Are Mortgage Interest Rates Headed Up?
Are interest rates headed up?
Most experts are saying, yes. The Federal Reserve has been artificially keeping rates low for the last year. At the end of March, The Fed has announced they will quit buying Mortgage Backed Securities, which will cause rates to rise. Financial experts are saying rates may rise for 1-1.5% and that it could happen in short period of time. This could be devastating for a home buyer.
If rates rise 1%, you could see your purchase power decrease by 10%. On a $250,000 home, that is a $25,000 drop in the amount of home you can purchase. What about if rates go up 2% and rates end up in the 7’s? We are talking a 20% decrease in purchase power, or in our example, fifty-thousand dollars!
Now is the time to buy. Take the $8,000 tax credit for 1st time home buyers and couple it with the low rates that The Federal Reserve is giving us and you are talking about a nice gift from the government. Right now, you have the best incentives in history to buy a home, but they are likely going away. In order to get the $8,000 tax credit, you have to be under contract by April 30th 2010. With the possibility of rates going up toward the end of March, you would need to act now. It can take a month or more to find the right home and a month to close on your home loan. Don’t let this opportunity pass you by.
Toby R. Lane
Senior Loan Consultant
Academy Mortgage Corporation
Direct:Â 404-574-2609
Cell:Â 404-483-6040
eFax:Â 404-924-4990
www.atlantagamortgages.com
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Good news for inflation sent bonds into positive territory Friday on the heels of a stock sell off. This ended the week with FNMA mortgage bonds up almost 100 basis points over the close the previous Friday August 7th. This of course is good for mortgage rates since a higher yield in bonds leads to lower mortgage rates for the home buying public.
While this is not a huge decline in rates, in a tough mortgage market we will take what we can get and call the glass half full at any possible opportunity.
Coming up this week are plenty of economic reports that will have an affect on mortgage bonds and consequently mortgage rates. Remember, what is good for the economy, is generally bad for bonds and bad for mortgage rates. If you currently have a mortgage in processing but have not yet locked the rate, watch the news closely next week as the many indicators due out could swing the market in either direction including the Produce Price Index (PPI), New Housing Starts, Building Permits, and Jobless Claims to name a few.
If you would like to get pre-approved for a purchase or refinance in Gulf Shores or the Greater Pensacola area, please call 850-221-8334 anytime.
Steve Russell
Mortgage Banker
Primary Residential Mortgage
850-221-8334 Cell
850-497-6325 Office
Steve@steverussellonline.com
www.SteveRussellOnline.com
* All rates assume the purchase of a single family primary residence with at least 20% down payment, 740 credit scores, and verifiable income and assets. Rates vary based on borrower profile and property type. Rates are subject to change without notice. All rates also assume a 1% origination fee. Loans with no origination fee and no points may be available at a higher rate. Not all borrowers will qualify for the rates listed above.
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Alabama FHA Home Loans
FHA loans are hotter than ever – and for good reason in a down economy.
These low-cost loans offer a host of financial benefits from recession-weary homebuyers, from low down payments to great interest rates. Thousands of Americans, especially first-time buyers, are flocking to FHA loans.
In fact, the administration guaranteed almost 186,000 mortgages in June, establishing a new monthly record. The FHA has insured more than 34 million properties since its creation in 1934.
Financial flexibility is a major driving force behind the FHA loan’s surging popularity. There are no income restrictions for FHA loans, which require only a 3.5 percent down payment. Some borrowers can actually combine other loans with a standard FHA loan to eliminate the need for a down payment all together.
On top of that, FHA mortgages typically feature lower closing costs than conventional loans. For decades, these low-cost loans have appealed to first-time buyers and those with low and middle incomes. There are no credit score requirements to obtain an FHA loan, meaning prospective borrowers don’t need perfect credit. Even people who have declared bankruptcy or foreclosure can obtain an FHA loan. The administration will examine a borrower’s financial and employment history, along with a few other key indicators.
Many first-time buyers using FHA loans to truly capitalize on the federal government’s $8,000 first-time homebuyer’s tax credit. This unique tax credit can help defray closing costs or down payment expenses.
Borrowers can use an FHA loan to buy a single-family home, up to four-unit buildings (as long as one is owner-occupied) and condominiums. There are also specialized FHA loans for the purchase and rehabilitation of properties through the FHA’s 203k loan program.
Borrowers can prepay on their FHA loans or refinance at any time without financial penalty.
FHA loan recipients work with a price cap. The administration has loan limits that vary by geographic region. The current limit ranges from $271,050 to a maximum of $729,050 in high-cost parts of the country, such as California and New York.
For Baldwin County and the Gulf Shores and Orange Beach area of Alabama, the FHA loan limits are $271050 for a single-family unit; $347,000 for a two-family unit; $419,425 for a three-family unit; and $521,250 for a four-family unit.
Post provided by Brandon Laughridge with MortgageLoanPlace.com
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It looks like the financial markets had a good day. Breaking through the 25 day moving average, the benchmark Fannie Mae bond is back in positive territory since falling last week. This is good for rates, and has been reflected in today’s pricing
If you would like to get pre-approved for a purchase or refinance, please call 850-221-8334 anytime.
Steve Russell
Mortgage Banker
Primary Residential Mortgage
850-221-8334 Cell
850-497-6325 Office
Steve@steverussellonline.com
www.SteveRussellOnline.com
* All rates assume the purchase of a single family primary residence with at least 20% down payment, 740 credit scores, and verifiable income and assets. Rates vary based on borrower profile and property type. Rates are subject to change without notice. All rates also assume a 1% origination fee. Loans with no origination fee and no points may be available at a higher rate.
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Home Affordable Refinance Program
It was great to see that Obama Administration recently introduced the Home Affordable Refinance Program. It is being anticipated that with the introduction of the new program approximately 4 million to 5 million homeowners will be able to avail the refinancing program.
When do you qualify for the Home Affordable Refinance Program?
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There is a lot of volatility in daily trading in the mortgage bond market, and since the main stream media always gets it wrong, I have included visual aids for you to see exactly what mortgage professionals see.
What you see below is a 30 day chart of the FNMA 4.5% mortgage bond trading activity. The activity on the bond market is what dictates retail mortgage rates, and the retail mortgage rates that are passed on to consumers are generally .5% to 1.0% higher than the "coupon" rate of the bond itself. We are now following the 4.5% coupon bond because the activity in the 4% bond has trickled and
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The bond market had a rough day yesterday and yet it has had little affect on today’s mortgage rates. This is likely due to previous rate increases to try and slow down the overwhelming rush to refinances that has underwriting backed up for weeks.
Something interesting is happening with the FED’s buy back program for mortgage backed securities. As mortgage bonds are traded, they come at certain "coupon" rates and are sold in .5% intervals. For instance, right now we are watching the 4% Fannie Mae
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Today marked the first FED meeting since December 16th when they announced the FED would be aggressively buying mortgage backed securities through the first 6 months of 2009.
The news was as expected with rates remaining unchanged and a commitment to keep them unchanged until further notice.
The bond market reacted negatively to the news as it is seen as a positive for the economy. Bond traders are selling this afternoon
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According to FED member Frederic Mishkin in an interview on CNBC this morning, we could see inflation begin to creep into the economy based on all the government programs on the drawing board.
If there is anything that will scare away bond investors…it is the word inflation. This combined with the summer driving season right around the corner which will inevitably lead to higher oil and gas prices means that we will likely see much higher mortgage rates in
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