Mortgages might be getting cheaper
Mortgage rates could become lower. As lower rates make homes more affordable, this is positive news for existing and prospective home buyers. The existing market, characterized by slowing new construction and declining interest rates, provides a unique opportunity for anyone in the market to buy a home.
For the past five weeks, interest rates on 30-year fixed rate mortgage loans have been climbing, and this weeks drop signals a change from the norm. Economists believe that the drop in mortgage interest rates is the result of general economic pressure applied to consumers by the housing market. Essentially, as rates increased and owning a home became more expensive, homeowners felt the squeeze. Since the high cost of housing is slowing economic growth, a drop in mortgage rates is likely to save consumers some money and inject some growth into the economy.
Freddie Mac, a mortgage corporation chartered by the federal government, stated that mortgage interest rates (for 30-year fixed rate loans) averaged 6.69% last week, down from 6.74% the week prior. This decline is actually the first drop since mortgage interest rates reached their highest level in the past 11 months. While investors are still reacting to this change, the result is positive news for prospective home buyers, who can take advantage of more favorable interest rates. Existing homeowners may want to take this opportunity to consider refinancing their mortgages, especially if they have mortgages with fixed interest rates.
The climate of increasing interest rates and high housing costs also has led to slowdowns in the new home building market. The construction of new homes (both houses and apartments) fell 2.1% from April to May. This is an overall decline of 24.2% from May 2006. The National Association of Home Builders announced that new home builder sentiment – an index measured by the organization has fallen to a 16-year low.
Among the reasons new construction is slowing is that rates have been high for 11 months, resulting in less sales activity from prospective home buyers. When rates are high, new homes don’t go up. As a result, this can be an interesting time to purchase a home, especially if you have a high credit rating (and can get a more favorable interest rate). With new construction slowing, there are bound to be bargains on the market, making this an ideal time to pick up an investment or vacation property.
The mortgage and housing markets are always moving, so it pays to stay in touch. If you keep track of the direction of mortgage rates, you will know when it is time to refinance your mortgage, in order to save money on your monthly payments. By keeping track of both the mortgage and housing markets, you will be able to identify the right time to buy a new home, perhaps one to use as an investment. Watch the market. Keep track of interest rates and new construction. These small bits of information can scream loud opportunities to you if you are paying attention.
Understand how much your mortgage costs
Most Americans believe that interest is not expensive. According to a survey by credit reporting agency Trans Union’s TrueCredit.com division, 62% of respondents believe that in repaying a 30-year fixed mortgage, the interest payments will not exceed 100% of the amount borrowed. Put simply, most people believe that they will repay twice the price of the home, with the extra going toward interest.
In reality, a 30-year fixed rate mortgage can lead to interest payments of much more than 100% of the amount borrowed. The effect of compound interest can make a home purchase quite expensive, and the size of the mortgage will dictate just how much the interest will cost over the life of the loan. In order to avoid overpaying, it is prudent to offer as large a down payment as possible in order to reduce the amount borrowed. This approach literally can lead to hundreds of thousands of dollars in savings.
Additionally, the interest rate can have a profound impact on the interest payments over the life of a 30-year mortgage. It is important to get as low an interest rate as possible in order to slow the effects of compound interest and realize a cost savings every month. Consumers also should keep track of interest rate changes in order to take advantage of drops in rates that could provide a refinancing opportunity. Simply by monitoring the mortgage market, even in passing, can provide the information necessary to take advantage of lending changes that can benefit the consumer.
The TrueCredit.com study found that 24% of American homeowners claim to be concerned about the monthly cost of their mortgages, and that fixed rate mortgages are most popular. 49% of homeowners have fixed rate mortgage loans. The remainder is split among Adjustable Rate Mortgages (ARMs), interest-only mortgages and other mortgage products that have only specific applicability.
13% worry about negative equity. Negative equity occurs when the amount that the homeowner owes is greater than the value of the home itself. When this occurs, the home is no longer sufficient collateral for the mortgage. If the homeowner wishes to sell, there are only three viable alternatives. The homeowner could come up with the difference in cash, roll the negative equity into the next mortgage (assuming the homeowner is buying a new home) or sell the home and refinance the remaining debt into an unsecured loan at a substantially higher interest rate.
In order to get the most from your mortgage, it pays to understand how this market works. TrueCredit.com’s survey found that few homeowners really understand what their mortgages mean, aside from a certain amount to be paid every month. If you invest your time into understanding your mortgage, you have the potential to save hundreds of thousands of dollars over the life of your mortgage. Watch interest rates, and make a down payment if possible. Always be ready to refinance, and don’t borrow excessively against your home. With these four tips, your home will become a more productive asset.
Mortgage foreclosures climb steeplyBy Darla Mercado June 13, 2007
U.S. foreclosure filings have spiked 90% in the last year and have risen 19% between April and May alone.
Last month saw a total of 176,137 foreclosure filings, which cover default notices, auction sale notices and bank repossessions, according to online mortgage marketplace RealtyTrac of Irvine, Calif. That’s up 19% from April.
This translates to a national foreclosure rate of one filing for every 656 U.S. households.
California had the most foreclosure filings, reporting 39,659 during May, while Florida came in second with 21,704.
The news may not be so bad if you’re looking to buy a house cheap.
“Such strong activity in the midst of the typical spring buying season could foreshadow even higher foreclosure levels later in the year,” said James J. Saccacio, CEO of RealtyTrac.
“Foreclosed properties are becoming more commonplace and adding to the downward pressure on home prices in many areas,” he added.
Source: Investment News
6/12/2007 10:46:13 AM Tuesday morning, Countrywide Financial Corporation (CFC), a provider of diversified financial services, said Mortgage loan funding for May 2007 grew 15% to $44 billion, compared to the same period last year.
The Calabasas, California-based company said on a consolidated basis it funded $2.3 billion in pay-option loans during the month as compared to $6.6 billion in May 2006. Year-to-date funding for pay-option loans totaled $15 billion, as compared to $35 billion for the same prior year period.
Average daily mortgage loan application activity for May 2007 was $3.1 billion, an increase of 17% from May 2006. The mortgage loan pipeline was $70 billion at May 31, 2007 as compared to $66 billion at May 31, 2006.
The company generated robust residential mortgage productions results for the month of May, said David Sambol, President and Chief Operating officer. The mortgage loan-servicing portfolio totaled $1.4 trillion at May 31, 2007; an increase of $214 billion, or18%, from May 31, 2006.
Banking Operations' assets rose to $87 billion at May 31, 2007 from $80 billion at May 31, 2006. Securities trading volume in the Capital Markets segment of $351 billion for May 2007 was 6% higher when compared to the same month last year. Net earned premiums from the Insurance segment totaled $118 million, up 30% from May 2006.
CFC is currently down $0.10 or 0.26% and trades at 37.74
Introduction to Best Rate for Buyers
BestRateForBuyers.com finds the right mortgage for you. With access to an extensive network of
mortgage providers, our mortgage professionals are able to find the specific products that can make your new home a reality. We work with you to understand exactly what you want – not just in a mortgage but in the entire
home mortgage process. If you have no idea, we can help! Then, we search the mortgage marketplace for the best interest rates available. Our team will work with you for as long as it takes to find the
home mortgage loans / equity home loans of which you are comfortable with.
Our experienced mortgage professionals do more than find you a great mortgage loan rate. They will take the time you need to understand exactly what your choices are.
Fixed or adjustable? Should you pay points? What about a down payment? Don’t worry; we are here to help you understand what all this mean to you. The mortgage process may not be easy, but it does not have to be intimidating. With BestRateForBuyers.com, you have a partner in the entire process.
You will also notice that each State has there own "mini site" and all the information listed on those pages are completely relevant to only that specific state. Each state also has there own Directory Box, where industry related partners can list their business to share in the traffic and benefit the user as a whole. We want to create a truly reliable directory where a user who is looking for a mortgage can easily find all the resources needed throughout the mortgage process.
If you are interested in getting your business advertised on our site, please call us at
561-340-1441 or email me at info@bestrateforbuyers.com
