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interest rates

Mortgage Rates hit all-time record low

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Mortgage Rates Hit All-time Record Lows For Second Consecutive Week

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates falling to new all-time record lows for the second consecutive week on mortgage securities purchases by the Federal Reserve and indicators of a weakening economy.

The Federal Reserve’s purchase of long-term fixed mortgage securities allowed the 15-year fixed-rate mortgage at 2.69 percent to fall below the 5-year ARM’s rate at 2.72 percent. The last time the average 15-year fixed was lower than the 5-year ARM was the week ending October 15, 2009.

News Facts

30-year fixed-rate mortgages (FRM) averaged 3.36 percent with an average 0.6 point for the week ending October 4, 2012, down from last week when it averaged 3.40 percent. Last year at this time, the 30-year FRM averaged 3.94 percent.
15-year fixed rate mortgages this week averaged 2.69 percent with an average 0.5 point, down from last week when it averaged 2.73 percent. A year ago at this time, the 15-year FRM averaged 3.26 percent.
5-year adjustable rate mortgages (ARM) averaged 2.72 percent this week with an average 0.6 point, up from last week when it averaged 2.71 percent. A year ago, the 5-year ARM averaged 2.96 percent.

Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Fixed mortgage rates fell again this week to all-time record lows due to the mortgage securities purchases by the Federal Reserve and indicators of a weakening economy. The final estimate of growth in Gross Domestic Product was revised down to 1.3 percent in the second quarter, representing the slowest growth in a year. In addition, personal incomes rose only 0.1 percent in August, while July’s increase was revised downward. And finally, pending home sales in August fell 2.6 percent, well below the market consensus forecast of a slight increase.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s MN and WI mortgage interest rates.

 

Mortgage Rates hit NEW Record Low

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All-Time Low: 30-Year Fixed-Rate Mortgage Averages 3.40 Percent

Minneapolis, MN:  Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates breaking their previous average record lows helping to keep homebuyer affordability high and refinancing strong to support an already improving housing market. All mortgage products, except the 5-year ARM, averaged new all-time record lows.

News Facts

  • 30-year fixed-rate mortgages averaged 3.40 percent with an average 0.6 point for the week ending September 27, 2012, down from last week when it averaged 3.49 percent. Last year at this time, the 30-year FRM averaged 4.01 percent.
  • 15-year fixed rate mortgages this week averaged 2.73 percent with an average 0.6 point, down from last week when it averaged 2.77 percent. A year ago at this time, the 15-year FRM averaged 3.28 percent.
  • 5-year adjustable-rate mortgages (ARM) averaged 2.71 percent this week with an average 0.6 point, down from last week when it averaged 2.76 percent. A year ago, the 5-year ARM averaged 3.02 percent.

Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Fixed mortgage rates continued to decline this week, largely due to the Federal Reserve’s purchases of mortgage securities, and should support an already improving housing market. For instance, the S&P/Case-Shiller® 20-city home price index rose 1.2 percent over the 12 months ending in July, reflecting the largest annual increase since August 2010. Moreover, 16 of the cities saw positive growth, led by Phoenix’s 16.6 percent gain. Additionally, new home sales in July and August had the strongest two-month pace since March and April 2010.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s MN and WI mortgage interest rates.

Mortgage Rates Back To Record Lows

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Minneapolis, MN:  Freddie Mac  today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates at or near their all-time record lows helping to keep homebuyer affordability high. The average 30-year fixed rate mortgage matched its all-time record low at 3.49 percent, and the average 15-year fixed fell to a new all-time record low at 2.77 percent.

News Facts

  • 30-year fixed-rate mortgagese averaged 3.49 percent with an average 0.6 point for the week ending September 20, 2012, down from last week when it averaged 3.55 percent. Last year at this time, the 30-year FRM averaged 4.09 percent.
  • 15-year fixed rate mortgages this week averaged 2.77 percent with an average 0.6 point, down from last week when it averaged 2.85 percent. A year ago at this time, the 15-year FRM averaged 3.29 percent.
  • 5-year adjustable rate mortgages (ARM) averaged 2.76 percent this week with an average 0.6 point, up from last week when it averaged 2.72 percent. A year ago, the 5-year ARM averaged 3.02 percent.

Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Following the Federal Reserve’s announcement of a new bond purchase plan, yields on mortgage-backed securities fell bringing average fixed mortgage rates to their all-time record lows which should aid in the ongoing housing recovery. New construction on one-family homes rebounded in August, rising by 5.5 percent to the fastest pace since April 2010. In addition, existing home sales increased by 7.8 percent in August to its strongest pace since May 2010.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s MN and WI mortgage interest rates.

Mortgage closing costs up because of government rules

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Closing costs have NOT gone down!

St Paul, MN:  Recent news releases from the government have been claiming that mortgage closing costs have gone down 7% due to new mandated government procedures that make it necessary for lenders to be more accurate when making estimates for borrower’s closing costs.

The spin masters are wrong on two fronts.

First, most lenders were already accurate in their initial closing cost disclosures, and the items that caused them to re-adjust their estimate later on are still there.  The only significant difference is the incredible burden of new paperwork, and disclosures that make absolutely no difference to the customer, or their bottom line.  For example, the old easy to read and understand one page Good Faith Estimate has been replaced with an incredible confusing three page Good Faith Estimate. The new form has been so badly received, that the Consumer Financial Protection Bureau is already working on a new form to replace the new form! Furthermore, re-disclosing forms for minor changes with mandatory wait times before a client can close on their loan has done more harm than good, and has significantly increased lender costs, turn times, and client frustration.

Secondly, due to the new rules, industry insiders have proven that closing costs have actually risen about $1200 per client.  Where the government spins it is that under the new rules, lenders are now forced to give home owners more “lender credits towards closing costs”. This sounds great, and it does actually lower the OUT-OF-POCKET average closing cost for many people. But, what is actually happening is that the client now has reduced options, and is being forced to pay more over time with a higher interest rate in exchange for those lender credit.

The bottom line?  Don’t be fooled by the spin. The government has mandated more rules, more paperwork, and less consumer choice all while claiming victory in reduced costs. The reality is it cost consumers significantly more in a higher mortgage interest rate over the length of the loan than they ever saved in initial closing costs.

30-year Fixed-rate Mortgage Moves Up, Averages 3.55 Percent

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30-year Fixed-rate Mortgage Moves Up, Averages 3.55 Percent

For the week ending Aug. 2, 2012

Freddie Mac released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgages rates breaking their streak of record-breaking lows and moving higher on mixed Eurozone and domestic economic data. Before this week, the average rate on the 30-year fixed had fallen to or matched record-low levels in 13 of the past 14 weeks.

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 3.55 percent with an average 0.7 point for the week ending August 2, 2012, up from last week when it averaged 3.49 percent. Last year at this time, the 30-year FRM averaged 4.39 percent.
  • 15-year FRM this week averaged 2.83 percent with an average 0.6 point, up from last week when it averaged 2.80 percent. A year ago at this time, the 15-year FRM averaged 3.54 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.75 percent this week with an average 0.6 point, up from last week when it averaged 2.74 percent. A year ago, the 5-year ARM averaged 3.18 percent.
  • 1-year Treasury-indexed ARM averaged 2.70 percent this week with an average 0.4 point, down from last week when it averaged 2.71 percent. At this time last year, the 1-year ARM averaged 3.02 percent.

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Follow this link to view today’s MN and WI mortgage interest rates.

How to pick an expert Mortgage Loan Officer

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With today’s super low mortgage rates, many people are looking to refinance or buy a home.  Everyday, they call lenders and ask “What is your rate.”  A seeming logical question to ask – but the reality is, the #1 most important aspect of a successful mortgage transaction is the quality of the Loan Officer.

When selecting a Mortgage Loan Officer, most people mistakenly call their local bank first and assume the banks have hired qualified people.  The reality is, most banks hire relatively new, and have low paid people as mortgage loan officers. Bank Loan Officers are NOT required to have any education, nor do they have to pass any sort of mandatory state or federal tests to be labeled a loan officer. Many of the big banks staff their 1-800 phone numbers with temps.  Yes, you heard me – temps!

The secret to selecting an expert is a combination of experience and training.

An experienced Loan Officer can help you understand the entire mortgage process and will be able to determine the best loan for you based on your individual goals. The right loan for someone who plans to stay in a home for three years and who has increasing income, may not be the right loan for someone who wants to have the loan paid off within 15 years and can afford a higher payment. The first borrower may find a five year adjustable rate mortgage the best option, while the second borrower may realize a 15 year low fixed rate mortgage matches her needs best.

Many borrowers find the mortgage process very frustrating. They feel they are kept in the dark about the process and problems that arise which cause delays. An experienced Loan Officer does not over promise, but rather explains the type of problems you may experience and the solutions to those problems. By keeping you informed and protected, an experienced loan consultant reduces your stress.

A poor inexperienced application clerk (loan officer) may suggest you fudge information on your loan application, or may not get a complete application out of laziness. The more complete and accurate your loan application is from the beginning, the faster and smoother your loan underwriting will be. The industry has evolved to the extent that fraudulent or misleading information is almost always uncovered by fraud alert systems that scrutinize employment and residency information. You are required to be honest in completing a loan application. Do not do business with any loan officer who tells you otherwise.

Lastly, an experienced loan officer can explain how closing costs and interest rates are dependent on one another. The more fees you are willing to pay, the lower your rate. The less fees you are willing to pay, the higher the rate. Many loan officers will tell you they have the best rate only to surprise you with unreasonable closing costs. It is best to work with a loan officer who explains all of your rate options with you, and who will suggest a rate and fee combination that works best to meet your long term goals. The right loan officer will always get an exact title fee quote so that the Good Faith Estimate provided to you is accurate.

Once you’ve started talking with a Loan Officer – verify their credentials.  All Loan Officers are required to have and display an NMLS number (Nationwide Mortgage Licensing System and Registry). Go to www.NMLSConsumerAccess.org, and type in your Loan Officers name or number.

You can see their employers, and work history – but more importantly, you can see if they are simply a registered but unlicensed Loan Application Clerk, or an actual Licensed, and Tested Loan Officer.  It is a bit trick to tell, but at the very bottom of their NMLS information page, it will say one of two things:

1) Federal Registration – then Federal Mortgage Loan Originator. This person is a unlicensed application clerk

2)  State Licenses / Registrations – They list one or more individual state licenses. This person is licensed and tested both Federally, and in each state listed.

For the largest financial transaction of your life, it is smart to NEVER WORK WITH JUST AN APPLICATION CLERK

 

Mortgage Rates break record low

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30-Year Fixed-Rate Mortgage Averages a Record-Breaking 3.49 Percent

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgages rates continuing their streak of record-breaking lows. The 30-year fixed rate mortgage averaged 3.49 percent, more than a full percentage point lower than a year ago when it averaged 4.55 percent. Meanwhile, the 15-year fixed-rate mortgage, a popular choice for those looking to refinance, also set another record low at 2.80 percent.

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 3.49 percent with an average 0.7 point for the week ending July 26, 2012, down from last week when it averaged 3.53 percent. Last year at this time, the 30-year FRM averaged 4.55 percent.
  • 15-year FRM this week averaged 2.80 percent with an average 0.7 point, down from last week when it averaged 2.83 percent. A year ago at this time, the 15-year FRM averaged 3.66 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.74 percent this week with an average 0.6 point, up from last week when it averaged 2.69 percent. A year ago, the 5-year ARM averaged 3.25 percent.
  • 1-year Treasury-indexed ARM averaged 2.71 percent this week with an average 0.5 point, up from last week when it averaged 2.69 percent. At this time last year, the 1-year ARM averaged 2.95 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage.

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Follow this link to view today’s MN and WI mortgage interest rates.

Low Mortgage Rates Continue

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Low Mortgage Rates Continue

Minneapolis, MN: Week over week mortgage rates continue to remain at or near historic lows, offering home buyers and mortgage owners interested in refinancing a chance to get amazing interest rates on their home loans.

According to the weekly survey by Freddie Mac, 30-year fixed rate mortgages have reached an average of 3.53% this week, a 0.03% decline under last week’s 3.56% average, and almost a full percent drop from this time last year’s rate, which was 4.52%. Meanwhile, 15-year fixed rate mortgages also dropped, reaching an average of 2.83% under last week’s 2.86% average, and well below last year’s average at this time which was 3.66%.

Treasury-indexed hybrid 5-year adjustable rate mortgages averages 2.69% under last week’s average of 2.74% and below last year’s average at this time which was 3.27%. 1-year treasury-indexed adjustable rate mortgages are at 2.69%, under last year’s average rate of 2.97%.

Vice president and chief economist for Freddie Mac, Frank Nothaft made a statement about the continued drop in mortgage interest rates, indicating a correlation between U.S. Treasury bond yields staying “in check” by the Federal Reserve’s “Operation Twist.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Follow this link to  view today’s MN and WI mortgage interest rates.

 

In Real Estate, When you snooze, you lose

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In Real Estate – When You Snooze, You Lose!

Minneapolis / St Paul, MN: A big shift in the housing market in our area has taken many by surprise. Any qualify house under $200,000 is selling in just days, with multiple offers, and above asking price.

With dwindling inventory, mostly from fewer foreclosures, increased demand with more competition because of terrific interest rates, we are seeing more and more multiple offers. This often happening soon after a property hits the market. It brings to mind the popular axiom “when you snooze you lose.” Wait too long to look at a great, well-priced property, or to make a strong offer, and you’ve lost your opportunity.

The problem some of you must confront is that even once you learn NOT to snooze and to move fast, you still might lose.

Why?? 

  1. The offer isn’t strong enough even at list price
  2. There are many offers (sometimes 10 and more)
  3. Cash buyers are too plentiful
  4. Lending rules on homes needing a little work

Is this the case with all properties? Certainly not. But we are seeing more competing offers at many price points, and new listings moving more quickly than in the past few years. This is not intended to scare you, and or make you feel that you cannot compete effectively. Simply understand the market has shifted in some significant ways and you need to be aware so you can react accordingly when you find a home you really like.

PAUSE – if you aren’t ready to jump, then you shouldn’t.  Just because things have heated up and there are “bidding wars” does not mean you should get bent out of shape or move quickly on an offer when you are really not ready. It’s a huge decision and an expensive one that shouldn’t be taken lightly. Make the decision that is right for you. And be prepared to live by it. 

Tips to help you win the deal: 

  • Be SURE to discuss any offer with your mortgage lender BEFORE writing the offer
  • Paying Cash? Have Proof of Funds ready to supply with your offer.
  • Know the comparable properties – this is what you pay a Realtor for.
  • Do not delay in making an appointment to see a hot new listing. Go now. Take time off work.
  • Do NOT assume a listing you like that has been languishing on the market will continue to sit there while you ponder. Remember…NEW BUYERS are hitting the market all the time and they might like the same house YOU do and be prepared to make a move
  • Know your budget (not just what you qualify to borrow) and make SURE you know what you are and are NOT willing to spend
  • Be ready to make an offer immediately if you like the house. Taking a night or two to “think about it” might be the kiss of death. REMEMBER THE TITLE OF THIS POST?!
  • Don’t get caught up in the auction-like atmosphere that can happen with multiple bids
  • Just because the tax value is significantly higher than the asking price DOES NOT mean you are getting a deal on the house.
  • Know that the home still has to appraise if you are getting a mortgage loan. Just because you are willing to spend more does not mean the bank will.

 

Mortgage Interest Rates Hit All Time Low

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Average 15-Year Fixed-Rate Mortgage Breaks Barrier, Falls To 2.97 Percent

MCLEAN, Va., May 31, 2012 /PRNewswire/ —  Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates following bond yields lower to new all-time record lows. The 30-year fixed averaged 3.75 percent setting a new all-time record low for the fifth consecutive week. The 15-year fixed averaged an unprecedented 2.97 percent bringing three of the four benchmark mortgage rates below 3 percent for the first time in Freddie Mac’s weekly survey.

NOTE: Rates reported by Freddie Mac are averages from last week, and may or may not be reflective of actual interest rates available today, nor your individual situation

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 3.75 percent with an average 0.8 point for the week ending May 31, 2012, down from last week when it averaged 3.78 percent. Last year at this time, the 30-year FRM averaged 4.55 percent.
  • 15-year FRM this week averaged 2.97 percent with an average 0.7 point, down changed from last week when it averaged 3.04 percent. A year ago at this time, the 15-year FRM averaged 3.74 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.84 percent this week, with an average 0.6 point, up from last week when it averaged 2.83. A year ago, the 5-year ARM averaged 3.41 percent.
  • 1-year Treasury-indexed ARM averaged 2.75 percent this week with an average 0.4 point, unchanged from last week. At this time last year, the 1-year ARM averaged 3.13 percent.

Adjustable mortgage loans popular again. Here is why.

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Adjustable (ARM) Loan Resets Cause Foreclosures – Fact or Fiction?

Saint Paul, Minnesota: Requests for adjustable mortgage loans dropped to near zero the past few years because of the general belief that adjustable loans are bad, and that recent high levels of foreclosures was because homeowners were doing fine with their loans until their adjustable loans reset to higher rates.

Lenders are again starting to see inquiries about, and home buyers again taking adjustable rate loans because of the super low adjustable loan rates.

FACTS VERSUS FICTION:  According to recent nationwide data, the number one reason homeowners default on their home loans was because their income was cut. This accounted for just under 60% of loans in default. Once traditional causes of foreclosure are factored in (divorce, major illness), cash flow problems added up to a whopping 80% of all “causes” of defaulted mortgages nationwide.

Adjustable payment loans resetting to a higher payment alone accounted for just 2%, according to the data. Rather than being the cause, they appear to be the final straw that breaks the camels back of people who were already in financial trouble.

ADJUSTABLE RATE MORTGAGES: Adjustable Rate Mortgages (ARMs) became one of the most popular and effective tools for helping some prospective homebuyers achieve their dream of homeownership between 2000 and 2007. Initially developed during a time of high interest rates that kept many people out of the housing market, the ARM offers lower initial interest rates by sharing the future risk of higher rates between borrower and lender.

IS AN ADJUSTABLE MORTGAGE RIGHT FOR YOU? Talk to a local licensed Loan Officer (not an unlicensed bank application clerk) about the benefits. ARMs can be an excellent choice of financing under certain conditions, such as rising income expectations, high interest rates, and short-term homeownership plans. But because payments and interest rates can increase, either steadily or irregularly, homebuyers considering this kind of home mortgage loan need to have the income to keep up with all possible rate and/or payment changes. Each ARM has four basic components:

  • Initial interest rate, which is typically one to three percentage points lower than that of most fixed rate mortgages.
  • Adjustment interval, at the time between changes in the interest rate and/or monthly payment will be.
  • Index, what lenders use to determine future rate changes. This is usually LIBOR.
  • Margin, or the additional amount the lender adds to the index to establish the adjusted interest rate on an ARM.

Typical adjustable loans come in 1-year, 3-year, 5-ya, 7-year, and 10-year initial fixed term options. The 5-year adjustable is super popular. The rate is fixed for the first five years of the loan, then becomes adjustable on a yearly basis.

Is the real estate market going Up or Down?

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Is the real estate market finally going up, or still in trouble?

It depends on what market statistics you are looking at. Is there a real estate recovery, or is this just a small blip in the radar of a longer housing cycle?
For the 7th month, home prices of non-distressed properties have declined, according to Inman News. Not good news for sellers, but awesome news for buyers.
In another report,  pending home sales are up in March, an indicator of a real estate recovery, according to the National Association of Realtors. That index is now 111, and 100 or above is considered a healthy real estate market. The index in March 2011 was 89. The index right now is what it was in 2001 before the market started climbing.
But the public appears to be wary of all the discord between the talking heads, and all their doom and gloom. Buyers appear to be finally getting off the fence, taking advantage of super low mortgage interest rates,  and house prices not seen in a decade.
What’s different today? Is this just an uptick on the graph that will quickly be pulled down by the shadow inventory and new distressed sales?  Are we truly pulling out of the mire of dismay and dismal market we have suffered through since Fall 2008?
From my individual perspective, there is a change in the real estate market that I have not seen in years. Buyers are eager to buy, they are making offers, they are NOT sitting on the fence any longer, and good homes, priced right, especially in the under $200,000 market, are once again selling in just days with multiple offers.  The buy versus rent question is clearly leaning towards home purchase once again, especially for first time home buyers.
Buyers need to be fully pre-approved from a licensed mortgage loan officer and ready to make an offer.

Lowest Interest Rate or Lowest Closing Cost – Which is better?

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Lowest Interest Rate or Lowest Closing Costs – Plus No Lender Fee, or No Closing Costs Advertising

HOW DO THEY WORK?

A common mistake shoppers make is to simply ask: “What’s your rate?” or “What are your closing costs?” Both logical questions to ask, but they do not give the response most borrowers need to make a proper decision. Borrowers must understand both rates and fees.  Interest Rates are only half the answer to getting the best mortgage deal. It is possible end up with the lowest rate, or with low or no closing costs, but not necessarily the best deal.

Remember that nothing is ever free. Lenders simply use “reverse points” whenever they claim to offer any sort of low closing costs, or no fee mortgage.

Simply put, the lowest rate & the lowest fees do not go hand-in-hand. NO LENDER can offer both together. I can give you rock bottom rates, but it will cost you in fees. I can give you the lowest fees, but it will cost you in interest rate. Most lenders quote their best rate in combination with covering all third party fees (appraisal, credit report, title company, state taxes, county recording fees, etc) with 1% origination. See the example below.

Here is an example of Rate vs. Costs on a $150,000 – 30 year fixed loan

Here is an example of Rate vs. Costs on a $200,000 – 30 year fixed loan
Lower Rate Standard Quote

Low Cost

Total NO Cost

Rate

4.75%

5.0%

5.25%

5.75%

Origination

1%

1%

None

None

Discount Points

1%

 None

None

None
Closing Costs $5042 $5042 $3042  $0.00

Closing Costs with Points

$7167

n/a

n/a

n/a

Monthly P & I Payment

$1043.29

$1073.64

$1104.41

$1,167.15

10 Years of Interest

$92,352

$95,240

$98,151

$108,037

20 Years of Interest

$155,609

$162,618

$169,718

$188,181

30 Years of Interest

$181,300

$190,232

$199,311

$221,909

WHICH LOAN VERSION is RIGHT FOR YOU?

The combination of rate & fees can be very confusing. One lender is screaming “No closing costs.” A second lender may quote you just $000 in fees, while another lender is offering an amazing rate.

So are closing costs and fees bad? Well if you ask everyone’s brother who has a real estate license and knows everything about mortgages, then the answer you will most likely hear is yes.  I am here to tell you everyone’s brother is probably wrong.

Good enough answer?  I didn’t think so…

Begin by asking yourself “How long am I going to be in this property?” This is the single most important question to determine which option is best for you. Now look at the chart above. It becomes very obvious based on how long you are going to be in the home if ‘Best Rate or Lowest Cost‘ makes the most sense for you and your family.

Congratulations, you are now smarter than everyone’s brother, mother and sister with a real estate license.

Minnesota home sales jump higher

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Minnesota Home sales jump dramatically higher

Minnesota first time home buyersIt appears the things are changing in the housing market as Minnesota’s home sales shot up 24 percent in October from a year earlier.

It appears the pent up housing demand, combined with historically low mortgage interest rates in Minnesota, and home prices that are (on average) about equal to 2002 values, has finally gotten home buyers off the fence.

Another recent report indicated that first time home buyer numbers have begun to fall off as many of those people have already taken advantage of their buying opportunities, so who is buying the homes? Clearly move up buyers – those selling an existing home and buying something different have surged the last six months.

Surpassing most areas of the state, sales in the seven-county metro area jumped 34 percent.

For the sixth month in a row, statewide pending sales have increased, rising 33 percent versus October 2010.

In October, homes were on the market an average of 120 days. Inventory is decreasing, with new listings down 10 percent versus October 2010.

You just missed the mortgage interest rate boat… or did you?

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Oops – you just missed the mortgage interest rate boat… or did you?

St Paul, MN:  The headlines are screaming… Mortgage interest rates just hit historic lows again for the forth straight weak. The morning talk shows are asking if it is a good time to refinance your home?  So is it a good time to refinance? The answer is probably yes, but let’s find out the truth about interest rates and how they work.

The main item to understand is simple. Mortgage rates go up and down everyday.  Sometimes a lot. Sometimes a little. There are many factors that contribute to rate changes, but a simple one to understand is that negative stock market and negative economic news is good for long-term mortgage interest rates. Good news is bad for rates.

The next big item to understand is all lenders are virtually the same. If one lenders rates do down, so does everyone else. They all underwrite to the same basic guidelines, they have all the same third party fees (appraisal, title company, underwriting, etc), and they all are transferring your file to Fannie Mae, Freddie Mac, FHA, etc.

Rates Change: I was quoting rates at 3.875% on Monday (10/3/2011) for an under 80% loan-to-value 30-yr fixed loan for someone with over a 740 credit score. By Friday (10/7/2011), the same deal was 4.25%. The bottom dropped out of the bond market during the week, rates went up, and every shopper who got quoted a great deal but asked if I thought rates were going to go lower just got burned.

BE CAREFUL: I just heard hear this morning another report from America’s most misleading rate information site,  Bankrate.com. They just said that interest rates are in the 3’s. Hmmmm….  Really now? Be careful. On what program? With how many points, and how much blood do I have to give?

Each Thursday, Freddie Mac reports interest rates. This information is picked up by all the media and spread across all the TV, radio, and newspaper. This is perhaps the most misleading piece of news that is placed into consumers hands on a regular basis. The full story is usually edited down to Twitter sized chunks, and we only see the blurb…”INTEREST RATES HIT ANOTHER LOW” or “INTEREST RATES REMAIN LOW” and reporting about what that indicator is.

This is LAST WEEK’s news. They are telling you what closed and what was already locked previously. If you want to buy Google stock, does it matter what the average of the stock was last week, or today’s price? If the nationwide average was 4.123% two weeks ago, and the average last week was 4.122% – I guess that does count as “INTEREST RATES WENT DOWN AGAIN“.

As many of you who see the news and call around about rates have found out, that rate is not always available and now you know why.

No lender can offer you yesterday rates today. Nobody can offer you what you were looking for in the beginning: Monday’s rates! Frustration, hassle, pestering, over promising, ignorance, lies, demands, promises, etc all take place and you likely throw your hands in the air and say. FORGET IT! I’ll STAY WHERE I’M AT! You missed the boat!

You didn’t miss the boat. You almost got suckered in today’s over hyped mass media world. The reality is it is almost impossible to pick the day interest rates hit a low. Pretty much dumb luck.  On the other hand, getting a mortgage interest rate that is NEAR the bottom of the market is super easy.

Partner with a professional Loan Officer, and get your mortgage application started!

Winning or losing – How to play the Mortgage Interest Rate Game

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Mortgage interest rates — just like stock prices — change price daily and you can win big or lose big if you don’t know what you are doing.

#1 Mortgage Interest Rate and Lender Shopping Tip | MN and WI Mortgage Rates | Quote, Float, or Lock? |

For the home buyer that is “shopping” for a mortgage, or waiting for rates to fall, or just “hasn’t gotten around to it”, we suggest you almost always lock, and to do it quickly. The sooner you lock your rate, the less chance you have of losing in the Mortgage Rate game.

If you are refinancing, you can gamble a bit more, but if you have a signed purchase contract in hand, lock your rate as soon as possible.  There is no better way to protect yourself from the fickle mortgage markets. Holding out for 1/8th – 1/4% more is just not worth the risk! If you want to gamble… go to Vegas.

What is a Rate QUOTE? When buying a home or refinancing, it is common to call around to many lenders to get a rate quote. A quote is not a guaranteed rate. Another common issue with getting a quote is you often get one from Lender A on Monday, Lender B on Tuesday, and Lender C on Wednesday. Rates can change daily, sometimes multiple times, so unless you get all your quotes at the same time, you don’t have accurate information. THE ONLY QUOTE THAT MATTERS IS THE DAY YOU LOCK. Many lenders quote you low to get you to stop shopping, knowing that you will usually NOT be locking the same day of the quote – especially for any purchase loans. Be wary of anyone significantly lower than anyone else.

What is a Rate Lock Period? The lender will usually quote rates along with a rate lock period, usually 15, 45, or 60 days. The loan must close within this period. The longer the rate period, the higher the interest rate.

What is a Rate Lock? When you “LOCK” your interest rate with your lender, you and the lender agree this is the guaranteed rate you will receive, and that no matter what the markets do before closing, you will not be charged a higher rate if rates go up, and you will not be able to get a lower rate if rates go down. Your rate lock should be in writing.

What Does It Mean to Float? Floating your rate means means that while your loan is in progress, the rate is NOT yet guaranteed. You are taking the risk that interest rates will either not go up or that they will fall. If rates have been dropping, then you might want to take a chance that rates will be lower by the time you close your loan than they are today. Discuss the floating with your Loan Officer. Sometimes it is worth the gamble, sometimes it isn’t.