Mortgage Rates & Trends: Mortgage Blog

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  1. Affordable Adjustable Rate Mortgages Available at Total Mortgage

    By Staff on July 21, 2010

    Total Mortgage currently has some of the most affordable adjustable rate mortgages (ARM) in the mortgage business. With a variety of conforming and jumbo ARM’s Total Mortgage will tailor a mortgage product that fits you individual needs.Adjustable Rate Mortgages at Total Mortgage

    Amongst Total Mortgage’s conforming adjustable rate mortgages (ARM) are both a 5/1 and 1/1 mortgages, both of which are available with some of the lowest ARM mortgage rates. A 5/1 conforming ARM is currently available with a 3.000 percent mortgage rate and a 3.481 percent APR. A 1/1 conforming ARM, with borrowers paying no points, is being offered with a mortgage rate of 3.350 percent and a 4.078 percent APR.

    Continue Reading…

    Category: Adjustable Rate Mortgages, Mortgage Rates

  2. FHA ARM: Great Alternative For Many Home Buyers Part 2

    By BillSchettler on October 13, 2009

    Part 1 | Part 2
    fha ARM Rates

    As mentioned earlier, the advantages that an FHA ARM holds are twofold. In the first place the FHA ARMs have all of the same benefits that a fixed FHA mortgage has:

    • 96.5% Loan to Value (LTV) on purchase transactions
    • 97.75% LTV on rate and term refince transactions
    • 85% LTV on cash-out refinances
    • Less expensive Mortgage Insurance
    • 6% Seller Concession allowed
    • Expanded Credit criteria
    • Assumable
    • Streamline Refi available

    What are the Terms of an FHA ARM Loan?

    In addition to these benefits, the FHA ARM Mortgage has very attractive terms as well. The FHA ARM uses the 1 year TBill (CMT) as its index. The CMT has historically been a fairly steady index not prone to wild swings in rate. More importantly, the Margin for FHA ARMs is set at 2% which is lower than other more traditional (Agency) ARMs. Typically the Agency ARMs have margins ranging between 2.25% and 2.75%. Remember, when the fixed period for an ARM ends, the Index is added to the Margin to establish the new rate. So the lower the Margin (which never changes) is the lower your chances are for big jumps in rate in any given adjustment period. To further protect the FHA ARM borrower from big moves in any given adjustment period, the Caps for an FHA ARM are very favorable. In comparison to Agency ARMs which typically have Caps of 2/2/6 for CMT ARMs or 5/2/5 for LIBOR ARMs, the FHA ARMs Caps of 1/1/5 are real game changers. The fact that the rate can change no more than 1% in any given adjustment period is a real advantage over other types of ARM products, particularly the LIBOR ARMs that can change as much as 5% in the first year of adjustment!

    Who is the FHA ARM Mortgage For?

    As I have said in previous blogs about Adjustable Rate Mortgages, the ARM product is not always the best choice for every mortgage customer but then again neither is the ubiquitous 30y Fixed either. If you are on a career path that requires relocating often or are nearing retirement age and know you will be moving to sunnier climes, or are simply looking for the lowest possible rate in the near term; the ARM is something to seriously consider. The FHA ARM with all the advantages it holds in terms of qualifying and in very reasonable Cap, Margin and Index terms should be something that works its way into every mortgage decision maker’s view. Please contact one of our mortgage professionals today to discuss great FHA ARM rates as well as industry leading rates on the entire spectrum of available mortgage products.

    If you have any question that you would like to get answered by our expert mortgage brokers, please email us or call us at 1-877-868-2503. See our lowest FHA ARM Mortgage Rates.

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    Category: Adjustable Rate Mortgages, FHA

  3. FHA ARM: Great Alternative For Many Home Buyers Part 1

    By BillSchettler on October 13, 2009

    Part 1 | Part 2

    mortgage-rates

    FHA ARM Rates

    FHA Adjustable Rate Mortgages (ARMs) have always held an important place in the mortgage product spectrum. They have faded a little in popularity in the current era of historically low fixed rates but they still have a place in today’s market. ARMs have traditionally had lower rates than fixed rate mortgage products and this remains true even in this market. They allow a borrower who does not need the security of a fixed rate mortgage to get the benefit of lower rates and the cash flow advantage afforded by these lower payments. While not the right product for all scenarios, the ARM is still a great alternative for many borrowers. With that said it is also important to note that there are some very strong FHA ARMs available out there that not only have all of the advantages of a fixed FHA mortgage (low downpayment, expanded credit criteria, etc.) but have very strong ARM terms and great rates.

    What is an FHA ARM?

    First a quick primer on Adjustable Rate Mortgage products in general: ARMs are mortgage products that have a fixed rate for a set number of years and then begin to adjust (typically once a year) for the remainder of the term of the mortgage. The fixed term of these loans can vary; 3/1 ARMs have a fixed rate for 3 years, 5/1 Arms are fixed for 5 years, 7/1 fixed for 7 years and so on.

    FHA ARM Rate
    How much an FHA ARM rate can adjust at the end of the fixed period is based on a ‘Margin’ that is established at the beginning and will not change through the life of the loan and an ‘Index’ which is ever changing. On most ARM loans the ‘Index’ used is typically either the 1 yr T Bill (CMT) or the 12 month LIBOR. There are products that use other indexes but the vast majority of ARMs are tied to these two. At the end of the fixed period the Margin is added to the current Index and this sum is the new rate for the next 12 months.

    FHA ARM Rate Caps
    This ‘new’ rate is subject to ‘Caps’ set forth at the beginning of the mortgage that establish maximum amounts the rate can adjust in any one period and over the life of the loan. On traditional ARMs sold by Fannie Mae and Freddie Mac (Agency ARMs) these Caps are in the 2%-6% range. FHA ARM Caps are typically set with 3 numbers relayed in a format that outlines the first adjustment cap/life cap. So with an ARM that has Caps of 5/2/5, the rate can adjust up to 5% in the first adjustment period, 2% every year thereafter, and has a lifetime cap of 5%. As you can see the combination of favorable Margin, Index and Cap terms will often be the determining factors when considering an ARM.

    Continue to Part 2: FHA ARM: Great Alternative For Many Home Buyers Part 2

    If you have any question that you would like to get answered by our expert mortgage brokers, please email us or call us at 1-877-868-2503.

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    Category: Adjustable Rate Mortgages, FHA

  4. Adjustable Rate Mortgages(ARM) are Still Here! Part 2

    By Dave Jefferlone on August 26, 2009

    Part 1:  Adjustable Mortgage Rates (ARM) a re still here | Part 2

    Here are some questions you need to consider:

    How long do I plan to own this home? (If you plan to sell soon, rising current mortgage rates may not pose the problem they do if you plan to own the house for a long time.)  It is my opinion this should be the number 1 factor when considering if an ARM is right for you

    Is my income enough—or likely to rise enough—to cover higher mortgage payments if current mortgage rates go up?

    Will I be taking on other sizable debts, such as a loan for a car or school tuition, in the near future?

    Do I plan to make any additional payments or pay the loan off early?  I strongly suggest everyone should attempt to make additional principle payments as often as possible.

    How ARMs work?

    The initial rate and payment amount on an adjustable rate mortgage will remain in effect for a limited period—ranging from just 1 month to 3 years, 5 years , 7 years and 10 years. If you think an adjustable rate mortgage will work for you I would not consider any term less than a 3 year arm.

    If lenders or brokers quote the initial rate and payment on a loan, ask them for the Annual Percentage Rate (APR). If the APR is significantly higher than the initial rate, then it is likely that your rate and payments will be a lot higher when the loan adjusts, even if general interest rates remain the same.

    There are 4 vital components to an adjustable rate mortgage:

    1. The adjustment period. This is when the interest rate on your loan will adjust. For illustration purposes we I will use a 5/1 adjustable rate mortgage and a 5/6 adjustable rate mortgage.  The first number is the number of years your initial interest rate on your mortgage will be fixed for.  In the case of the 5/1, the initial interest rate will be fixed for the first five years (60 months and will  adjust every 1 year afterwards.

    5/6 again the initial interest rate will be fixed fir the first five years but then the rate could adjust every 6 months thereafter.The interest rate on an ARM is made up of two parts: the Index and the Margin, which are the 2nd and 3rd vital components.

    The index is a measure of interest rates generally, and the margin is an extra amount that the lender adds to the index when calculating your interest rate.  Lenders base ARM rates on a variety of indexes. Among the most common indexes are, the London Interbank Offered Rate (LIBOR) and the the rates on 1-year constant-maturity Treasury (CMT) securities.  Today the Libor index is at 1.39 which most agency loans are base on and the Treasury Index is at .47 which most FHA loans are based on. The margin can vary per loan program but generally are 1.75 -2.00 for FHA loans and 2.25% -2.75% for Agency Fannie Mae and Freddie Mac loans

    The forth vital component of an adjustable rate mortgage are the “caps” This is the amount your interest rate may adjust at each adjustment period.  The most common caps are 1/1/5 for FHA and 2/2/5 or 5/2/5 Agency loans 2/2/5 or 5/2/5.

    The first number is the maximum % your rate can adjust upon the first adjustment period, the 2nd number is the maximum % the rate can adjust at each subsequent adjustment period and the 3rd number is the maximum % the interest rate can adjust over the life of your loan.  So a 5/1  adjustable rate mortgage based on the LIBOR index with caps of 2/2/5 may adjust up to 2% after 5 years on the 61st payment, then every year (12 payments) there after may adjust another 2%  and may adjust a maximum of 5%.  PLEASE NOTE the adjustments may be adjusted either up or down.  Today’s libor index is 1.39 so if the margin is 2.25 based on the Libor index and your adjustable rate adjusted today then the rate would be 1.39 + 2.25 = 3.64. (Please remember today’s current mortgage rates are still at historically low levels and will probably not stay here forever)

    Most people have a tendency to consider if an adjustable rate mortgage is the right loan program for them based on the initial fixed rate loan term. When comparing an adjustable rate mortgage to a 30 year fixed rate mortgage  For instance if they are planning on moving within the next 5 years then a 5 year adjustable rate mortgage would be more beneficial for them, if they plan on moving in 7 years then a 7 year adjustable rate mortgage would be more beneficial than a 30 year fixed rate mortgage.

    The following comparison will show you how a 5/1 adjustable rate mortgage with a margin of 2.25 and caps of 2/2/5 @ 3.875% interest rate will take you more than 7 years to catch up to what you would have paid on a 30 year fixed rate mortgage at 5.00 interest rate assuming the adjustable rate mortgage adjust at the maximum allowed at each adjustment period.

    Comparison of ARM and Fixed Rate Mortgage

    300,000 Initial Mortgage 5/1 ARM @ 3.875% with caps of 2/2/5 30 year fixed @ 5.00%
    Monthly P & I payments 1-60 $1,410.71 $1,610.46
    Monthly P & I payments 61-72 $1,724.08 (@ 5.875%) $1,610.46
    Monthly P & I payment 73-84 $2,057.61 ( @ 7.875%) $1,610.45
    Total P & I payments after 60 months $84,642.60 $96,627.60
    Total payments 61-72 $20,688.96 $19,325.52
    Total P & I payments after 72 months $105,331.56 $115,953.12
    Total payments 61-72 $24,691.32 $19,325.52
    Total P & I payments after 84 months $130,022.88 $135,278.64

    As you can see in the example above you will save @ 12k after 5 years, @10k after 6 years and @ 5k after 7 years by having a 5/1 adjustable rate mortgage instead of a 30 year fixed rate mortgage.

    At the end of the day you have to feel comfortable with the decision you make.  I wanted to open your eyes to some facets of an Adjustable Rate Mortgage you may not have been aware of.  Call one of our experienced mortgage professionals at Total Mortgage Services to discuss which loan program would best suit your individual needs.

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    Category: Adjustable Rate Mortgages, Current Mortgage Rates

  5. Renting versus Owning: The Scales Are Tipping to Ownership

    By Robert Hyder on August 26, 2009

    rent-or-buy

    For most, the biggest part of the American dream is owning a home. For those Americans who are currently renting, the scales are beginning to balance and shift toward homeownership in the great debate of whether to rent or buy a home. Besides building equity for the future, the three major components that are tipping the scales in the favor of homeownership are the declining values of homes, historically low mortgage rates and the federal government’s $8,000 tax credit for first-time homebuyers.

    For an additional $221 (estimated per an Associated Press analysis of 45 metro areas for the first quarter of 2009), renters can buy their own home. With the gap between a median-priced home and a median rent down to $221 from $777 just three years ago, this realization could signify a quicker conclusion to the national housing crisis if renters start buying up available housing. Some areas of the country have an estimated gap of approximately $100.

    As home values have continued to decline over a two-year period, the timing couldn’t be better for renters to delve into the realm of homeownership. The National Association of Realtors recently reported that the median home price in the United States peaked in 2006 at just above $230,000. Today, the median home price has fallen over 25% to well below $175,000.

    If this weren’t enough, current mortgage rates are still hovering near historic lows. Federal Reserve Chairman Ben S. Bernanke recently stated that he expects current mortgage rates to remain “exceptionally low for an extended period.” But don’t wait too long, as rates unexpectedly skyrocketed last month, but have since settled a bit.

    In addition to the historically low mortgage rates, first-time homebuyers can take advantage of the $8,000 federal tax credit. Only available until November 30, 2009, this tax credit can be utilized immediately, rather than waiting to file taxes at the beginning of 2010. It is important to note that this tax credit does not have to be repaid, unlike the tax credit from 2008 that was more comparable to an interest-free loan that must be repaid through tax returns over a 15-year period.

    So if you’re currently renting, don’t just throw your money away on rent. You owe it to yourself to at least take a look at the possibility of owning your own home.

    –Robert Hyder

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    Category: Adjustable Rate Mortgages, Condominium, Credit Score, Current Mortgage Rates, FHA, Fixed Rate Mortgages, General, Mortgage Broker/Banker, Mortgage Insurance, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Purchase, Stimulus

  6. Current Mortgage Rates & First Time Home Buyers Tax Credit

    By Dave Jefferlone on August 24, 2009

    Current Mortgage Rates Drop

    current mortgage rates, mortgage rates, adjustable rate mortgage

    Attention!

    First Time Home Buyers:

    Federal Government’s 8 thousand dollar tax credit is set to expire in 3 months; 5 days and 8 hours

    I am seeing quite a few headlines stating the housing market is improving a lot faster than expected.  If you happened to be paying attention to the Bond market last Friday you would have noticed bond prices were down quite a bit, current mortgage rates were up higher, giving back some of their momentum after rates have been falling 7 out of the last 9 days.

    As of this writing today, current mortgage rates started out the day continuing their upward trend from Friday only to start falling again and falling by a noticeable amount by mid day which causing lenders to re-price for the better.  I cannot say for sure which fueled rates to drop but I may guess it was the announcement the Federal governments bought 5.6 billion dollars of Fannie, Freddie and the federal Home loan’s debt on Friday which also lead to both Fannie and Freddie’ stock up about 70% or more at one time today.
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    Friday saw current mortgage rates rising due to the bond market falling and the stock market increasing.  The latest report on existing home sales helped fuel the stock market on Friday. It was released that existing home sales in July posted the highest monthly increase since 1999. Consensus was existing home sale were expected to rise at an annual pace of 5 million yet they increased to an annualized rate of 5.24 in July from a pace of 4.89 in June.

    The increase can be tied mainly to the influx of the first time home buyers entering the housing market.  It was stated; first time home buyers were buying one out of every three homes.  The tax credit, I would say has been a highly successful tool in helping the real estate market rebound.  Historically low current mortgage rates along with it being a buyers market in most markets due to low housing prices also helped fuel the increase.

     I wish I had a crystal ball.  It will be very interesting to see what will happen to the housing market and the economy in general when the 1st time home buyers tax credit incentive program expires on Nov 30th, 2009 if the government does NOT extend or reissue it. 

    - Unemployment is still rising and expected to rise through the beginning of 2010,
    - Consumer confidence is still at unacceptable lows for a recovery to continue and endure. Since a lot of this recovery is due to the housing market, it would definitely be a shame is waste the momentum we are experiencing now.
    - The prime house buying season will be over with when it does expire leading to what I would guess be another reason for a decrease in home sales which on December 1st, 2009 thru the winter months will need a big boost

    Adjustable rate mortgages, especially the 5/1 ARM is still an extremely attractive alternative to a 30 year fixed rate mortgage depending on your individual circumstances.
    Today, a current interest rate for a 5/1 ARM can be had at t 3.25% -3.5% with about 1.50 – 2.00 points. 

    Since it is a buyers market it would definitely not be out of the realm of possibilities to have the seller pay for the 1.5 – 2% so you can be locked into a ridiculously low interest rate for 5 years.

    Category: Adjustable Rate Mortgages, Current Mortgage Rates, General, Mortgage Rate Trends and Analysis

  7. Adjustable Rate Mortgages Are Still Here! Part 1

    By Dave Jefferlone on August 21, 2009

    Part 1 |  Part 2: Compare ARM with Fixed Rate Mortgages

    Adjustable Rate Mortgage (ARM)

    adjustable rate mortgage, arm mortgage rates

    - Please allow me to introduce myself…

    Hello…can you see me?

    Can you hear me?  You may have thought I have left the building but I am still here alive, well and kicking.

    Look up; I am standing right here in front of you waiving my ARMS up in the air.

    I am extending my ARM offering my hand to you to shake your hand.

    Freddie Mac just released their interest rate numbers and stated current mortgage rates were at their lowest levels since May, 2009.

    Freddie Mac said “The average rate for a 30-year fixed-rate mortgage was 5.12 percent, down from 5.29 percent last week. At this time last year, the average rate for 30-year fixed-rate mortgages was 6.47 percent.

    They said “The average rate on a 15-year fixed-rate mortgage was 4.56 percent, down from 4.68 percent last week, according to Freddie Mac”

    If you happen to read Freddie Mac’s report way down at the bottom almost forgotten was…

    Rates on five-year, adjustable rate mortgages averaged 4.57 percent, down from 4.75 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.69 from 4.72 percent.  If you do the math here the five year adjustable rate mortgage fell more than the 30 yr fixed.….

    ARM Mortgage Rates:

    If you are paying attention you will realize  ARM rates are AWESOME!!!

    While Freddie Mac’s numbers have 5 year ARM rates about .60 lower than the 30 year fixed rates, here at Total Mortgage, today our rates on a 3/1 arm are @ 1.25% lower than the 30 year fixed, the 5/1 arm is @1.125% lower than the 30 year fixed and the 7/1 is @ .75 lower than the 30 year fixed for conforming loans.

    What is an adjustable rate mortgage?

    The following is according to the Federal Reserve.

    An adjustable rate mortgage differs from a fixed-rate mortgage in many ways. Most importantly, with a fixed-rate mortgage, the interest rate stays the same during the life of the loan.

    With an adjustable rate mortgage the interest rate changes periodically, usually in relation to an index and payments may go up or down accordingly.

    To compare two adjustable rate mortgages, or to compare an adjustable rate mortgage with a fixed-rate mortgage, you need to know about indexes, margins, discounts, caps on rates and payments, negative amortization, payment options, and recasting (recalculating) your loan. (If any Arm program you may be interested in has negative amortization, which means the principle balance on your mortgage is going up even after making your required payments on time or is susceptible to future recasting  run away as fast as you can)

    You need to consider the maximum amount your monthly payment could increase. Most importantly, you need to know what might happen to your monthly mortgage payment in relation to your future ability to afford higher payments.

    Against these advantages, you have to weigh the risk that an increase in mortgage rates would lead to higher monthly payments in the future. It’s a trade-off—you get a lower initial rate with an adjustable rate mortgage in exchange for assuming more risk over the long run.

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    Category: Adjustable Rate Mortgages, Mortgage Rate Trends and Analysis

  8. Current Mortgage Rates and 5/1 ARM Options

    By Dave Jefferlone on August 11, 2009

    Current Mortgage Rates Continue to Fluctuate

    current mortgage rates, mortgage rates, 5/1 arm

    Analyzing the Mortgage Trends:

    After a very rough week last week which showed current mortgage rates spike up, yesterday was like a much needed breath of fresh air.  Mortgage rates today opened lower fluctuated up and down a little from their opening and then ended up lower then where they opened at.  We always appreciate when the interest rates end up lower than where they opened…

    Last week saw current mortgage rates rise due to all of the positive news pertaining to home sales, unemployment/employment numbers and also reported earnings from a number or corporations. This news along with many articles from “experts” saying the recession will end in the 3rd quarter of 2009 helped stocks in the DOW, NASDAQ and S&P 500 show significant gains. Today there was not any significant news to push stocks higher.  It is believed investors were taking a little profit taking from their stock portfolios in light of last weeks gains and putting those funds into bonds which raised the bond prices and lower the yield, lowered the interest rates

     

    Some random thoughts…

    If you have a recent Chapter 13 bankruptcy and you are thinking about purchasing a home or refinancing your current mortgage FHA guidelines only require you have been in the Chapter 13 plan for at least 12 months, your trustee shows all of your payments have been paid as agreed and your trustee approves in writing for you to obtain a new mortgage or new financing.

    With 30 year fixed rates creeping up to the mid 5 percent, a 5/1 fully amortized adjustable rate mortgage may be a very viable option for you.  If you are just graduating with your college degree and entering the job market, buying your first home and think you will or possibly may be relocating within the next 5-6 yrs, why take out a 30 year fixed mortgage when you can still get a 5/1 adjustable rate mortgage in the mid 4’s.

    We are all aware of the recent declines in the housing market over the last couple of years. Condominiums have been hardest hit yet they may also present the greatest opportunity or value in today’s market.  While underwriting guidelines have been getting a lot stricter and this is especially evident for condominiums, it may behoove you to do a bit of research so your transaction will go a lot smoother and quicker before either buying or selling a condo.  Fannie Mae and also FHA have approved condominium projects.  Most Fannie Mae programs will also allow a condominium project which is approved by an FHA Mortgage. (Unfortunately if it is approved by Fannie Mae it does not automatically mean it will be approved by FHA although the chance that it will is a lot higher since it has already been reviewed)  If you are looking for a condominium to buy, you may want to start looking at condo’s approved on FHA’s site.   https://entp.hud.gov/idapp/html/condlook.cfm.  You can search by state, city, zip or condo association’s name.  Fannie Mae’s approved condo’s (click on the link scroll down, find the appropriate state and click) https://www.efanniemae.com/sf/refmaterials/approvedprojects/index.jsp .  If you are selling a condo, you may also want to check and see if it is approved on either of these lists. If it is, it could be a very strong selling point.  Please do not get discouraged if your condo project is not listed above.  Call one of our experienced loan professionals at Total Mortgage to guide and advise you on the possibility of the condo you may want to purchase being an approved project.

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    Category: Adjustable Rate Mortgages, Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis

  9. Mortgage Rates to Rise Over 6%?

    1 By Robert Hyder on August 10, 2009

    Percent growth

    Since early last week, mortgage rates leaped from around 5% to approximately 5.5%, steadily moving toward 6%. Even though the 10-year Treasury rate is back down today, it is certainly not down enough to make up for the huge jump it made last week. As the 10-year Treasury eventually makes its way back to the 4% range, experts believe mortgage rates will move swiftly to 6% and beyond.

    As mortgage rates slowly inched up last month, homeowners hoping to refinance lost interest rather quickly. When and if mortgage rates do climb back to the 6% range, it will be interesting to see how the housing market reacts to purchases, as well.

    While mortgage rates are still low, existing homeowners need to act now to refinance. Those looking to purchase their first home should act now for two reasons: rates appear to be on the rise and the $8,000 first-time homebuyer tax credit is due to expire on November 30, 2009, just over three months from now.

    –Robert Hyder

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    Category: Adjustable Rate Mortgages, Current Mortgage Rates, Fixed Rate Mortgages, General, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Purchase, Refinance, Stimulus

  10. Improvements Coming For Mortgage Disclosures

    By Robert Hyder on July 24, 2009

    disclosure1

    In conjunction with the Obama administration, key Democratic party leaders on Capitol Hill are looking to remove consumer-protection authority from the Federal Reserve and delegate it to a new regulatory agency, yet to be created. In addition, plans are in motion for new rules concerning an overhaul to the timing and content of disclosures for borrowers of first and second mortgages.

    These comprehensive changes are geared towards helping homeowners to clearly understand the disclosures associated with their mortgage loans so they can make more informed decisions.     Having the consumer-protection authority since 1994, the Federal Reserve has been targeted for unsuccessfully acting on its authority until 2008. By then, it was too late and the housing crisis had its teeth firmly embedded into the American landscape.

    The new disclosure proposal would provide borrowers with a simplified document outlining the costs associated with a mortgage loan, along with an unambiguous annual percentage rate (APR). Additionally, borrowers would be provided with a one-page question-and-answer document warning of loan features that may cause risks, such as balloon loans, mortgages with negative amortization and in some instances, adjustable-rate mortgages (ARMs).

    Mortgage brokers typically earn their commission on what is called a yield spread premium (YSP). Essentially, the amount of YSP a mortgage broker earns depends on how high or how low of a mortgage rate they sell to a borrower. The new proposal would effectively eliminate yield spread premiums, thus preventing borrowers from being guided toward risky loans that would potentially increase commissions.

    –Robert Hyder

    Category: Adjustable Rate Mortgages, General, Mortgage Rate Trends and Analysis, Purchase, Refinance
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