Best rates on 30-Year Mortgages
The most favorable interest rates on 30-year fixed rate mortgages at this time are from AimLoan.com. You can now get a 30-year mortgage for as low as 4.375% with only $1,995 in fees and 1.973 discount points (prepaid interest equal to 1% of the amount borrowed).
If you prefer a loan with no points or fees, the rate is 4.75%, and a monthly payment of $521. The figure may not seem too attractive, but the San Diego based on-line lender’s fees are much better than the national average of 5.12% for 30- year fixed rate mortgages with no fees or points.
AimLoan mortgages are available in all but five states (New York, New Jersey, Nevada, Kansas and Pennsylvania).
Those with credit scores lower than 700 points are not eligible. The load should be a conforming loan, which means it has to be for less than $417,000 to $729,500 (the amount varies from market to market).
30 Year Mortgages Beginning at 4.35 Percent
The best deals on 30 year fixed rate mortgages in the US these days can be found at AimLoan.com. You can get a 30 year fixed mortgage rate for as low 4.375% with 1.973 discount points and $1,995 in fees. Each point is equivalent to 1% of the total amount borrowed, and is regarded as prepaid interest.
No point loans are also available from AimLoan.com at 4.75% interest, and a monthly payment of $521.
While the rates may not seem particularly low, considering the national average of 5.12% for the same type of mortgage, they really are quite attractive.
AimLoan.com mortgages are available to borrowers in most states; New Jersey, New York, Nevada, Pennsylvania and Kansas are the exceptions.
The rates apply to those borrowing between $417,000 to $729,500 and who have a credit score of at least 700.
Increase Home Value with Open-End Mortgages
Borrowers who want to use mortgage funds to improve their homes can do so through open-end mortgages. Open-end mortgages with mortgage rates give borrowers the ability to borrow additional money through the main mortgage, as long as the borrower fulfills some specific criteria.
Apply For Open-End Mortgages at the Outset
You have to apply for an open-end mortgage when you initially apply for your loan. If you wish to convert to an open-end mortgage in the middle of your contract, you’ll need to refinance.
In traditional mortgages, the principal refers to the amount of money that the borrower takes out to pay for the home. Then, the lender and borrower agree on a repayment plan so that the borrower can pay back the principal with interest.
The Freedom to Access More Principal
However, in open-ended mortgages, borrowers have the ability to take out more principal incrementally. This means that the borrower can effectively increase the principal owed on the home. Borrowers do this usually to improve upon the home.
This works very similarly to home equity loans, except that in this case, the lender issues the additional principal rather than the bank.
Keep A Good Ratio
Borrowers must establish a strong ratio between the principal owed on the home to the value of the home. Lenders will often impose restrictions on open-ended loans based on these criteria.
Many people like open-end loans because it allows them to quickly tap into money and use it to improve upon the home. So, if you want to fix your floors, you can utilize these funds to do so.
Choose open-ended mortgages if you have a strong credit history and you are good at estimating your financial obligation to lenders.
Ways To Save Your Home When Behind on Mortgage Payments
Many homeowners are struggling with their monthly mortgage rate payments and wondering will they take my home when I’m behind on the mortgage. Thousands of people are dealing with the loss of their job, decreased wages, and possibly mounting medical bills resulting in late payments on their home loan, utilities, and insurance coverage just to name a few.
Most mortgage companies do not want to foreclose and take your house. This costs the lender money and makes them responsible for the property taxes and insurance. The mortgage company would also feel the burden of listing the property with a realtor to sell and recoup some of their costs.
There are several options for homeowners who are behind on their mortgage. An important tip is not to wait until a letter of default is sent from the lender. Contacting the lender when first becoming behind will make them aware of the situation and to offer assistance before it becomes a larger problem.
Re-amortization means that missed payments are tacked onto the balance of the loan. Another method is for the lender to set up a repayment plan for two or three months. A mortgage company can also offer a reinstatement which is one large payment to get caught up. Forbearance is often offered with reinstatement. This is when the lender temporarily decreases or postpones a number of payments with the understanding that a large payment will be paid at a specified time to get the loan caught up.
Two other options include refinancing the interest rate of the loan or going through a loan modification. Both options rely on the submission of financial and other documents and can take time to attain the end result.
A homeowner’s thought of will they take my home when I’m behind on the mortgage can be replaced by one of the above steps to keep their home and prevent this loss of security.
Mortgage Rate Trends for May 11-18, 2010
While national mortgage rates are generally falling, we are seeing a trend of mortgage rates remaining above 5 percent. According to Freddie Mac, the national average for a 30-year fixed mortgage stayed above 5 percent for the fifth straight week.
Rates for May 2-9th and This Week
While last week’s rate was noted at 5.07 percent, this week’s rate fell to 5.06 percent. Compare this to 2009, when the national average for fixed rate mortgages was about 4.8 percent.
In December, when the Federal Reserve and the government released new FHA guidelines and federal loans, rates tumbled down to 4.71 percent. Consumers were then able to borrow more without worrying about a high, spiked interest rate. Since the program ended in March, rates have steadily crept above 5 percent.
Protecting Against Home Price Decline
Generally, these rates are still considered low rates, as they protect the real estate market from suffering large declines in home prices. Most of the time, Freddie Mac will survey private and semi-private lenders across the country to calculate national averages.
They’ll do this research on Monday through Wednesday so they can release the results on Thursday.
The rate on 15-year fixed rate mortgages remained the same as last week, at 4.39 percent. Five-year adjustable rate mortgages fell somewhat significantly, from 4.03 percent to 4 percent.
Including Fee Assessments and Points
None of Freddie Mac’s above calculations include fee assessments for loan points. Generally, points are considered to be equivalent to 1 percent of the amount of the loan.
These points are calculated separately. As you can see, rates are generally hovering between 4.7 and 5 percent nowadays.
Numerous Factors That Determine Mortgage Rates
The calculations and actions that go into setting prevailing mortgage rates are quite complicated, but it’s possible to break these down into a few major influences. Actually, local banks and lenders don’t have much influence on mortgage rates. Rather, these rates are largely determined by more general and broad factors.
Watch The Fed
The Federal Reserve exerts a pretty powerful influence over mortgage rates. When the Fed adjusts its funds rate, then banks also modify their interest rates. Some lenders set rates based on 10-year T bill projections, while others evaluate indexes and other bonds.
So, you’ll notice that when 10 year bonds fluctuate, mortgages will follow suit. This can be particularly damaging for people who have adjustable mortgages, if rates increase.
The Secondary Market
When a bank or financial institution gives you a loan, it’s not often that they hold onto the loan. In fact, it’ll probably travel to what’s called the secondary mortgage market. Here’s how this works:
The bank will sell your loan to a third party or outside investor. Often, the bank will sell it to a mutual fund. The purchaser of the loan is usually called the aggregate.
Then, the aggregate puts your loan in a basket with many other loans to form what’s called a mortgage-backed security, or MBS.
The aggregate will probably divide up the security into a variety of different stocks, called tranches, to sell back to investors.
How Do Investors Earn Funds On Tranches, and How Does It Affect Me?
Investors purchase these tranches so that they can get a return on what they’ve invested, which is theoretically supposed to come from mortgage payments. So, you can see already that it’s the best interest of the lender and the aggregator to balance the financial interests of investors as well as buyers.
If a mortgage rate is unilaterally low, then it will attract a lot of buyers. But, if the rate is higher, then more investors are likely to jump on board and invest. Both the buyer and the investor are competing to acquire what’s in their best interest.
So, the secondary mortgage market plays a huge role in determining mortgage rates. But there’s more to it. Often, the mortgage rate will be determined by the price at which the aggregator is willing to purchase any loan. Remember, that price is dependent upon the success of selling mortgage-backed tranches. Therefore, since investors determine the rate of tranches, you can see that individual investors can have a huge effect on mortgage rates.
A Variety of Factors
Factors such as the Federal Reserve, the strength of the U.S. economy, the rate of inflation, and many other things affect investors’ willingness to take risks. Huge inflation will deter investors, while moderate inflation is actually a sign of a good economy.
Remember, since investors can freely choose where to invest, competition with other investments will also determine mortgage rates. If investors can find a good return on mortgage-backed securities, then they’ll be more likely to purchase them.
Most investors are hip to adjustments made by the Federal Reserve, which is basically why this institution has such a profound influence on mortgage rates.
As you can see, investors are really the main factor that affects mortgage interest rates and home loans.
FRM Interest Rate Stable at less than 5%
Out of the 10 major cities surveyed this month, 8 of the cities’ financial institutions have recently been offering fixed-rate mortgages at less than 5%.
This is a substantial jump from July, back then only one city offered mortgage rates at less than 5%. This is almost a return to the way things were in November; average mortgage rates were at an all time low and you could get an FRM in every one of the 10 cities for less than 5%. The data for the interest rates in each city is available on the databases of Bankrate.com, and Interest.com.
The most popular mortgages among borrowers are 30-year fixed rate loans with neither points nor fees of less than $2,000. A comparison such offerings from different banks yielded these results:
Atlanta: 4.875% from AimLoan.com.
Boston: 4.875% from Gold Star Inc.
Chicago: 4.875% from Sterling Home Mortgage.
Dallas: 4.875% from Austin First Mortgage.
Los Angeles: 5.00% from Integrity First Financial Group.
Miami: 4.75% from Quick Quote Mortgage.
New York: 4.875% from EverBank.
Phoenix: 4.875% from Interstate Mortgage Service, Inc.
San Francisco: 4.875% from Mortgage Capital Associates.
Seattle: 4.875% from American Interbank.com.
There are conditions though: Such mortgages are only for conforming loans of less than $417,000, and borrowers need to have credit scores of 700 or better. Scores from 680 to 699, are allowable, but at a higher rate; at least 1% of the loan value or even higher.
Efinance Your Way Out of Ridiculous Mortgage Rates
Many homeowners choose refinancing as a great way to reduce mortgage rates. While refinancing can help you save money in the long term, it’s only advised for people who have done the math and can safely deduce that refinancing will help ease their financial burden. Here, we’ll take an in-depth look at refinancing.
The Pros and Cons of Refinancing
Technically, refinancing is a process by which you renegotiate your loan so that you can earn a more favorable rate and better terms. In this sense, refinancing helps make your home more affordable. Usually, the new loan will be placed against the dictated property as collateral, yet its value may or may not exceed the balance of the current loan.
Here are some reasons why refinancing might be a good option for you.
1.A desire to save more. If you can get a term extension or a lower rate, you might be able to save more. Extensions in terms could mean an increase in your savings, but an overall jump in interest.
2.You want to pay things off quicker. If you reduce the loan term, you can shorten the length of your mortgage. Since monthly payments will increase, overall interest will decrease. You’ll be on your way to owning your home in no time.
3.More cash liquidity. Refinancing can help you free up cash you need for various expenses. In this manner, you can pay off any high interest debts, or you can take care of credit card balances and any other loans you might have. This interest is not deductible, unlike mortgage interest.
4.Consolidation of 2 loans into one. If sufficient equity is there, you can consolidate the first and second mortgages and end up paying interest on only one mortgage.
5.Converting an adjustable-rate mortgage to a fixed rate mortgage. You can secure a low rate for the remainder of your term if you can get a good fixed rate.
6.Getting rid of your PMI. As long as your balance sits below 80% of the home value (as it has been appraised), then it’s possible for you to refinance without paying the PMI.
Why You Need to Build Up Equity
It’s incredibly smart to build up equity in your home before you refinance. This will give you more flexibility when you refinance. Also, make sure you refinance when rates are low. Be patient, as it doesn’t make sense to refinance just for the sake of doing something new. Be sure you pay off any late payments, but many lenders have restrictions that require borrowers to have made timely payments for the past twelve months.
Nitpick And Make Refinancing Work For You
Get rid of pesky negatives and improve your credit score. This will help you qualify for the best refinancing rates available. Lenders will be particularly picky about your credit score, so you need to make sure that you dispute any negative items and pay off any outstanding balances. Stay away from strange ‘bad credit’ refinance loans. These often have hidden fees and very high rates.
If you can hone your refinancing skills, you will end up with a much more affordable home than you ever thought possible. Take it slow.
The Skinny on Adjustable Mortgage Rates
Many people are unaware that taking on an adjustable mortgage rate can significantly lower mortgage rates. These loans, otherwise known as ARMs, are basically special types of mortgage loans. Often, homeowners can find lower rates on mortgage payments in the beginning years of their loans.
Fixed Rate vs. Adjustable Rate Mortgages
Most mortgages operate as fixed rate mortgages. This means the interest rate stays the same for the duration of the mortgage. You’ll pay the same amount every month on your premium, unless you refinance or pay off your loans early.
The interest rates on ARMs will change depending on prevailing interest rates. Many adjustable rate mortgages are tied to the LIBOR index, the Treasury Securities Index, the Cost of Funds Index, or a variety of other indexes.
Term Fluctuation
Your rate will adjust depending on the terms of your adjustable rate mortgage. These rates are adjustable every six months, every year, or even every several years. Adjustable rates are usually good for people who are paying off a condo or a short term home.
A Good Short Term Option
Remember that adjustable rates will benefit you in the short term, but if interest rates rise, you could end up paying more than you bargained for.
Analyze all your options to determine if a fixed rate mortgage or an adjustable rate mortgage would be better for you.
How Does a Home Equity Loan Work?
Though it’s been a much discussed practice in the media lately, many are still relatively in the dark as far as home equity loans are concerned. As with anything related to mortgages and financing, there are a lot of subtle nuances and rules you need to be aware of and understand before you do anything. But in general the basic principles behind home equity loans are pretty simple and universally applicable throughout the housing market. In essence, a home equity loan entails a homeowner borrowing money from the mortgage firm or bank against the equity they have built up in their house.
In order to determine how much equity you have in your house to borrow against, the following basic formula lets you know how much you can take out. First, take the current value of your home and subtract the amount you still owe, which gives you the equity amount. When borrowing against this built up equity, you generally don’t want to borrow more than 75% to 80% of that total. There are a number of reasons that one might want to take out a home equity loan. Anyone with positive equity is eligible to apply for one.
Some times emergencies crop up and homeowners need some extra cash to deal with unexpected expenses. Or they may want to make capital improvements to their home in the hopes of selling it for a greater amount, so they can come out even or even make a profit. For whatever reason, there are a few things that need to be kept in mind when taking out a loan. The terms of your deal will depend greatly on your credit history and ability to pay back the loan in a timely manner. Obviously, your home equity depends entirely on the current assessed value of your home, which can go down in the future, despite what some experts claim.
When you do take out a loan against the equity, you’ll be refinancing your original mortgage or taking out a second one. The interest rates will of course be somewhat higher in either event. As with any contract, the important thing to remember is to carefully read the fine print and review your options before you make any decisions. Home equity loans can be both a blessing and a curse, so it is vital that you take the time to weigh all eventualities before you undertake any new financial obligations.