The Fed cut the fed funds rate at the end of October. The rate was dropped from 1.5% to 1%. This is the lowest the rate has been since 2003. Following the cut we saw drops in all the major mortgage products. The 30 year dropped from 6.46 to 6.2. The largest drop was in the 15 year mortgage which fell from 6.19 to 5.88 a drop of .31 points. 5 year arms and 1 years also fell .17 and .13 respectively. Below are mortgage rates for the last several weeks.
November 6, 2008 30-yr 6.20 15-yr 5.88 5-yr ARM 6.19 1-yr ARM 5.25
October 30, 2008 30-yr 6.46 15-yr 6.19 5-yr ARM 6.36 1-yr ARM 5.38
October 23, 2008 30-yr 6.04 15-yr 5.72 5-yr ARM 6.06 1-yr ARM 5.23
October 16, 2008 30-yr 6.46 15-yr 6.14 5-yr ARM 6.14 1-yr ARM 5.16
As we can see from the numbers rates have been moving back and forth over the last few weeks pushed around by different bits of economic news coming out. And this week of course by the recent cuts by the fed. Let's look at what a mortgage would be this week on a 200k loan based on current rates. We also looked at what the mortgage would be for a 200k loan based on last weeks rates.
November 6th 30-yr $1224.92 15-yr $1674.77 5-yr ARM $1223.64 1-yr ARM $1104.40
October 30th 30-yr 1258.87 15-yr 1708.31 5-yr ARM 1245.77 1-yr ARM 1120.56
So first off my advice would be to avoid the 5 year arm. Since the mortgage is so close to what you would be paying on a 30 year fixed mortgage their is almost no reason to consider a 5 year arm. I would also probably avoid a 1 year arm. With mortgage rates acting so wildly its pretty likely rates could be much higher a year from now. If you get a 30 year fixed and rates drop substantially you can also refinance at the new lower rate. If you get a 1 year arm and rates increase there is not much you can do but simply make higher payments.
So what is going to happen moving forward. I have heard some speculation that rates are going to increase this month. I don't know if rates will be higher a month from now but I think rates will continue to see the atypical large weekly fluctuations we have seen the last few weeks.
There has also been some speculation that the fed will raise rates if the market starts to improve. I don't think this is a foregone conclusion. If the economy starts to improve I don't think the government will move quickly to raise rates. Basically the financial crisis has been so severe that if we start to move beyond it politicians will be worried of raising rates too quickly will botch a potential recovery. Or if the recovery fails for other reasons they will be blamed anyway. Therefore I think priority number 1 over the next year will remain the real estate and mortgage markets and that translates to keeping the fed rate low. Of course keeping the fed rate low does not guarantee that mortgage rates will stay low.
Escapeso Realty works in Austin Texas. Their site offers a free mortgage calculator html for webmasters and a widget that shows current mortgage rates
Wednesday, November 12, 2008
Refinance Home Loan - 3 Tips to Help You Avoid Trouble
The refinance home loan process can be so confusing if you have absolutely no idea about what is involved in this process. There are 3 things that you can do to give yourself the edge and get a much understanding about this process. As the old saying goes "Knowledge is Power"; and nowhere is that more evident than in this case. The more you know, the better off you will be when you final come through the entire process.
Do Your Research
The very best thing that you can do before you even start the refinance home loan process in earnest is to spend some time doing research into the local and national lenders. There are several different ways to go about researching; online searches, talking to friends and family for recommendations and talking to several over the phone. If you decide that the only type of research you are going to do is online; you are very likely to be completely swamped and probably very confused by the sheer volume of information that you will find. You might be wiser in getting recommendations or referrals from family and/or friends; or calling a few that are in the telephone boo or that you have heard good information about.
KNOW the current Rates
If you already know the current interest rate that you are paying, this is half the battle in the refinance home loan process. This will tell the lender how much you are currently paying in interest. You will also want to get to know what the current going interest rates are so that you are prepared for whatever may come your way. Knowing this information tells you what you are getting into.
Be Totally Prepared
This means that you need to know and have written down every bit of information that you will need to provide the lender when you go to meet with them the start the refinance home loan process. You will definitely need to have all of the documentation that relates to your current mortgage; this includes the statements and/or payments coupons from your current lender as well as the original paperwork that you received at the start of the original loan. All of this information is un-necessary if you are refinancing your mortgage through the lender that you are already working with; as they already have all of this information.
Miscellaneous Thoughts
There are some other things that you really need to consider before you initiate the refinance home loan process. One of the main things to think about and really consider is why you are looking to refinance your existing mortgage. Are you refinancing because the current interest rates are lower than what you are paying now? Are you thinking that you will be able to get a lower monthly payment by refinancing? You might; but then again, you may not. Make sure that you are completely prepared for the possibility of being turned down and ask for the specific reasons for rejection.
Is this enough information to get you started in the Refinance Home Loan process? If you said no, then why not go to http://www.homemortgageloan-refinance.com/Bad-Credit-Home-Loan-Refinance.php to find out more
Do Your Research
The very best thing that you can do before you even start the refinance home loan process in earnest is to spend some time doing research into the local and national lenders. There are several different ways to go about researching; online searches, talking to friends and family for recommendations and talking to several over the phone. If you decide that the only type of research you are going to do is online; you are very likely to be completely swamped and probably very confused by the sheer volume of information that you will find. You might be wiser in getting recommendations or referrals from family and/or friends; or calling a few that are in the telephone boo or that you have heard good information about.
KNOW the current Rates
If you already know the current interest rate that you are paying, this is half the battle in the refinance home loan process. This will tell the lender how much you are currently paying in interest. You will also want to get to know what the current going interest rates are so that you are prepared for whatever may come your way. Knowing this information tells you what you are getting into.
Be Totally Prepared
This means that you need to know and have written down every bit of information that you will need to provide the lender when you go to meet with them the start the refinance home loan process. You will definitely need to have all of the documentation that relates to your current mortgage; this includes the statements and/or payments coupons from your current lender as well as the original paperwork that you received at the start of the original loan. All of this information is un-necessary if you are refinancing your mortgage through the lender that you are already working with; as they already have all of this information.
Miscellaneous Thoughts
There are some other things that you really need to consider before you initiate the refinance home loan process. One of the main things to think about and really consider is why you are looking to refinance your existing mortgage. Are you refinancing because the current interest rates are lower than what you are paying now? Are you thinking that you will be able to get a lower monthly payment by refinancing? You might; but then again, you may not. Make sure that you are completely prepared for the possibility of being turned down and ask for the specific reasons for rejection.
Is this enough information to get you started in the Refinance Home Loan process? If you said no, then why not go to http://www.homemortgageloan-refinance.com/Bad-Credit-Home-Loan-Refinance.php to find out more
Types of Home Mortgage Loans
Mortgage is a loan that is obtained to close the gap between the cash in hand for a down payment and the purchase price of the home. While opting for a home mortgage loan, choosing the type of loan can clear half of the hurdle. There are various types of loans like fixed rate mortgage loans and adjustable rate.
In a fixed rate mortgage loan, the interest rate remains the same irrespective of the economy. Therefore the monthly mortgage payment is the same throughout in effect. The main advantage of this type of fixed rate mortgage is the certainty but the negative aspect is that the amount of the monthly installment for repayment of the loan will be a little higher in the form of a higher interest rate. When the period of fixed rate loan is longer there is a certain amount of risk for the lender because the difference in the increase of interest rate is borne by the lender and hence the higher interest rate.
On the contrary, adjustable rate mortgage rates of interest adjust periodically during the loan term. And for this type of loans the overall interest rate is low. The main disadvantage in this type is the uncertainty of the adjustment phase. During this period the monthly payments will go up and down with the changes in interest rates and it is highly unpredictable.
The third type of loan is the balloon loans or a reset mortgage which starts with the fixed interest rate for a certain number of years, usually seven to ten years which will be as low as adjustable market rates, after which period the balance should be paid in full which is a large sum of money to be paid in one lump sum. Balloon mortgages have interest rates lower than a traditional home loan.
Fixed rate mortgage can be for a term of 30 year fixed rate, which has the greatest interest reduction and easiest type to qualify for. The 20 year fixed rate offers a lower interest rate and 15 year fixed rate, which is the same as 20 years term but increases the monthly amount to be paid.
In addition there are other loans like FHA loans, VA loans and RHS loans. FHA loan is offered by the Federal Housing administration to qualified homebuyers for moderately priced homes with a low down payment, usually three to five percent VA loan is offered by the department of veteran affairs, which has the added benefit of zero down payments. This type of loan is available only to military veterans RHS loans are available to households with low or moderate income located in rural areas or small towns.
To get a fair deal in home mortgage, it is advisable to set a budget, pick the right type of mortgage, choose a suitable locale, compare the cost of loans with similar ones and most importantly inspect the home to be bought. If these things are taken care of, a home mortgage loan can be worth taking.
Joli De Royale is, The Rich BabeTeaching my successful techniques to my readershttp://www.therichbabe.com
In a fixed rate mortgage loan, the interest rate remains the same irrespective of the economy. Therefore the monthly mortgage payment is the same throughout in effect. The main advantage of this type of fixed rate mortgage is the certainty but the negative aspect is that the amount of the monthly installment for repayment of the loan will be a little higher in the form of a higher interest rate. When the period of fixed rate loan is longer there is a certain amount of risk for the lender because the difference in the increase of interest rate is borne by the lender and hence the higher interest rate.
On the contrary, adjustable rate mortgage rates of interest adjust periodically during the loan term. And for this type of loans the overall interest rate is low. The main disadvantage in this type is the uncertainty of the adjustment phase. During this period the monthly payments will go up and down with the changes in interest rates and it is highly unpredictable.
The third type of loan is the balloon loans or a reset mortgage which starts with the fixed interest rate for a certain number of years, usually seven to ten years which will be as low as adjustable market rates, after which period the balance should be paid in full which is a large sum of money to be paid in one lump sum. Balloon mortgages have interest rates lower than a traditional home loan.
Fixed rate mortgage can be for a term of 30 year fixed rate, which has the greatest interest reduction and easiest type to qualify for. The 20 year fixed rate offers a lower interest rate and 15 year fixed rate, which is the same as 20 years term but increases the monthly amount to be paid.
In addition there are other loans like FHA loans, VA loans and RHS loans. FHA loan is offered by the Federal Housing administration to qualified homebuyers for moderately priced homes with a low down payment, usually three to five percent VA loan is offered by the department of veteran affairs, which has the added benefit of zero down payments. This type of loan is available only to military veterans RHS loans are available to households with low or moderate income located in rural areas or small towns.
To get a fair deal in home mortgage, it is advisable to set a budget, pick the right type of mortgage, choose a suitable locale, compare the cost of loans with similar ones and most importantly inspect the home to be bought. If these things are taken care of, a home mortgage loan can be worth taking.
Joli De Royale is, The Rich BabeTeaching my successful techniques to my readershttp://www.therichbabe.com
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