Falling mortgage rates make owning a home more affordable. Mortgage rates are directly tied to monthly mortgage payment so as mortgage rates drop, so does the cost of home-ownership.  

It’s a money-saving time to buy a home in Tacoma — or to refinance one. Mortgage rates have never been this low in history.

According to Freddie Mac, last week, the average 30-year fixed rate mortgage fell to 3.87% nationwide for borrowers willing to pay an accompanying 0.8 discount points plus closing costs. 0.8 discount points is a one-time closing cost equal to 0.8 percent of your loan size, or $800 per $100,000 borrowed.

This represents an incredible value as compared to February of last year. 

It was exactly one year ago that mortgage rates begin their long slide lower. On February 11, 2011, the 30-year fixed rate mortgage reached its peak for the year, reading 5.05% in Freddie Mac’s nationwide survey. If you are among the many U.S. households that bought or refinanced a home around that time, you could choose to replace your current home loan with a new one and save close to 13% on your monthly mortgage payment.

13 percent saved on your mortgage is a noteworthy statistic.

Look at this 30-year fixed rate mortgage payment comparison over the last 12 months :

• February 2011 : $539.88 principal + interest per $100,000 borrowed
• February 2012 : $469.95 principal + interest per $100,000 borrowed

Because of falling mortgage rates, a homeowner with a $250,000 30-year fixed rate mortgage would save at least $175 per month just by refinancing into a new loan at today’s mortgage rates. That’s $2,100 in savings per year. 

Even after accounting for discount points and closing costs, the “break-even point” on a mortgage like that can come relatively quickly.

We can’t predict mortgage rates so there’s no promise rates will stay like this forever. If you’re planning to buy a home or refinance one, the best way to keep your monthly payments down is to lock your rate while rates are still low.

The market looks ripe for that now. 

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1. Reduce Long-Term Loan Costs With A 15-Year Fixed Rate Mortgage For as low as 30-year fixed rate mortgage rates are...
2. Mortgage Payments Fall 12% Since February 2011 As mortgage rates drop, so do housing payments. It's a...
3. Choosing A 15-Year Fixed Rate Mortgage Over A 30-Year Fixed Rate Mortgage If you've ever considered a 15-year loan term, it's a...

With mortgage rates at all-time lows, you may be asking “Is now a good time to refinance?”. This short interview from NBC’s The Today Show offers good insight.

Refinancing a mortgage is about more than just “low rates”. For example, there are costs associated with giving a new mortgage and even with the average, 30-year fixed rate mortgage near 4 percent, the costs of a such a move can outweigh the benefits — both in the short- and long-term.

The video originally ran in September when mortgage rates averaged 4.09%. Rates are different today, but the offered advice remains relevant.

Some of the key points raised include :

• The lowest rates come with the highest costs. Consider a slightly higher-rate option from your bank.
• Falling home values may make it harder to qualify for a refinance in the future. Your best time to act may be now.
• If you’re many years into a 30-year loan, you can consider switching to a 15-year mortgage to avoid “resetting” your term.

And, lastly, the interviewee makes a strong point that your refinance should save you enough money to make paying the closing costs “worth it”. Make sure the break-even point on your closing costs versus your monthly savings occurs within a reasonable time frame.

At 4 minutes, the The Today Show video is short, but dense with quality information. For follow-up on whether a refinance makes sense for your situation, be sure to talk with your loan officer.

Related posts:

1. 5-Year ARM Falls To Historic Lows The interest rate differential between fixed-rate and adjustable-rate mortgages continues...
2. Choosing A 15-Year Fixed Rate Mortgage Over A 30-Year Fixed Rate Mortgage If you've ever considered a 15-year loan term, it's a...

Fed announced its plan to purchase Mortgage Backed Securities last week, and began buying them Monday. The Fed will announce the results each Thursday (This should be an interesting rate day).  The Fed is estimating 500b will be purchased. This process will continue gradually through June and should aid in pushing rates down until then. (Read between the lines, make sure your refinance or purchase before the end of July 2009, in order to take part in History) Market Forecast Week of January 5, 2009

As you can see from the chart it has not been pretty in the MBS Market. If my Technical Analysis serves me right; if we don’t fill Friday’s gap we are in trouble!

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Loans closed in May will have first payment dates of July 2009.

If April was a harbinger of things to come for May, Homeowners and Homebuyers will be the proud recipients of stable LOW Historic Mortgage Rates (see chart).  The FED will continue its Agency Mortgage-Backed Securities Purchase Program, which is will temporarily keep rates low.  Once the Purchase Program wraps, “Hello Carter era Rates”!

From the current analysis of MBS charts coupled with GOV subsides look to see rates stay low until late fall. If you are planning on purchasing or refinancing, now is the time to “Get off the fence” as both can take anywhere between 20 – 60 days to close.

April 2009 Mortgage Rate Chart

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For active home buyers who have yet to find the “right home”, long-term flatness like this is terrific.  While interest rates stay even, buyer purchasing power holds flat and pre-approval letters stay valid.

For buyers under contract or homeowners looking to refinance, though, the market’s pattern is a little more rough.  Although rates are holding steady week-to-week, the day-to-day action is quite different.  Bond markets are volatile and rate swings of a quarter-percent in a day have been common.

How good of a rate you get depends on day on which you shop. This complicates the process of “locking a rate” and makes it very hard for people trying to time a market bottom.

This week, though, the market may finally make a run and break its range.

Aside from it being an unusually data-heavy week, the Federal Reserve meets Tuesday and Wednesday to discuss monetary policy.  The data combined with the Fedspeak may push the markets one way or the other towards economic optimism or pessimism for the latter half of 2009.

Lately, it’s been a combination of the two — a “cautious optimism” — and that’s a big reason why mortgage rates have held in a tight range for so long.

Understand, though, that when mortgage rates finally do move, they’re going to move in a big way.  So, if you’re among the crowd looking for lower rates, the best possible outcomes you can hope for this week are:

• Weak consumer confidence data (Tuesday, Friday)
• Weak consumer spending data (Thursday)
• Falling “cost of living” calculations (Thursday)
• Fed concerns about deflation and/or recession (Wednesday)

Any of these four events would likely temper hope for a quick economic revival, sending mortgage rates lower.  On the other hand, if confidence or spending is strong, or the Fed has no regard for deflation or recession, expect mortgage rates to rise.

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Unfortunately, for many, the experience is the exact opposite. Unfulfilled promises to pay bills, the maxing out of credit cards and a total breakdown in communication frequently lead to the annihilation of at least one spouse’s credit. Depending upon how finances are structured, it can sometimes have a negative impact on both parties.

The good news is it doesn’t have to be this way. By taking a proactive approach and creating a specific plan to maintain one’s credit status, anyone can ensure that “starting over” doesn’t have to mean rebuilding credit.

The first step for anyone going through a divorce is to obtain copies of your credit report from the 3 major agencies: Equifax, Experian®, and TransUnion®. It’s impossible to formulate a plan without having a complete understanding of the situation. (Once a year, you may obtain a free credit report by visiting www.AnnualCreditReport.com.)

Once you’ve gathered the facts, you can begin to address what’s most important. Create a spreadsheet, and list all of the accounts that are currently open. For each entry, fill in columns with the following information: creditor name, contact number, the account number, type of account (e.g. credit card, car loan, etc.), account status (e.g. current, past due), account balance, minimum monthly payment amount, and who is vested in the account (joint/individual/authorized signer).

Now that you have this information at your fingertips, it’s time to make a plan.

There are two types of credit accounts, and each is handled differently during a divorce. The first type is a secured account, meaning it’s attached to an asset. The most common secured
accounts are car loans and home mortgages. The second type is an unsecured account. These accounts are typically credit cards and charge cards, and they have no assets attached.

When it comes to a secured account, your best option is to sell the asset. This way the loan is paid off and your name is no longer attached. The next best option is to refinance the loan. In other words, one spouse buys out the other. This only works, however, if the purchasing spouse can qualify for a loan by themselves and can assume payments on their own. Your last option is to keep your name on the loan. This is the most risky option because if you’re not the one making the payment, your credit is truly vulnerable. If you decide to keep your name on the loan, make sure your name is also kept on the title. The worst case scenario is being stuck paying for something that you do not legally own.

In the case of a mortgage, enlisting the aid of a qualified mortgage professional is extremely important. This individual will review your existing home loan along with the equity you’ve built up and help you to determine the best course of action.

When it comes to unsecured accounts, you will need to act quickly. It’s important to know which spouse (if not both) is vested. If you are merely a signer on the account, have your name removed immediately. If you are the vested party and your spouse is a signer, have their name removed. Any joint accounts (both parties vested) that do not carry a balance should be closed immediately.

If there are jointly vested accounts which carry a balance, your best option is to have them frozen. This will ensure that no future charges can be made to the accounts. When an account is frozen, however, it is frozen for both parties. If you do not have any credit cards in your name, it is recommended you obtain one before freezing all of your jointly vested accounts. By having a card in your own name, you now have the option of transferring any joint balances into your account, guaranteeing they’ll get paid.

Ensuring payment on a debt which carries your name is paramount when it comes to preserving credit. Keep in mind that one 30-day late payment can drop your credit score as much as 75 points. It is also important to know that a divorce decree does not override any agreement you have with a creditor. So, regardless of which spouse is ordered to pay by the judge, not doing so will affect the credit score of both parties. The message here is to not only eliminate all joint accounts, but to do it quickly.

Divorce is difficult for everyone involved. By taking these steps, you can ensure that your credit remains intact.

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Refinance Your Mortgage for Rate and Payment Reductions

Homeowners refinance for different reasons, but the process of refinancing a mortgage should result in some benefit to the homeowner.  A borrower may choose to refinance to obtain a lower interest rate and a lower monthly payment, or change the type of loan that they have. Borrowers who started with a high-interest sub-prime loan can often reap the rewards of an improved credit standing by refinancing. Some homeowners refinance to ‘cash out’ and take advantage of the equity they have earned, while others may choose to refinance to shorten their loan term and build equity more quickly.

One of the biggest reasons homeowners refinance their mortgage is to obtain a lower interest rate and lower monthly payments. By refinancing, the borrower pays off their existing mortgage and replaces it with a new one. This can often be accomplished with a no-points no-fees loan program, which essentially means at “no cost” to the borrower.

In the no-points no-fees scenario, the mortgage consultant uses rebate monies paid by the lender to pay off non-recurring closing costs for the borrower. These are “one time” fees such as escrow or attorney fees, title insurance, document preparation, tax service, flood certification, processing and underwriting fees, etc. The borrower is still responsible for recurring fees such as interim insurance, property taxes or insurance policy payments.

Refinancing typically occurs when mortgage interest rates drop significantly, but borrowers with recently improved credit scores (from paying off credit card debt, making mortgage payments on time, etc.) are often candidates for better interest rates as well. If you haven’t checked your credit score in a while, it’s a good time to call a mortgage consultant.

The question most asked is, “But why should I go back into a 30-year loan?”

There are two schools of thought on this subject, and the mortgage consultant should work hand-in-hand with the borrower’s financial planner to determine what works best for their mutual client.

One option is to take the route of the “same payment” refinance, and actually pay off the loan faster and save money on interest fees in the long-run. If refinancing results in a lower monthly payment, the borrower can still continue making the same payment they made in the original loan, and the extra money will be applied to the principal balance.

For example: Let’s say you have 25 years remaining in your current loan, and you refinance back to a 30-year loan with a slightly lower interest rate, resulting in a payment reduction of $200 per month. (Note: This is just an example. The actual amount could vary.) You could then take that extra $200 per month and apply it toward the principal on the new loan. At this rate, the loan will be paid off in 22 years and 4 months, which is 2 years and 8 months less than the original loan.

Regardless of the reason for the refinance, the mortgage consultant will need to know what the existing loan scenario entails, review the homeowner’s long-term goals, and provide a comprehensive analysis that compares and contrasts the various loan programs available.

Bear in mind, refinancing to obtain a lower interest payment could also result in a lower deduction at tax time. The homeowner’s mortgage consultant and financial planner should work hand-in-hand with their mutual client’s best interest in mind.
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Both Building Permits and Housing Starts were released today.  Building Permits were down over 61k from last month and Housing Starts down 62k..All though they are down this is a positive sign in the sense the supply is not increasing; it will take a tighter supply in order to clear the current inventory on the market.  Given the Foreclosure Moratoriums have come to an end, the housing number are welcomed, as we will start to witness an increases in foreclosures given the temporary delay in now gone.

I have one REO Agent friend who informed me that just last week he received 48 BPO request from banks, if only half hit the market that is HUGE.

The finger has been removed from the dike!

In a recent post by my idol; Tyler Durden he points out that we can’t hide from the massive wave of California Foreclosures that is ominously approaching.  While pointing out the fact he does not point to the reasoning.

Many borrowers in CA decided to take advantage of what we in the biz called the POA (Option ARM). Now that these ARM are set to adjust, the borrowers will need to refinance into a fixed.  Given the deterioration in housing values they will not have the luxury.  One item that is aiding in taming the massive amount of defaults is the fact that although the ARMS have adjusted the Index to which they are tied to has come down to the point they are paying less on their IO (interest only) payment then they would in a current fixed.  This temporary lull will only be brief. Once inflation kicks in and rates shoot up, the defaults will recommence as the homeowners walk!

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That’s why I offer the Strategy Session!

Every month, I am probably involved in more real estate transactions than even the top Realtors in town. I know this real estate market, and my experience can help you understand what the conditions of the market are now, and how that affects your negotiating position. Understanding your position (strengths & weaknesses) is the first rule of negotiating.

If you decide to buy a home or refinance, and if I can help you save time and money, and give you the tools & information to help make you a more confident and effective negotiator, I think you will remember me.
•    The average American family moves every 6 years, so
•    You’ll probably buy several homes and refinance several times in your lifetime. I hope to earn your business for life.
•    When someone really does an exceptional job for you, you probably tell your friends about it. I want to be someone you would tell your friends about.

First, I’ll need to understand your situation, what you’re trying to accomplish. Then we’ll identify any missing information you would need in order to be able to formulate a strategic plan. We’ll figure out how to get any information we might need.

If you can be prepared for what’s ahead, if you know the facts about the market, what homes are appraising and selling for, if you know how to improve your bargaining position, and if you know ahead of time exactly how high (or low, depending on whether you’re buying or selling or refinancing) you’re willing to go – you’re going to feel a lot more in control of the whole process. You’ll end up saving a lot of time – whether you’re on a one-month time frame or a one-year time frame. You will be able to avoid paying too much for a home mortgage, and our negotiating advice could very well save you thousands of dollars, and thousands more when you factor in the interest you would have paid on the difference.

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• NO Appraisal
• NO FICO Score
• NO Income Verification
• NO Asset Verification

After reading that there is little to nothing in order to qualify; you are probably asking what’s the catch, or this can’t be real.
First off FHA Streamlines have been around for years.  To start your current mortgage must be a FHA insured mortgage.  The intent is to lower the monthly principal and interest payments (P&I).  The Streamline must decrease P&I by the lesser of $50 or 10%.

A streamline is considered a Rate and Term refinance, thus paying off debt or taking cash out is not an option ($500 max cash back).

Credit guidelines are what make the FHA Streamline unique. The credit profile is based on mortgage only.  Although many lenders require a minimum 600 mid score.  The benefit of the mortgage only is the fact that liabilities are not calculated into a debt to income (DTI) ratio. Underwriting is only concerned with the performance of the FHA loan.  A delinquent mortgage is generally not eligible for streamline refinancing until the loan is brought current.

One of the Standout benefits of a Streamline is that Subordinate financing (2nd mortgage) may remain in place, regardless of the total loans against the property, with or without appraisals.  What this means is that for homeowners in declining markets and who are upside down on their mortgage, they can still qualify for today’s historic Mortgage Rates.

Contact Me NOW to get started!

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