Tag Archives: mortgage

Market Analysis

Why Does Market Movement Fluctuate The Mortgage Rates

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The rates generally rally up with news of weak housing data. Typically mortgage rates fluctuate with the movement of market prices for mortgage-backed securities. It is important to determine from qualified advisors the potential movement of rates with current economic trends and how lenders are typically responding with their rate offers, and their marketing messaging. Buying a home is likely to be the largest, most significant purchase of your life. So while it is part of the “American dream,” it can be equally as exciting as it is stressful for many people. Down payments represent the amount of cash investment that buyers have available to put towards the purchase price of a home. Depending on the type of loan, there may be restrictions on the down payment, such as the length of time for which the cash has been in the buyer’s possession, the source of those funds, whether the funds were a gift or not, etc. Furthermore, often times prospective home buyers estimate their down payment requirements by simply multiplying the percentage of down payment by the value of the home, which can be incorrect. Involving your lender early can help you with understanding how much of a monthly payment you can afford, how to calculate the down payment needed and ultimately the maximum purchase price of a home. The principal is the final loan amount needed to secure the home purchase. The principal may or may not include all of the closing costs rolled up into the loan. Securing the right mortgage rates for home purchase loan may involve the consideration of many factors, several of which are mentioned below.

The duration of the loan is specified by the number of months or years for which the contract is scheduled. If payments are made exactly according to the schedule, mortgage loans are calculated to expire when the final payment in the series is processed. The standard length of term for a mortgage is 30 years, but other common terms are 20 and 15 years, with 40 year terms becoming more popular. Mortgage Interest Rates and APR are two key terms used in mortgages. If you’re not careful, you might confuse or otherwise not fully understand the difference between the two. The mortgage interest rates to purchase home represent only the rate itself, whereas the APR more accurately represents the “true” cost of the loan by accounting for the added costs of lender fees and spreading those fees out across the life of the loan. In this sense, the APR provides an accurate measurement of the cost of the loan over the entire length of term. It is always advisable that you compare both the interest rates as well as the APRs when competing lenders submit mortgage rate quotes to you.

Locking in home purchase mortgage rates is very important. Interest rates can vary from day to day, which means that as a savvy consumer you may want to pay close attention to interest rate tables or establish enough rapport with your lender to make sure you are immediately notified of favorable interest rate drops when home purchase offers are in play. At some later point in the home buying process you may work with your lender to lock-in your low interest rate. Locking in a rate means that the interest rate for your loan is now set and will not change, regardless of the market fluctuations which occur after the rate has been locked. Locking in a rate too early in the purchase process however, could provide you with a false sense of security if the rate expires prior to the loan closing. It is advisable that you work in tandem with your lender to ensure that the lowest possible rate is locked in for your loan at the appropriate time.

Market Analysis

Bad News And Disturbing Trends in The Mortgage Market

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The homes market has been turned upside down by the severe economic crisis. This led to great hardship for millions of homeowners. The prevailing trends in the mortgage market are very discouraging.

Unusual Stabilization of Rates

You know already that the Federal Reserve dumped billions into mortgage which depressed the interest rates. However, all financial bail outs have stopped already. Experts expected that this will cause an unprecedented increase in mortgage interest rates. However, the contrary happened as the market saw a stabilization of interest rates. This is due to the low demand for new mortgages due to the continuing uncertainty of the economy.

Low Demand or Increasing Poverty

The average mortgage rate now is pegged at 5.9 percent and new mortgage is going for 4.75 percent. In the past, homeowners will scramble to refinance their original mortgages to take advantage of the situation. However, the housing market is still abnormal. Many homeowners are upside down which means they owe more than the value of their equity. So if you have no equity, you can not possibly qualify for refinancing.

The HARP Is a Big Letdown

The US government pushed for the Homeowners Affordable Refinance Plan or HARP. This program seeks to give 2 million homeowners the chance to refinance even if they are upside down. Unfortunately, HARP is not a mandated program and banks refused to participate including those who got TARP money. In the end, the program only helped less than 300,000 homeowners.

Tightening FHA Requirements

The FHA typically has more liberal loan requirements for borrowers. That is why its mortgage programs are so attractive to homeowners who want to refinance their home loans. Unfortunately, the FHA has tightened its requirements and followed the rules applied by commercial lenders. This deprived millions of people to buy homes.

Easing Requirements for Jumbo Loans

There is a paradox in the housing market. Banks and lenders are very quick to tighten the requirements for conventional mortgage loans. However, the requirements for jumbo loans are generally easing. In the past, you need to put up 25 percent down payment on a jumbo loan. Today, the down is only 20 percent. If you have lots of money, you can get a mansion for less.

Loopholes with SAFE

The SAFE mortgage license act seeks to insure that lenders understood the market and provides protection for consumers and homeowners against sharks and unscrupulous lenders. Unfortunately, the act does not apply to everybody. Lending companies and brokers are required to pass a test as mandated by SAFE. However, those who work for the banks are not required to pass the test.

For New Mortgage, FHA Is Still Attractive

FHA is still the most attractive option for those who need new mortgage. The down payment requirement is still affordable at 3.5 percent of the sale price. This is the lowest you can find right now.

It is easier now to buy a home if you have a bundle of cash. But if you are upside down on your mortgage, then your troubles will not go away any sooner. The market is still suffering and the trends are not promising.