreclosures is to incentivize lending institutions to rent homes they have seized as a result of foreclosure.  An excerpt from the article:

    “It is not sufficient, given current economic conditions and the significant needs of our neighborhoods, to do things the way we have always done them,” Duke said today in a speech at a Fed conference in Washington. “Including rental options among the mix of stabilization strategies makes particular sense at a time of high unemployment.”

    Duke recommended rent-to-own programs as well as turning current distressed owners into renters in order to keep vacancies low and avoid the blight and crime associated with high levels of vacancy.  Over 4.5 percent of homes in the United States are in foreclosure, and nearly 1 in 10 U.S. mortgages are delinquent.

    Further complicating matters is the massive excess supply of homes and the low level of demand for housing following the expiration of the first time homebuyer tax credit.  This situation, combined with the continued weak labor market is causing downward pressure on home values.  A reduction in home values could cause even more Americans to be underwater on their mortgage (owe more on their mortgage than their house is worth).  Underwater borrowers are far more likely to default than those who have equity in their house, so many people worry we could see another wave of foreclosures in the near future.

    While turning major lenders and entities such as Fannie Mae and Freddie Mac into giant landlords may not be ideal, it is a proposal that merits some consideration.  I have yet to see a breakdown of the costs that would be associated with such a policy, and that will be the ultimate determinant of whether or not this idea makes any sense.  At this stage in the game, it would be wise for policy-makers to entertain any and all ideas, because nothing that has been tried up to this point has made any significant headway towards solving our current housing problems.

    What do you think of this proposal?  Let me know in the comments section below.

    Category: Mortgage Rates
  7. Mortgage Activity Up, Mortgage Rates Hit New Lows

    By Michael Kraus on September 1, 2010

    According to this week’s Weekly Application Survey from the Mortgage Banker’s Association, mortgage applications increased slightly from the previous week, rising 2.7 percent (seasonally adjusted).  Refinance activity increased again, and is up 2.8 percent (seasonally adjusted) from the week prior.  Refinance applications are now at their highest point since May of 2009.  Purchase applications also rose, and are up 1.8 percent (seasonally adjusted) from the previous week.

    Excerpted from the survey:

    “Refinancing activity picked up again last week, reaching new 15-month highs, as borrowers took advantage of even lower mortgage rates.  The drop in mortgage rates was in line with Treasury rates as the latest data continue to show weak economic growth and an exceptionally weak housing market,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.  “The sharp decline in MBA’s Purchase Application index in May had provided a clear leading indicator of the drops in new and existing home sales that were reported for June and July.  Despite the slight increase in purchase activity in the past week, the continued low level of purchase applications indicates we are unlikely to see an increase in new home sales reported for August or existing home sales reported for September.”

    The continuing increase in refinance activity is not surprising, as mortgage rates continue to hit all-time lows.  According to Zillow, the average rate on a 30 year fixed rate mortgage is now 4.26 percent.  According to Freddie Mac the average rate is 4.36 percent (I believe the discrepancy comes from the methodology used to ascertain the average rate).

    While purchase applications increased a little bit, they are still close to 15 year lows.  This is also anticipated based upon the collapse in demand for housing and very weak labor market (U-3 unemployment is still at 9.5 percent and broader measures of unemployment are above 16 percent).

    Until we see any real improvements in the labor market, we are unlikely to see purchase applications increase significantly and we are unlikely to see substantial improvement in the housing sector as a whole.

    Category: Mortgage Rates
  8. FHA Mortgage Rates in Connecticut

    By Staff on September 1, 2010

    FHA Mortgage Rates in CTTotal Mortgage currently offers one of the lowest FHA mortgage rates in Connecticut.  At Total Mortgage a 30 year fixed FHA loan is available at 4.000% rate with 5.178% APR.  FHA mortgages have become more and more popular over the last four years, and now is a great time to take advantage of record low mortgages rates whether you are a first-time home-buyer or if you are refinancing your current mortgage.

    A fixed FHA mortgage loan is similar to a fixed conventional mortgage loan in that the interest rate remains the same for the life of the loan. There are several benefits to FHA mortgages compared to traditional mortgages.  Down payments can be as low as 3.5 percent.  Additionally, credit requirements for FHA mortgages are often not as stringent for standard mortgages because they are insured by the FHA.  One of the downsides is that FHA mortgages cost more than traditional mortgages because the borrower needs to pay for mortgage insurance.

    Other popular mortgage products at Total Mortgage are the 30 year fixed mortgage, 15 year fixed mortgage, 30 year fixed jumbo mortgage , and 5/1 ARM conforming mortgage.

    CT Mortgage Rates as of September 1, 2010.

    • 30 year Fixed Conventional at 4.125% rate with 4.323% APR
    • 15 year Fixed Conventional at 3.625% rate with 3.972% APR
    • 30 year Fixed FHA at 4.000% rate with 5.178% APR
    • 30 year Fixed Jumbo mortgage at 4.875% rate at 5.098%
    • 5/1 ARM Jumbo mortgage at 3.625% rate at 3.657% APR
    • 1/1 ARM Jumbo mortgage (0 Points) at 3.350% rate at 3.957% APR

    Mortgage rates are always changing, all rates were quoted at 11:15 A.M., September 1, 2010.

    For more information on our rates and to learn more on our mortgage products please call at 877-868-2503 to speak with a licensed mortgage professional.

    * All rates shown are for 30 day rate locks. Longer locks available. The APR for conventional loan amounts is calculated using a loan amount of $417,000, 2 points, a $495 application fee, $400 appraisal fee, $715 underwriting fee and a $16 flood certification fee. The APR for jumbo loan amounts is calculated using a loan amount of $500,000, two points, a $495 application fee, $400 appraisal fee, $715 underwriting fee and a $16 flood certification fee. The APR for FHA loan amounts is calculated using a loan amount of $295,000, two points, a $495 application fee, $450 appraisal fee, $715 underwriting fee and a $16 flood certification fee. Some rates and fees may vary by state. All interest rates listed are for qualified applicants with 720 or higher FICO and 80 LTV and are subject to mortgage approval with full documentation of income. All rates are subject to change without notice.

    All rates shown are for 30 day rate locks with 2 Points unless otherwise noted.

    Category: Mortgage Rates
  9. California Foreclosure Prevention Initiative Defeated

    By Michael Kraus on September 1, 2010

    California ranks fourth in the nation in foreclosure rate, and has had more than 340,000 foreclosures so far this year.  In response to this crisis, a bill (SB 1275) designed to prevent further foreclosures was introduced in the California General Assembly earlier in the summer.  Yesterday, the bill was defeated in the California Assembly by a vote of 29-36.

    The bill would have required lenders to take four action steps before they could serve a borrower with a Notice of Default.  In brief, the steps would have been:

    • Mail a notice to the borrower that would advise them of their rights during the foreclosure process.
    • Mail the borrower applications for loan modification or foreclosure alternative programs.
    • Evaluate all requests for loan modification.
    • Mail those who are denied modification a detailed explanation for the denial

    The bill would also allow borrowers some form of legal recourse if they felt they had been unfairly foreclosed upon.  Borrowers would be able to seek injunctions against foreclosure and sue for damages if they were unjustly foreclosed upon.

    Continue Reading…

    Category: Mortgage Rates
  10. Today’s Mortgage Rates at Total Mortgage for Wednesday, September 1, 2010

    By Michael Kraus on September 1, 2010

    It’s hard to believe it is already September.  Soon the weather will turn cold and the days will become short.  At least we have football to look forward to….

    So while you are pondering who to take in your upcoming fantasy football draft, take a moment to look at the incredibly low mortgage rates we are offering at Total Mortgage today.  Risk averse investors have been fleeing the stock market in droves, and are seeking the relative safety of the bond market, driving down bond yields, and taking mortgage rates with them.  According to Freddie Mac’s most recent survey of rates, the average mortgage rate on a 30 year fixed rate mortgage is now at 4.36 percent.  Not since the 1950s has it been this inexpensive to finance a mortgage.

    We use in house underwriting, processing, and the latest mortgage technology to reduce our costs and pass the savings along to you.  Total Mortgage has some of the lowest mortgage rates in the industry, consistently beating the national average. 30 year fixed rate mortgages are available to qualified buyers at 4.125 percent and a 4.323 percent APR. For borrowers who would like to retire their mortgage more quickly, 15 year fixed rate mortgages are available at 3.625 percent with an APR of 3.972 percent.

    If you are a first time homebuyer or do not have a lot of money for a down payment, an FHA mortgage could be great for you.  The current mortgage rate on a 30 year fixed FHA mortgage is 4.000 percent with a 4.349 percent APR.  FHA mortgages have become more and more popular in the last couple years, and we are experts at doing them.

    Continue Reading…

    Category: Mortgage Rates

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