Posts Tagged ‘mortgage’

Mortgage rates for 30-year fixed mortgages rose this week, with the current rate borrowers were quoted on Zillow Mortgage Marketplace at 3.9 percent, up from 3.83 percent at this same time last week.

After rising to 3.94 percent last Thursday, the 30-year fixed mortgage rated hovered between 3.93 and 3.91 percent for the rest of the week, falling to the current rate early this morning.

“Mortgage rates have remained low throughout the week and likely will stay at historically low levels for the foreseeable future,” said Erin Lantz, director of Zillow Mortgage Marketplace. “This is great news for the nearly 900,000 current homeowners that are projected to take advantage of the revamped Home Affordable Refinance Program by the end of 2013.”

Additionally, the 15-year fixed mortgage rate this morning was 3.24 percent and for 5/1 ARMs, the rate was 2.82 percent.

What are the rates right now? Check Zillow Mortgage Marketplace for up-to-the-minute mortgage ratesfor your state.

Posted at Zillow.com

Getting a mortgage is no simple task: It’s a complex and time-consuming process, and perhaps one of the most significant events of our lives, at least in financial terms. Here are ten potential pitfalls to avoid:

1. Not checking your credit: Long before you begin searching for a mortgage, you should know where you stand in the credit score department. After all, a bad credit score can bump up your mortgage interest rate several percentage points or leave you with no approval at all. Be sure you check your credit early on (several months in advance) in case any changes need to be made to get it back up to snuff.

[Click here to check home loan rates in your area.]

2. Applying for new credit alongside the mortgage: In this same vein, be sure to avoid applying for any other type of credit before and during the mortgage application process. Whenever you apply for new credit, you’re seen as a greater credit risk, at least initially. If you happen to apply for a credit card or auto loan around the same time you apply for a mortgage, your credit score might get dinged enough to kill your eligibility or bump up your interest rate.

3. Failing to look at the total housing payment: A mortgage payment consists of principal, interest, taxes, and insurance (PITI). A common mistake made by prospective home buyers is not factoring in their property taxes and insurance premium into their overall mortgage budget. The debt-to-income ratio (DTI ratio), used to determine if a borrower will qualify for a certain mortgage payment, is calculated by dividing the proposed cost of PITI by gross monthly income. A $1,200 homeowner’s insurance policy would add $100 per month to an escrowed mortgage payment.

4. Not seasoning your assets: The bank or lender will want to see that you can actually pay your mortgage each month. But without seasoned assets, those that have been in your own account for at least a couple months, you could be out of luck entirely. Some borrowers seem to think they can transfer funds from a relative’s account days before applying, but this simply won’t fly once the underwriter uncovers the paper trail.

5. Job hopping: Another key to mortgage approval is steady employment and income. An underwriter will want to know that the income you bring in every month is consistent and expected to continue into the foreseeable future. So don’t jump from job to job too much before applying for a mortgage. If it’s in the same field, it shouldn’t be a deal killer, but a career change will lead to problems. If you’re thinking about jumping ship, wait until you’ve closed your mortgage first.

6. Not getting pre-approved: Good preparation is the key to a good mortgage. Before shopping for a home, make sure you can actually qualify for financing by getting a pre-approval. A mortgage pre-approval is more robust than a simple pre-qualification because the bank pulls your credit and looks at your income, assets, and employment. Your DTI ratio will also come into play to ensure you know exactly how much you can afford. With this pre-approval, you will also get a written commitment from the lender that will show home sellers you’re serious about the purchase.

7. Not shopping around: But just because you’re pre-approved with one bank doesn’t mean you need to obtain financing from them. Be sure to shop around with multiple banks and lenders and even consider a mortgage broker. A broker can shop your rate with a number of banks concurrently and find you the lowest rate with the best terms. Don’t be one of the many consumers who obtains a single mortgage rate prior to applying. Comparison shop as you would for anything else you buy. And don’t forget to factor in closing costs!

8. Chasing exotic loan programs: Shop around for the lowest rate and closing costs, but not at the expense of your mortgage. Anything that sounds too good to be true most likely is. If the payment seems too low, you might be paying interest-only or even negatively amortizing, meaning your mortgage balance is growing each month. It’s best to keep it simple and go with a loan program you can get your head around, like a fixed-rate mortgage.

9. Forgetting to lock your rate: Keep in mind that a mortgage rate means very little if it’s not locked-in. If you’re happy with your rate, lock it. Mortgage rates change daily and sometimes several times daily. All those mortgage quotes you obtain are just quotes until you actually tell the bank, lender, or broker to “lock it in.” Once locked, your rate is guaranteed for a certain period of time, be it 7 days, 15 days, or a month. But never assume your rate is locked until you get it in writing!

10. Not reading your loan documents: Finally, it’s your responsibility to read and accept the terms of your new mortgage. Sure, it might be a pain to go through all the loan documents at signing, but it’s a bigger pain to sign up for something you don’t want or agree with. Take the time at closing to ensure you understand everything you’re signing, and thereby agreeing to. And don’t be afraid to ask questions! Otherwise, you could wind up with a mortgage with predatory terms and no place to turn.

Colin Robertson is the author of several finance websites aimed at helping consumers save money, including The Truth About Mortgage and The Truth About Credit Cards, which includes his popular credit score range.

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Posted at Yahoo.com

Mortgage rates for 30-year fixed mortgages fell this week, with the current rate borrowers were quoted on Zillow Mortgage Marketplace at 3.76 percent, down from 3.86 percent at this same time last week. On Sept. 22, the 30-year fixed mortgage rates dropped to 3.74 percent – the lowest recorded rate since Zillow Mortgage Marketplace launched in April 2008.

The 30-year fixed mortgage stayed below 3.9 percent for the entire week, hovering between 3.79 percent and 3.82 percent over the weekend. The rate then dropped to 3.74 percent yesterday before rising to the current rate early this morning.

“Concerns that Europe’s debt crisis will worsen by spreading beyond Greece to other euro zone countries, paired with the overarching depression of the financial markets, have kept mortgage rates at historically low levels as of late,” said Erin Lantz, Director of Zillow Mortgage Marketplace. “Although the launch of Operation Twist and the Fed’s new mortgage-backed securities buying efforts should be stabilizing factors, I expect volatility in the coming weeks related to either positive or negative news on the potential for Greek default.”

Additionally, the 15-year fixed mortgage rate this morning was 3.18 percent and for 5/1 ARMs, the rate was 2.7 percent.

What are the rates right now? Check Zillow Mortgage Marketplace for up-to-the-minute mortgage ratesfor your state.

Posted at Zillow.com

Mortgage rates for 30-year fixed mortgages rose this week, with the current rate borrowers were quoted on Zillow Mortgage Marketplace at 4.09 percent, up from 4.05 percent at this same time last week.

After peaking at 4.07 percent on Saturday, the 30-year fixed mortgage rate hovered between 3.98 percent and 4.02 percent for the remainder of the week before rising to the current rate early this morning.

Additionally, the 15-year fixed mortgage rate this morning was 3.37 percent and for 5/1 ARMs, the rate was 2.84 percent.

What are the rates right now? Check Zillow Mortgage Marketplace for up-to-the-minute mortgage ratesfor your state.

Posted at Zillow.com

Mortgage rates for 30-year fixed mortgages rose this week, with a current rate on Zillow Mortgage Marketplace of 4.05 percent, down from 4.14 percent at this same time last week, but up 13 basis points from 3.92 percent last Wednesday – the lowest rate recorded since Zillow Mortgage Marketplace launched in April 2008.

After peaking at 4.09 percent last Thursday, the 30-year fixed mortgage rate hovered between 4 percent and 4.05 percent for the remainder of the week, returning to 4.09 percent early this morning before falling to the current rate.

Additionally, the 15-year fixed mortgage rate this morning was 3.33 percent and the 5/1 ARMs rate was 2.86 percent

What are the rates right now? Check Zillow Mortgage Marketplace for up-to-the-minute mortgage rates for your state.

Posted at Zillow.com

Does it make sense to pay off your mortgage early?

It might.

Should you pay your mortgage bi-weekly?

Maybe.

Bi-weekly mortgage payment programs are something that many people take advantage of and seem to be happy with.  The most common reason people give me when I talk with them about bi-weeklymortgage programs is that they want to pay their house off early and bi-weekly programs seem tomatch up well with their paycheck schedule.

If you get a regular paycheck and are interested in paying off your house early, a bi-weekly mortgage payment plan can make a lot of sense.

How Bi-Weekly Programs Work

Once you have signed final paperwork for your mortgage, many lenders will send you a mail piece offering “bi-weekly payment plans” that you can sign up for. There is almost always a price to sign up for bi-weekly payment programs – typically $250-$500 up front and then $5-10 each payment.  Prices will vary, but the first thing to be aware of is that bi-weekly payment programs are usually not free.

Once you are enrolled in the bi-weekly payment program, you will be making payments via EFT (Electronic Funds Transfer), which means that you will make 26 payments per year instead of 12 – and essentially, you are making 13 monthly payments rather than 12, with the “extra” payment going to principal.

Depending on your interest rate and term of your mortgage, just making 13 payments a year instead of 12 you can reduce anywhere from 6 to 8 years from a 30-year mortgage.

When Bi-Weekly Programs Make Sense

If you get paid twice-a-month and live within a tight budget like many Americans, I recommend considering a bi-weekly mortgage program.  There are costs, but the ease of being able to know that you are making a smart financial decision is something that you can simply set up and then forget about.

For most of my life, I have personally been on a bi-weekly mortgage program and for most people I know, it makes sense.

How to Avoid Costs of a Bi-Weekly Plan

In the event that you are one of the people who take the position that the costs are simply too high for a bi-weekly program, there are two simple things you could do that will have the same financial effect on reducing the term of your mortgage:

• When you make your payment each month, add an additional 1/12th of a payment and indicate that it should go to the principal balance

OR;

• Make an extra payment once a year and indicate that the extra payment should go to the principal balance

As with everything in life, convenience has a price.  And when it comes to paying off a mortgage early using a bi-weekly mortgage payment program, setting it up so you can forget about it is worth the price.

At least it is to most people.

Justin McHood works for Academy Mortgage and is based in Chandler, AZ. He is a contributor to Zillow Blog and has conversations about mortgages whenever he can. Learn more about Justin athttp://www.mortgagecommentator.com.

Posted at Zillow.com

After failing on repeated occasions to extend a two-month rally, mortgage rates took the path of least resistance this week: UP

The BestEx levee burst.

In the chart of Consumer Rate Quotes below, if the line is moving up, closing costs are rising.  If the line is moving lower, costs are getting cheaper. Sideways mortgage rate behavior followed by an abrupt drop followed by another spell of mostly sideways activity can be seen when looking closely. This spell of sideways activity took place near the most aggressive rate quotes of the year.  Since setting new lows last Friday, consumer borrowing costs have risen sharply. 

Home loan borrowing costs clearly spiked this week...

The chart above compares the average origination costs (as a percentage of loan amount) for several available mortgage note rates as quoted by the five major lenders. Each line represents a different 30 year fixed mortgage note rate.  The numbers on the right vertical axis are the origination closing costs, as a percentage of your loan amount, that a borrower would be required to pay in order to close on that note rate. If the note rate graph line is below the 0.00% marker, the consumer may potentially receive closing cost help from their lender in the form of a lender credits. If the note rate line is above the 0.00% marker, the consumer should expect to pay additional points at the closing table to cover permanent buydown costs and origination fees. PLEASE SEE OUR MORTGAGE RATE DISCLAIMER BELOW

CURRENT MARKET*: The "Best Execution" conventional 30-year fixed mortgage rate has risen to 4.625%, but fewer lenders are readily quoting it after additional weakness was experienced today. More lenders are offering 4.75% instead (extra margin in rate sheets).  On FHA/VA 30 year fixed "Best Execution"  is still 4.375% but just barely, 4.50% is more willingly quoted.   15 year fixed conventional loans are best priced at 3.875%. Five year ARMs are still best priced at 3.25% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

GUIDANCE OFFERED LAST FRIDAY:  This is as good as it's been all year. Since the middle of November really.  If you're on a short lock/float timeline (15 days), now is a good time to considering locking. While a few sessions of continued loan pricing rallies could lead to a lower overall note rate offer, we've been here before (recently) and failed to see investors commit to a sustained rally in the bond market. Our long-term outlook still supports the case for lower rates though, however until we see investors display a commitment to rally, we will be reluctant to advise floating in the short-term, especially with volatility only 2-days behind us.

CURRENT GUIDANCE:   Last week's guidance nailed it.  The path of least resistance is still up for interest rates, at least in the short-term. That puts us in a defensive posture for at least the next 10 to 20 days and creates an uncomfortable lock/float environment. Rate watchers have two choices: 1) lock up and get out now or 2) try to capitalize on a correction.  The former is the safe advice.  With respect to the latter, there will be ups and downs no matter which direction rates are trending.  And in the current environment, those swings can be BIG, as illustrated in the chart above. For the thrill-seekers out there, or the longer-term, more flexible scenarios, we haven't change our outlook for lower rates by the end of the summer. BEWARE: This is guidance is speculative in nature. We don't have a crystal ball, we can't predict the future, we can only share our outlook. Making the following considerations extra important........................

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

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"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

*Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process.

Volatility attacked on Tuesday and attacked again today.

For the second time this week, home loan borrowing costs have risen about as much as they can without negatively impacting the CURRENT MARKET Best Execution Mortgage Rates. 

The abrupt jump in cost is again due to bond market volatility following a "technical breakdown." Read More from MBSonMND.

CURRENT MARKET*: The "Best Execution" conventional 30-year fixed mortgage rate has risen to 4.625%. Some lenders may already be quoting 4.75% though.  On FHA/VA 30 year fixed "Best Execution"  is 4.375% and potentially even 4.50% at some lenders (GNI pricing = better).   15 year fixed conventional loans are now best priced at 3.875%. Five year ARMs are still best priced at 3.25% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

PREVIOUS GUIDANCE:   After failing on repeated occasions to extend the two-month rally, mortgage rates are acting exhausted. That means the path of least resistance is up for interest rates, at least in the short-term. That puts us in a defensive posture for the next 10 to 20 days. We are not ready to change our outlook for lower rates by the end of the summer though. This corrective behavior happened last year too, which supports our long standing view that "history is repeating itself" in the bond market. 

CURRENT GUIDANCE:   Previous guidance nailed it: The path of least resistance is up for interest rates, at least in the short-term. That puts us in a defensive posture for the next 10 to 20 days.  And markets demonstrated that again today with sharp increases in costs.  You have two choices: 1) lock up and get out now, avoiding any ongoing volatility or 2) try to capitalize on a brief correction.  The former is the safe advice.  With respect to the latter, there will be ups and downs no matter which direction rates are moving.  And in the current environment, those swings can be BIG.  You're almost looking at another note rate higher in terms of Best-Execution quotes, so PROTECT THAT, especially if you can't afford to lose it.  For the thrill-seekers out there, or the longer-term, more flexible scenarios, we haven't seen anything yet that kills chances of lower rates by the end of the summer.  Bumpy ride in assessing that possibility though....  Making the following "rules of the game" doubly important.

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

SEE A CHART OF NEW YTD RATE LOWS

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"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

*Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process.

Copyright: Informa