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MN

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.

 

How long will interest rates remain low?

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Minneapolis, MN:  Mortgage interest rates and refinance rates are as of this posting are at record lows. This little jump lower is a direct effect from last weeks announcement by the FED of QE3.

First, understand that the FED does NOT control mortgage interest rates. They only control the Fed Funds Rate, which simply put, is what the banks pay in interest rates to borrow money from the Federal Reserve. Long-term mortgage rates are based on the bond market. The bond market does react to what the Fed says and does, so many people wrongly believe the change in actual rates is because of what the Fed did or didn’t do.

So just what does QE (Quantitative Easing) mean anyway? Well, in short – normally when the economy is struggling the Federal Reserve will reduce short term interest rates to encourage more lending and spending. However, interest rates have already been cut as low as they can go- so what to do? Well, that’s where quantitative easing comes in.

Since the Federal Reserve can essentially create money, it can buy up assets like long-term Treasuries or mortgage-backed securities from commercial banks and other institutions. This pumps money into the economy and reduces long-term interest rates further. When long-term interest rates go down, investors have more incentive to spend their money now. In theory.

Haven’t We Tried This Before?

The central bank has tried using quantitative easing twice before- in November 2008 and again in October 2010 (known as QE1 and QE2). So did it help? There has been plenty of research on this question. The first round of quantitative easing appeared to be effective in preventing the economy from sinking into a giant depression. Economists say this was because everyone realized the Fed would do whatever it takes to avoid deflation. It was essentially a giant confidence boost. The economy stopped sliding and inflation slowly rose. But the effects seemed to dwindle as the years went by. Experts are much more divided on how much QE2 has helped.

In theory, quantitative easing should work in two ways. First, it injects more cash into banks, allowing them to lend more. And second, it lowers interest rates — if the Fed buys up a bunch of mortgage-backed securities, for example, that should make it cheaper to borrow money to buy a house. In practice, interest rates do drop. But it’s hard to figure out whether this translates into a boost in the actual economy.

So now back to how long interest rates will stay low in the near future….

The Federal Reserve has actually done two things to try and improve QE3. First, the Fed said they will keep the rates banks pay for money low until mid-2015. Second, the central bank will buy up $85 billion worth of assets each month between now and the end of the year. But, unlike QE1 or QE2, this new round of purchases will be more open-ended. That’s an important change. Here’s the key bit from the Fed statement:

“If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved”

The purchases will continue until morale improves. What’s more, the Fed noted that it will continue its policy of easy money “for a considerable time after the economic recovery strengthens.”

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.

 

Trick to Pay Off Your Mortgage In Half The Time

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A Trick to Pay Off Your Mortgage In Half The Time

Minneapolis, Minnesota:  Sounds like a claim you might see on a SPAM E-Mail you receive. The fact is, smart people are doing this everyday to pay off their mortgage in half the time and there is nothing special about it.

What is it you ask?  Easy, simply shorten your term to a 10-year or 15-year mortgage loan.

Mortgage Refinance Rates in MN and WIMany homeowners are thinking of refinancing to today’s historically low mortgage rates here in MN, WI, and the rest of the country. Great, yet many people make the mistake of refinancing back into another 30-year loan.  Sure, you may save a few hundred dollars, but how much is it going to cost by adding back all those years?  How about retirement?  Wouldn’t it be nice to go into retirement WITHOUT a mortgage payment?

By lowering your term, you get a better interest rate than on a 30-year, and you save untold thousands of dollars in interest.

Fear of higher payments on the shorter term loans keeps many people from selecting this mortgage savings option.  But a quick peak at a mortgage calculator can show you the savings – and I’ll bet most people can easily afford the payment if they simply put their mind to it.

 

MN FHA streamline Refinance Loans

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FHA Refinance

Learn About Your Mortgage Options

Homeowners enjoy the benefits of investing in their property year after year. For some, there comes a time when that investment can come in handy. Refinancing with an FHA loan can prove to be an effective way to put that equity to work. Keep in mind that FHA refinancing is only available to homeowners who are currently using their home as their principal residence.

FHA options to homeowners who are considering an FHA refinance mortgage:

FHA CASH-OUT REFINANCE

This refinancing option is especially beneficial to homeowners whose property has increased in market value since the home was purchased. A Cash Out refinance allows homeowners to refinance their existing mortgage by taking out another mortgage for more than they currently owe.

FHA STREAMLINE REFINANCE

This refinancing option is considered streamlined because it allows you to reduce the interest rate on your current home loan quickly and oftentimes without an appraisal. FHA Streamlined Refinance also cuts down on the amount of paperwork that must be completed by your lender saving you valuable time and money.

FHA Up Front Mortgage Insurance Premiums (UFMIP)

FHA has recently made changes to the required mortgage insurance. June 11, 2012 is the date FHA Up Front Mortgage Insurance Premiums (UFMIP) will be lowered for some borrowers applying for FHA Streamline Refinance Loans. An FHA Mortgagee Letter 12-4 explains the changes, which affect some, but not al, FHA streamline refinancing loans:

For all FHA Streamline Refinance transactions that are refinancing existing FHA loans that were endorsed on or before May 31, 2009, the UFMIP will decrease from 1.75 percent to just 0.01 percent of the base loan amount.

Basically, those borrowers who have an FHA home loan for a single-family property that was endorsed on or before May 31, 2009 are eligible for a lower rate on their Up Front Mortgage Insurance Premiums. It’s important to note that this rule applies only to those with an FHA Streamline refinancing loan with a case number assigned on or after June 11, 2012.

The same mortgagee letter contains another announcement; “Decrease to Annual Mortgage Insurance Premium on Certain Streamline Refinance Transactions”. In this message, the FHA states, “For all Single Family Forward Streamline Refinance transactions that are refinancing FHA loans endorsed on or before May 31, 2009, the Annual MIP will be 55 basis points, regardless of the base loan amount.”

These two items make for a very significant savings on FHA streamline refinance transaction here in Minnesota, Wisconsin, and the rest of the country.

One other item. It’s important to remember that the FHA does not regulate FHA streamline mortgage interest rates or set them in any way except to state that such rates must be reasonable and customary according to the housing market in that area. Borrowers should expect to negotiate interest rates with the lender and/or comparison shop for the best rates and terms. 

FHA Mortgage Insurance REFUND Chart

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An FHA STREAMLINE REFINANCE is HOT right now because of the super low mortgage rates, so it is important to understand a possible FHA Mortgage insurance refund you may qualify for.

If you have an FHA loan, FHA charges an upfront MIP (mortgage insurance premium). This amount is calculated as a percentage of the loan amount, then added to your loan amount. That MIP amount you paid depends on when the FHA case number was requested.

If you’ve had your FHA loan for less than three years, and your are refinancing to a new FHA loan, you get a refund of some of the initial mortgage insurance premium (MIP) you paid on your FHA loan

The chart below is what FHA underwriters use to determine the amount of money refunded at the time of a FHA to FHA refinance. FHA will refund a percentage of that upfront MIP in the refinance. No refund check or anything is given to you, the refund is simply calculated into the costs of the new loan. The shorter the home owner has had the current FHA loan the higher the refund amount. This amount is displayed on page four of the application section called the “details of transaction” page.

FHA MORTGAGE INSURANCE REFUND CHART

FHA Mortgage Insurance Refund Chart

Example: You are refinancing, and at the time of closing, your current loan would be 2-years and 2 months old. Looking at the chart, you would get a 54% of the original MIP refunded to you as a credit on your new loans closing costs.

USDA Home Loans are Zero Down Payment

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USDA 100% Home Loan Financing – Best Kept Mortgage Secret! 

7 out of the 11 Twin City County Areas are eligible. These properties are closer than you think!

The USDA Guaranteed Rural Housing Mortgage Program offers individuals and families 100% financing for semi-rural to rural properties throughout the state of Minnesota and Wisconsin.

  • 100 % Financing – ZERO down payment
  • No Cash From Buyer
  • Cheap Mortgage Insurance (especially compared to FHA loans)
  • No Assets Needed – No Money left in the bank needed
  • Relaxed Credit Requirements
  • Finance Closing Costs into the Loan

Credit tips for first time home buyers

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 Credit tips for buying a home

We all should know that it’s important to have solid good credit when thinking about buying your first home. We all know that lenders and banks want to see solid credit in any borrower.

But what exactly does that mean for first time home buyers?

It means having some credit.  It means having a score in the mid-to-upper 600 range (although that doesn’t mean you’re out in the cold if you’re in the low 600’s).  It means no major negative items like a repo or bankruptcy in the past few years.

In short, it means you’re responsible with your money, and you pay your bills on time.  The way lender determine if you are doing these things is with a FICO credit score.

How do you make sure your credit is good in general? Let’s explore 6 credit tips for first time home buyers that you could follow even if you’re not a first time buyer.

  • Pay your bills on time, every time. This is a simple rule when it comes to establishing good credit (not always easy to follow, but it’s vital). You have to keep your bills current.
  • Have a diverse credit portfolio. This can include secured credit cards, a small car loan and maybe a store credit line. A diverse mix shows that you are able and willing to pay your bills.
  • Keep your credit charges below 30% of the limits. Going above this number will reduce your credit score. Paying the debt down is the best way to make this happen. You could also ask the credit company to raise your limit (but don’t charge more if they do!).
  • Check your credit history every quarter. You have a right to know what’s on your credit report. Thanks to the government, you actually have the legal right to get your credit report once a year from each of the 3 credit bureaus. That means you can actually check your credit report 3 times per year.
  • Keep your lines of credit open. Closing a paid-off account is a good step after you have your mortgage. A longer, more diverse credit history is important.
  • Once you have a few lines of credit, don’t open any more. Continuously opening new credit accounts is risky, and your score will reflect this.

You can explore more on how to get your credit ready to become a first time home buyer with reading “The Understanding Your FICO Score” at the button below. The Pamphlet covers what makes up a credit score, how to improve your FICO score, steps to rebuilding credit and more.

New FHA Streamline Refinance Guidelines

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New FHA Streamline Refinance Rules

St Paul, MN:  Home owners with an existing FHA mortgage loan – rejoice. Washington has announced new guidelines to make it cheaper and easier for homeowners to refinance FHA mortgages. The reason is pretty simple – since FHA already backs your mortgage, they’re the ones who are on the hook if you default. So if refinancing will help make your mortgage more affordable for you, it makes sense for them to help.

The updated guidelines apply to FHA Streamlined refinancing, which is about as close to automatic loan approval as any refinance program can get. There are many variables to the program, but under the best circumstances, you don’t even need an appraisal, making it a great loan for underwater home owners.

Reduced FHA Fees

The changes announced dramatically reduce some of the fees usually charged for FHA mortgages and refinancing. FHA loans have two major mortgage insurance parts. The upfront fee, and the monthly mortgage insurance. For refinances starting June 11th 2012 and after, the current upfront fee of 1 percent of the loan amount is being reduced to a mere 0.01% – equal to $10 on a $100,000 mortgage – while the annual insurance premium is being cut by more than half, to 0.55 percent of the balance, down from 1.15 percent currently.

The administration estimates the reduced annual fee will save an additional $95 a month on a $175,000 mortgage, on top of the actual savings from refinancing to a lower mortgage rate.

Anyone can with an FHA mortgage can refinance at anytime, but to qualify for the reduce fees, you must have obtained your current FHA mortgage prior to June 1, 2009.

Home Lost Value?

The FHA streamline refinance option that does NOT require an appraisal is a great option for homes that have lost value. Homeowners can be underwater on their FHA mortgage (i.e., owing more than their home is worth) and still qualify for refinancing. In fact, there’s no limit on how far underwater a borrower can be and still get an FHA Streamline Refinance.

If you’re underwater, but have a second mortgage or HELOC (home equity line of credit)  – you’ll have additional challenges – so be sure to speak with a good licensed loan officer to determined your exact situation.

Bottom Line

FHA does not do loans. Lenders do loans that FHA insures. Although FHA has pretty generous guidelines for refinancing, it’s still the lender’s call on whether to refinance or not. Some lenders will have tighter guidelines, and some may even refuse to refinance a mortgage even if it appears to meet FHA requirements. The new guidelines remove some of the obstacles that sometimes make lenders reluctant to do an FHA streamline refinance, by taking such loans out of the formula used to assess their performance as FHA approved lenders. Since many of these mortgages are considered somewhat riskier than more recent home loans, some lenders have been reluctant to refinance them for fear of damaging their rating with FHA.

To see if you can obtain an FHA mortgage refinance, check with your local approved FHA mortgage lender.

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Who owns my mortgage loan?

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Who owns my loan?

Minneapolis, MN: Until recently, no one really needed to know, and no one really cared who ultimately owns their mortgage loan. Home owners receive their monthly statements, and make their monthly payments, to their mortgage company (or mortgage servicer).

With numerous program available to assist homeowners, including HARP 2, the Home Affordable Refinance Program, which require the loan be owned by Fannie Mae or Freddie Mac, it is very important to know who, and if they own your mortgage loan.

There are usually a few people involved in your loan process:

  • The Originator: The company who did the original loan. This could be a bank, broker, or direct mortgage company
  • The Servicer: The company now providing the statements and accepting the payments is only providing the service of billing, statements, customer service, etc. This company could also have been your originator.
  • The Investor:  This is usually not the company that provided the funds originally to make the loan, but a company that may hold your loan permanently, or sell it off to someone else, like Fannie Mae and Freddie Mac. Many times this company also becomes your loan servicer.
  • Actual Owner / End Owner: This could be a bank, mortgage company, or some kind of investor group. For a large number of homeowners, this is Fannie Mae or Freddie Mac.
Who owns my mortgage loan? – Click to find out

 Click here for a HARP 2.0 Lender in MN and WI

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The amazing FHA Streamline Refinance Program

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The FHA Streamline Refinance Program

FHA Mortgage Loan Expert in MN and WI
FHA Streamline Mortgage Loan Expert in MN and WI

Minneapolis, MN: If you currently have an FHA mortgage you are eligible for one of the simplest money saving refinances available today. The FHA Streamline Refinance allows existing FHA borrowers to reduce their interest rate without having to jump through a lot of hoops. Basically, if you have made on time payments on your current FHA loan for the past 12 months. You get (almost) an automatic approval for the streamline refinance! How COOL IS THAT?

Most current FHA loans qualify for a no out-of-pocket cost streamline refinance loan that lowers your FHA interest rate and reduces your monthly mortgage payment without increasing the principal amount owed on your first mortgage. The FHA streamline refinance provide a rare opportunity for FHA borrowers to refinance any time the interest rate drop to level saving them more than 5% a month over their existing payment. FHA loan guidelines are changing, so ask your FHA loan expert how this could impact the FHA streamline program.

FHA mortgage rates have fallen to the lowest level since Eisenhower was President!  FHA streamline rates are as low as or even lower than conventional interest rates, so don’t sit back waiting for lower rates.  If you have made your loan payment on time and you already have this government loan, the FHA streamline refinance programs are easy to qualify for.

  1. no appraisal required

  2. lower credit requirements

  3. limited documentation

  4. skip a month of payments

HOME LOST VALUE?

You may have heard of HARP, the Home Affordable Refinance Program. HARP is only available if you have a Fannie Mae or Freddie Mac loan. and it allows you to refinance even if your home is underwater. FHA’s streamline streamline refinance has a  no appraisal option. So if your home has lost value, you can possible still refinance to today’s low mortgage rates too!

FHA streamline loans are highly regarded by FHA customers. FHA mortgage rates have never been more attractive so act now and lock into the lowest streamline rates in years.

With mortgage refinance rates this low it makes sense to reduce your monthly payment if you have any mortgage loan, but especially government insured loans like an FHA loan or a VA Loan.

VA STREAMLINE REFINANCE

An “Interest Rate Reduction Refinance Loan” (IRRRL) or VA Streamline Refinance allows Veterans to refinance their current mortgage interest rate to a lower rate than they are currently paying. This program is only available to veterans who are refinancing their original VA mortgage in which they utilized their original eligibility. 

VA Streamline Loan Guidelines:

  1. There is no cash out on an IRRRL loan
  2. The VA charges a 1/2 percent funding fee to guarantee the IRRRL Loan
  3. The VA loan being refinanced must be current and have a perfect pay history for the last 12 months
  4. No assumptions are allows
  5. Second mortgages can not be included and must be subordinated

Like the FHA streamline refinance, the VA streamline loan can be done with “no out of pocket money” by including all closing costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.

HARP 2 not ready until March 15th – Why?

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HARP 2 – Not ready until March 15th, 2012
Minneapolis, MN: There is a lot of consumers interested in a HARP refinance in MN and WI. The Home Affordable Refinance program allows home owners who have lost value to still refinance their homes are today’s low HARP  refinance rates.  HARP has been available since mid 2009.  HARP 2, which was announced in November 2011 removes some restrictions, and should help many more home owners refinance their home loans.

Officially, the the HARP 2 program started December 1. Unofficially, most lenders won’t be offering it until after March 15th, 2012. Let’s explore and understand why?

The original HARP program, which allows a home owner to be underwater on their home mortgage loan up to 125% loan-to-value is available today.

THE BIGGEST DELAY: Simple. Software. When a lender “underwrites” a loan, they actually do so through an AUS, which stands for Automated Underwriting Systems. The computer software evaluates the application, and gives an answer. The underwriter then verifies the computers decision. For example, the software may give a YES answer, then ask for pay stubs to verify income. The underwriters job is to then review the pay stubs to make sure the submitted income is the actual income.

Both Fannie Mae and Freddie Mac need to reprogram their computers, and they’ve indicated this will become effective March 15th.

BENEFITS TO LENDERS OF AUS: Can a lender “manually” underwrite a file?  Sure, but the biggest benefit of submitting a file through the automated systems is all about liability. Contracts with Fannie Mae and Freddie Mac protect a lender against liability for underwriting mistakes made by the lender of the original mortgage if the software said YES. Therefore smart lenders are not likely to take on the additional risk of a manual underwritten file.

THE RULES: Another major issue is simply getting the rules written, and distributed up and down all the lender channels. While Fannie Mae and Freddie Mac have indicated what their rules are, remember that they don’t actually lender to consumers. Lenders lend. Fannie Mae and Freddie Mac simply buy loans from lenders. Therefore there is still a large amount of risk to lenders. Each individual lender needs to review new rules, consider the risk, decide if they even want to participate in the enhanced HARP 2 program, then write their rules and push them out to the Loan Officers on the street.

THE BOTTOM LINE: Look for most lenders to start pushing out HARP 2 Refinance rules about the middle of February 2012, but not actually doing them until after March 15th, 2012.  Furthermore, expect a huge rush of customer looking to take advantage of the program, creating massive delays with the banks.

Adjustable Mortgage Rates Hit New Low

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Adjustable Mortgages Hit New Low

Historically in the United States, adjustable rate mortgages have always accounted for a small portion of overall mortgage loan choices. During the boom a few years ago, they jumped up dramatically, but still held just a small portion of the market.

Today, they hold an even smaller portion of the market share due to many factors, but most of them resulting from a misunderstanding, or lack of education on the borrowers part before taking one. For most people, they are considered too risky. Funny thing is, the rest of the world is just opposite. Almost everywhere else, the adjustable loan is the only product available, and if they offer a fixed rate loan, it is rarely over 20-years. The 30-year fixed exists primarily just in the United States.

It might be time to rethink the adjustable loan, as the Monthly Treasury Average has just set another record low. A review of Federal Reserve data indicates that the MTA was just 0.19583 percent in November. It was the lowest level ever for the index based on data back to 1953.

Today, we are seeing a spread of about 1.25% between a 30-year fixed loan and the most popular adjustable, the 5/1 ARM. On a $200,000 loan, that is about $130 per month difference.

The MTA index is determined based on the daily average for the yield on the one-year Treasury note for each of the past 12 months. The one-year yield averaged 0.11 percent during November.

Why is this important? Because adjustable loans all have a margin and an index. The margin is permanently set based on the loan, while the index can change. The lower the index, the lower your adjustable loan.

If you currently have an adjustable mortgage loan, you should be very happy right now.