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Mortgage Interest Rates Hit All Time Low

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.

Home prices leap – Time to buy

Twin Cities home prices bounced up in April with the largest jump since before the housing market meltdown.

A shrinking supply of homes on the market and the reappearance of multiple offers helped drive the median sales price up 12.4 percent to $163,000 over the previous April.

That’s the largest increase since January 2004, the Minneapolis Area Association of Realtors said in its monthly report Thursday, May 10.

Fewer foreclosures also helped boost prices, as traditional sales accounted for a greater share of the market, which “tends to drive up median and average prices since they tend to sell for more than foreclosure properties,” said Cari Linn, president of the trade group.

Read the full story

Check Minnesota Mortgage Interest Rates

 

 

Are mortgage rates going up?

ARE MORTGAGE RATES GOING UP?

Minneapolis, MN: Mortgage interest rates jumped up last week, putting a scare in those sitting on the fence, thinking about refinancing, yet waiting form rates to drop a bit lower. Lucky for them, Minnesota mortgage interest rates moved back down slowly to about where they have been holding for some time.

The big question is how long can mortgage rates remain this low? 

Mortgage rates have been stuck at these amazingly low levels for the past five months. According to Freddie Mac weekly survey of mortgage rates, last week was the first time that interest rates on a standard 30-year fixed-rate mortgage rose above 4 percent, only to slip back below this week.
It’s very clear that mortgage rates can’t stay this low forever. It was big news when 30-year rates fell below the 5 percent mark in March 2009 – a level unimaginable just a few years before. Now we’re a full percent lower than that. When you consider that rates rarely fell below 7 percent prior to 2001, and often ranged much higher, it’s clear that rates will eventually move back toward more historical norms. When I bought my first house in 1981 – I paid 16% for an FHA 30-year fixed mortgage.
The question is, when will that happen – and what will trigger it?  So, is it smart to keep holding out for lower refinance rates? Probably not…  Is it wise to not buy a house today?  Probably not, especially with these interest rates and zero down programs like the VA loan program, and the USDA Rural Development Program.

NO Closing Costs Loans COST Money

I constantly receive requests for a No Cost loan. Sadly there is no such thing.

All loans have closing costs associated with putting the loan together.

Just like you, participants in the mortgage loan process don’t work for free. The Appraiser, Title Officer, Title Insurance, County Recording Fees, Minnesota Mortgage Registration Tax, as well as your lender all need to get paid as part of the process.

Each of these parties charge fees for their service in processing and funding your loan. The Lender’s responsibility is to explain to you what the services and costs are, and to give you an estimate of the total costs when you apply for a loan. This estimate comes in the form of a document titled Good Faith Estimate of Closing Costs. It is only an estimate, but it should be very close to your actual costs. Lenders are not allowed to pad, or add onto the costs charged by these other parties, but rather simply pass on what they charge. The vast majority of closing costs go to third parties, not your actual lender.

The real question is: How do I get a loan so I don’t have to pay for these required services? The simple answer is you can’t. What you can do is determine how they get paid.

Purchasing or refinancing, it basically works the same way. All of the costs associated with transaction are paid in one of four ways: By you in cash, by the Seller (in a purchase), by rolling it into the new loan amount (refinance), by the Lender, or a combination thereof.  The most common way in a refinance is by rolling the closing costs into the new loan amount.

Now you may be saying “Wooh-Hooh, let the lender pay”, but you need to know how the lender can do this, and why it may not always be such a smart move.

To have the lender pay your closing costs, you agree to accept an interest rate that is higher than what is considered a “Market Rate.” In doing this, the lender receives more cash than just the face amount of the mortgage loan when they sell it to an investor on the secondary market. This excess cash is what the lender uses to pay some or all of your closing costs. This means that over the life of the loan, you will be paying more interest to the lender than you otherwise could have.

Does this strategy make sense for you? Maybe. It depends on several factors. How much higher is the mortgage rate and what is the monthly cost to you in increased payment? How big or small is the loan? How long do you plan to stay in this loan? Do I have the cash to pay the costs out of pocket?

This is where it becomes important to work with a Licensed Mortgage Originator and not a bank employee. As I have said many times, A Mortgage Banker / Broker is required to be Trained, Tested and Licensed in all aspects of Mortgage Origination. A bank employee is usually just registered, not tested, not licensed, and not required to be educated, tested, or licensed.

A NO COST loan is not automatically good or bad.

A local licensed Loan Officer will do the math with you, and take the time to show you the pros and cons of each method of paying closing costs so you can choose the best option in your particular situation.

Mortgage Interest Rates about to go up due to new HIDDEN tax

All home mortgage interest rates are about to go up due to new hidden tax congress buried into all new mortgage loans.

As part of the deal to extend a temporary reduction in payroll taxes, Congress last month approved a permanent increase in the fees borrowers pay on mortgages backed by Fannie Mae, Freddie Mac and the FHA.
The increase is an annual charge of at least 10 basis points – equal to one-tenth of one percent of the loan amount. That’s equal to an additional $300 a year on a $300,000 mortgage, or an additional $25 a month. The increase is proportional, so a borrower with a $150,000 mortgage would pay another $150 a year, one with a $400,000 loan would pay an additional $400, etc.        LOCK NOW

Watch the video from Frank and Brian to learn more, and be sure to COMPLAIN to Washington. Of course this is also a great time to mention the importance of who you select to be President…  DO YOUR HOMEWORK!

Thanks Washington…  Nice move

FED leaves Funds Rate Unchanged

THE FED LEAVES RATES UNCHANGED

Minneapolis, MN: Today the FED (Federal Open Market Committee) voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

Mortgage bonds are mostly unchanged since the Fed’s announcement, giving mortgage rates in Minnesota and Wisconsinlittle reason to move significantly in any direction.

Check live Minnesota Mortgage Insterest RatesWHAT IS THE FED FUND RATE? It is the interest rate at which a depository institution (Bank) lends immediately available funds (balances at the Federal Reserve) to another depository institution (Bank) overnight.  It has NO DIRECT BEARING on what you the consumer will get as a mortgage interest rate.

WHAT ARE MORTGAGE INTEREST RATES BASED ON?  The primary answer is mortgage-backed bonds, better known as Mortgage Backed Securities (MBS). Bonds issued by Fannie Mae and Freddie Mac (MBS) and the trading performance of those bonds will determine the direction of mortgage rates. Finding the catalyst that causes mortgage bonds to move will give you the keys to finding out what makes mortgage rates rise or fall.

Mortgage rates remain bouncing near all-time lows. If you’re thinking of buying or refinancing a home, it’s a good time to lock a great mortgage rate.

In its press release, the Federal Reserve said that the the U.S. economy is improving, noting that since its November 2011 meeting, the economy has been “expanding moderately”. The Fed also added that domestic growth is occurring despite some “apparent slowing in global growth” — a nod to ongoing uncertainty in  Europe.

The Federal Reserve expects a moderate pace of growth over the next few quarters, and believes that the jobs market will continue to improve, but slowly.

Other potential soft spots within the economy include :

  1. A slowdown in business investment
  2. A “depressed” housing market
  3. Strains in global financial markets

The Federal Reserve added no new policies at its December meeting, and made no changes to existing ones. It re-iterated its plan to leave the Fed Funds Rate within its current range of 0.000-0.250 percent “at least until mid-2013″ and re-affirmed “Operation Twist” — the stimulus program through which the Fed sells Treasury securities with a maturity of 3 years or less, and uses the proceeds to buy mortgage bonds with maturity between 6 and 30 years.

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

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!

Float or Lock a Mortgage Interest Rate?

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.

Everyday Loan Officers are ask “what do you think interest rates are going to do?” Of course none of us know that answer, so except for the most extreme cases on a purchase transaction, I suggest you always lock, and to do it as soon as you can. The sooner you lock your rate, the less chance you have of losing in the mortgage interest rate game

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.

With interest rates currently hovering near historic lows, the chance of any meaningful rate drop is low. The chance of rates going higher is very big.

It is better to win and lock on a known great rate, and be slightly annoyed if interest rates go down a little before closing, than to be floating and lose with rates dramatically higher before closing.

One other aspect… You have so many other things to do during the buying process than to keep stressing yourself out by looking at mortgage interest rates all day. Just lock and be done!

A refinance transaction on the other hand is different. The new refinance rate has to make sense to act. According to a recent survey, most people refinance when the difference between their current rate and any new rate is at least 1% or greater. You can potentially gamble a bit more because you are not under any time restraints, but if today’s refinance rate is close, take it and run.

Finally, we always suggest monitoring one of the interest rate advisory sites for good daily interest rate float or lock advice.

Most Refinances are “Rate and term” only

“Savvy homeowners are taking advantage of some of the lowest fixed-rates in more than 50 years to lock in interest savings,” said Nothaft. “Over the first half of 2011, fixed-rate mortgage rates hit a low during June, with 30-year product averaging 4.50 percent and 15-year averaging 3.68 percent over the last four weeks of June

Freddie Mac has released the results of its second quarter refinance analysis showing homeowners who refinance continue to strengthen their fiscal house. The analysis shows that 77 percent of homeowners who have refinanced have been able to maintain or reduce their mortgage debt in second quarter of 2011.

READ THE FULL STORY

 

Is refinancing easier than buying a home?

A refinance is just as easy to get as your first mortgage… right?

Many people think that refinancing is easier than buying a home for two main reasons:

1) you already have a loan on the home, you make your payments, so it should be easy to refinance.
2) your current mortgage lender already has all their information, so they with easily refinance you, and they are the best place to call **

Sorry… Not true on either count.

There are many factors that might make it hard to refinance:

First, understand that no matter who you call for the refinance – even your existing lender, you have to go through the full underwriting process again. With that said;

– Your financial situation could have changed. Do you have the same job, same income? Better or worse? How about credit. Better or worse?
– Mortgage loan Underwriting guidelines have changed. The crazy days of every getting a loan are long gone. Be are back to old school traditional financing guidelines. Did you buy the home on a program that no longer exists… like a no documentation loan?
– With all the foreclosures, your properties value probably went down. How does that play into your refinancing options?

Most people refinance for three main reasons.

1) Smaller payment
2) Shorter term
3) Cash out / consolidate debt

The good news is that mortgage rates in MN and WI are amazingly low right now, and lenders are still providing home loans everyday. If you are thinking of refinancing, but have been scared away by thinking you can’t for some of the reasons listed above, you are making a big mistake.

Contact a local MN or WI mortgage company with a licensed Loan Officer. Fill out a full application, and let them review your situation.

You may be very happy with the answer!

** WORD OF CAUTION: Many people make the mistake of just calling their existing lender. Almost exclusively, EVERY OTHER lender will have a better deal for you. Be sure to call more than just your current company.