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Mortgage Rates 9/1: Current Mortgage Rates Wobbly, Back Down

September 1, 2010 (FreeRateUpdate.com) – Current mortgage rates are wobbly and dropped an 1/8 today. 30-year fixed mortgage rates are back to 4%, a record low, for borrowers paying a standard .07 to 1 point origination. 15-year fixed mortgage rates today are at 3.625%, also a record low.

FHA mortgage rates are still similar to conforming mortgage interest rates and the FHA 30-year fixed loan rate today is 4%, identical to today’s conforming 30-year fixed mortgage rate. FHA mortgages come with higher fees than conforming mortgages, in particular because of MI, charged as 2.25% of the loan amount at closing, though there’s also other FHA fees.

Jumbo mortgage rates are steady with the jumbo 30-year fixed loan rate today at 5.125%.

Wells Fargo mortgage rates today are unchanged. Wells Fargo’s 30-year fixed interest rate today is 4.375% with an APR of 4.559 as advertised on Wells Fargo’s website.

To display today’s mortgage rates on your website or blog try our free mortgage rates widget.

Mortgage Rates 8/31: Current Mortgage Interest Rates Firm Up

August 31, 2010 (FreeRateUpdate.com) – Mortgage interest rates firmed up today thanks to gains in mortgage-backed securities prices. MBS prices, which drive mortgage rates in the opposite direction were up +9/32 (FNMA 30-yr 4.0 at 103.17).

Current 30-year fixed mortgage rates remain at 4.125% for well-qualified borrowers paying about 1 point origination. Today’s 15-year fixed mortgage interest rate remains at 3.625%.

Today’s FHA mortgage rates maintained levels similar to current conforming interest rates.

Jumbo mortgage rates are holding at record lows. Today’s jumbo 30-year fixed loan rate is 5.125%

Wells Fargo recently lowered their advertised 30-year fixed-rate to 4.375% with an APR of 4.559%.

To display current mortgage rates on your website or blog use our free mortgage rates widget.

Mortgage Rates Not Moving Housing Market

August 31, 2010 (FreeRateUpdate.com) – Mortgage rates have continued to remain low throughout the summer months. With the 30 year fixed rate at 4.125% and the 15 year fixed rate at 3.625%, one would expect that potential home borrowers would be waiting in line at banks to secure their mortgage. This is not the case today as mortgage rates are not moving the housing market in the direction that it should be going under normal circumstances.

There are several factors that can be blamed for the continued depressed housing market. Without knowing which way housing prices will go, buyers are not looking at purchasing a home as a way to make money and to secure their financial future. As housing prices continue to fall, it will take many years before a buyer will see any equity in their home. Many buyers are still waiting to see if housing prices continue to drop at which point there may only be foreclosures and short sales available.

Mortgage Rates Not Moving Housing Market

With existing home sales the worst that has been seen in 15 years but refinancing on the increase, it is evident that consumers are more interested today in reducing their current debt. Many are beginning to live within their means and saving money instead. The enticement of lower mortgage rates may not move the housing market until jobs are created and consumers begin to have confidence in the economic outlook.

Mortgage Rates 8/28: Current Mortgage Interest Rates Up Slightly Friday

August 28, 2010 (FreeRateUpdate.com) – Current 30-year fixed mortgage interest rates were up slightly Friday, off record lows, and at 4.125% for well-qualified borrowers who pay 1 point origination. 15-year fixed mortgage rates were also up a tad and at 3.625%.

Current 30-year fixed FHA loan rates, which are driven by the same bonds as conforming mortgage interest rates, are also up an 1/8 to 4.125%. Despite FHA mortgage rates being very similar to conforming loan rates, closing costs and APR are higher because of MI and other FHA fees charged only on FHA loans.

Current jumbo mortgage rates are also up a tad and today’s jumbo 30-year fixed loan rate is 5.125%.

Current Wells Fargo mortgage rates are unchanged. Today’s Wells Fargo 30-year fixed interest rate is down 1/8 from last week and at 4.375% with an APR of 4.559 according to their website.

A gloomy outlook for the global economy has continued to hurt stocks, helping mortgage-backed securities prices, which drive mortgage rates in the opposite direction.

Mortgage Rates 8/26: Current Mortgage Rates at Standstill

August 26, 2010 (FreeRateUpdate.com) – Current mortgage rates are at a standstill thanks to wavering mortgage-backed securities prices. MBS prices drive mortgage rates in the opposite direction and are up +5/32 today.

Current 30-year fixed mortgage rates remain at 4% and 15-year fixed mortgage rates today are at 3.5% for well-qualified consumers with a 20% down payment paying 1 point origination, considered standard. These interest rates are verified by FreeRateUpdate.com research of over 2 dozen wholesale lenders’ mortgage interest rate sheets.

Today’s FHA mortgage rates are unchanged matching conforming mortgage interest rates. Today’s FHA 30-year fixed loan rate is 4%; however, MI and other FHA fees make closing costs on an FHA loan at 4% higher than that of a conforming mortgage with the same note rate and origination fee.

Jumbo mortgage rates today are also unchanged. Today’s jumbo 30-year fixed loan rate is 5%.

Jumbo mortgage rates, conforming mortgage interest rates, and FHA loan rates are all at all time record lows.

To display current mortgage rates on your website or blog use our mortgage rates widget, which is free.

Borrowers Lowering Mortgage Interest Rates Via “Cash In” Refinance

August 25, 2010 (FreeRateUpdate.com) – In recent weeks, mortgage rates have hit a record low with the current 30 year fixed rate at 4.00% and the 15 year fixed rate at 3.50%. With many borrowers making the move to take advantage of these rates, the decision of how much to refinance has changed from the days of the housing boom when everyone was taking cash out of their homes. Today, borrowers are lowering their mortgage interest rates via the cash in refinance.

A cash in refinance is when a borrower brings money to the closing and, therefore, puts money into the transaction. These funds brought to closing must be documented with bank statements from the account that the funds were taken from. Borrowers need to know that all other normal underwriting guidelines still apply to these transactions.

According to the government sponsored entity, Freddie Mac, 22% of refinances made during the second quarter of this year have been cash in refinances with cash out refinances as their lowest level since 1985. As savings accounts, money market accounts and certificates of deposit have interest rate returns at their lowest since the 1930s, borrowers are choosing to invest their money into the equity of their homes instead of banks. As compared to several years ago when consumers were spending, today’s consumers have become more conservative and are interested in paying down their debt.

With housing values declining, many borrowers cannot qualify for a refinance unless they have more equity in their homes. As the past housing boom slowly corrects itself, the value of housing has plummeted leaving many home owners underwater in their mortgages. With these mortgages, a cash in refinance is the only option to take advantage of the current low interest rates. For many borrowers, bringing enough cash to increase their home equity to 20% will result in a lower interest rate and also the elimination of monthly private mortgage insurance premium payments. Since PMI rates have also increased for those without pristine credit, having to pay PMI could potentially disqualify some borrowers. With 30% home equity, the interest rate can possibly be even lower. Today’s stricter underwriting standards support loan to value ratios that should be at least between 75% to 80% in order to get the best rates. The less the loan to value together with good credit scores equals the lowest possible interest rate.

Some borrowers are bringing cash in to the refinance in order to avoid a jumbo mortgage which carries a higher rate. With the current interest rates at 50 years lows, some are refinancing with the intent to stay in their home for the long term. By doing a cash in refinance and reducing principal, many are finding that they are able to take a shorter term mortgage in an effort to pay down their loan as quickly as possible and, thereby, reducing their debt burden sooner. This has made the 15 year refinance very popular in today’s market. Over time, not only is the term shorter, but the overall interest paid over the life of the loan is greatly reduced.

As time goes on, housing will boom and bust while trends will come and go. Today’s trend of the cash in refinance will stay around as long as interest rates are low, housing prices are low and money is tight. With so much uncertainty in the economy, borrowers will continue lowering their mortgage interest rates via the cash in refinance in order to eliminate their debt as quickly as possible.

Mortgage Rates 8/24: Current Mortgage Interest Rates Keep Improving

August 24, 2010 (FreeRateUpdate.com) – Conventional fixed mortgage rates stabilized further today as mortgage-backed securities prices, which drive mortgage interest rates in the opposite direction, continue to improve, up +11/32 (FNMA 30-yr 4.0 at 102.30) on much weaker than expected housing data.

Current FHA mortgage rates are still about the same as conforming mortgage rates. An FHA mortgage with a note interest rate of 4% at 1 point origination, will have a much higher APR and closing fees than a conforming mortgage at the same interest rate and origination because of MI and other FHA fees charged exclusively on FHA loans.

Jumbo mortgage rates have been sinking steadily for months and today’s 30-year fixed jumbo loan rate is 5%.

Wells Fargo mortgage rates are unchanged with Wells Fargo’s 30-year fixed mortgage interest rate remaining at 4.5% with an APR of 4.686 according to their website.

FreeRateUpdate.com researches over 2 dozen wholesale lenders’ rate sheets daily to determine the most accurate mortgage rates available to consumers at a standard .07 to 1 point origination.

Mortgage Rates Spurring Refinance, but Some Banks are Underwriting Too Slow

August 20th 2010 (FreeRateUpdate.com) – Applications for mortgage refinancing are beginning to pour into lenders as mortgage rates continue to be at record lows. With the current mortgage rates at 4.00% for a 30 year fixed, 3.50% for a 15 year fixed and 3.25% for a 5/1 ARM, home owners are now taking the plunge to refinance. Many have been just watching the market to see what was going to happen and are now making their move. Since rates have reached historical lows not seen since the 1950s, the refinance door has opened up for everyone. Even those who already enjoy low rate mortgages are eager to apply for a refinance. Mortgage rates may be spurring refinance, but some banks are underwriting too slow to get loans closed.

Consumers, no doubt, are becoming frustrated with the amount of time it is taking to close their refinancing deal. As mortgage guidelines have changed and have become more complicated than several years ago, the process has become longer. In the past, automatic underwriting systems told exactly what was necessary to approve a loan. As the rules have changed, processors and underwriters must thoroughly examine the financial history of an applicant. Every credit glitch, every dollar deposited, every bad check and every overdraft must be explained. Documentation that must be received and verified can take a very long time. Any issue found delays the refinance mortgage from closing within a reasonable amount of time.

The appraisal rules have also changed the way a refinance is processed. Lenders must now use a third party system called the appraisal management system. With fewer appraisers working within an assigned market area, completed appraisals have fallen behind. A final underwriting cannot be done without the appraisal. In some cases, the appraisal takes so long to receive, that the credit, income and assets all have to be re-verified before underwriting the loan. This alone can take several days or weeks to accomplish.

With the volume of refinances increasing, lenders do not have the staff to produce the usual work flow. The problem has overloaded the available staff with an abundance of mortgage applications to be processed. This same problem occurred during the housing boom when mortgage volume was at its last high. At that time, lenders were willing to hire more staff in order to close loans more quickly. With today’s fluctuating market and unpredictable rates, lenders are not so willing to take on more staff to eliminate the overflow. If they are hiring, processors and underwriters need to become familiar with the new mortgage guidelines. To add to the problem, there is a shortage of FHA certified underwriters due to the lack of FHA business during the housing boom.

Having mortgage rates come down is what everyone has been waiting for. With approvals based on tighter standards, the usual work flow is no longer there. What we have gotten used to as normal closing time is not the norm and may never return. Although low mortgage rates are spurring refinance and some banks are underwriting too slow, borrowers can be prepared by having their paperwork ready and their credit in order prior to filling out an application. With lots of extra patience and cooperation, the refinance will finally be approved.

Mortgage Rates 8/19: Current Mortgage Interest Rates Helped by Falling Stocks

August 19th 2010 (FreeRateUpdate.com) – Weaker than expected jobs data helped to push investors away from stocks and toward bonds causing a 140 plus point drop in the Dow, helping mortgage-backed securities prices, which drive mortgage rates in the opposite direction, to rise +18/32 (FNMA 30-yr 4.0 at 102.30), and stabilizing mortgage interest rates at already all time record lows.

30-year fixed mortgage rates are at 4% for highly qualified borrows paying about 1 point origination. Current 15 year fixed mortgage rates are at 3.5. Rates are unchanged this week since improving last week.

30 year fixed FHA mortgage rates today are the same as current conforming interest rates.

Jumbo mortgage rates are unchanged today remaining at record lows. Today’s 30 year fixed jumbo loan rate remains at 5%.

Wells Fargo mortgage rates are unchanged. Wells Fargo is advertising a 30 year fixed loan rate of 4.5.

Mortgage Rates 8/18: Mortgage Rates Flat Today

August 18, 2010 (FreeRateUpdate.com) – Mortgage-backed securities prices, which move mortgage interest rates in the opposite direction, were down just a tad today -4/32, not enough to move fixed mortgage rates. As a result, 30-year fixed conforming and FHA mortgage rates today remain at 4% for well-qualified consumers with a 20% down payment who pay a standard .07 to 1 point origination. Today’s 30-year fixed mortgage rates were verified by FreeRateUpdate.com research of wholesale lenders’ interest rate sheets.

Current jumbo 30-year fixed mortgage rates remain at 5%. Jumbo loan rates, just as conforming and FHA loan rates, are at an all time low.

Wells Fargo mortgage rates are unchanged. Today’s Wells Fargo 30-year fixed rate remains at 4.5% with an APR of 4.686.

To display current FHA, Jumbo, and conforming fixed mortgage rates on your website or blog, use our today’s mortgage rates widget.

How Low Can Mortgage Rates Go?

August 17, 2010 (FreeRateUpdate.com) – As the government seeks to revive the real estate market, mortgage interest rates continue to fall. Interest rates dipped this week to a new record low in over fifty years. As of this writing, the interest rate on 30 year fixed rate conforming loans is 4.00% and 5.00% on jumbo loans. Jumbo loans are mortgage loan amounts that exceed $417,000 for most of the continental U.S.

Historically, jumbo mortgage rates were higher than conforming loan rates due to their considerable riskiness. But, recent developments in the mortgage lending business have made jumbo mortgage loans more attractive to banks and borrowers.

In order to avoid a government take-over, banks are motivated to provide more options to borrowers by way of jumbo mortgages. President Barack Obama signed new financial reform legislation last month, the Dodd-Frank Act, which permits the Federal Deposit Insurance Corporation (FDIC) to dismantle any financial institutions deemed “systemically risky,” forces banks to increase capital reserves, and enforces these regulations via a new consumer financial protection bureau.

In comparison to non-conforming jumbo loans, FHA-insured loans cost more. The annual percentage rate of an FHA-insured loan is 5.178 percent, whereas the APR of a jumbo loan is 5.098 percent. This year the Federal Housing Administration has reduced allotted seller concessions, increased down payment requirements, and increased mortgage insurance premiums. The FHA is floundering about for liquid assets because an audit revealed that capital reserves dipped to 0.53 percent, which Congress has mandated cannot be less than 2 percent. The FHA Commissioner, David Stevens, reported that the FHA seeks to decrease its market share by making it more difficult to qualify for FHA loans.

Big banks, such as J.P. Morgan Chase, Citibank, and Wells Fargo, are capitalizing on these recent developments by expanding jumbo lending practices. Some banks offer jumbo loans for as low as 10% down, 65 percent LTV, and $10 million mortgages. Jumbo loans are less risky because default rates are relatively low as most banks require a credit score above 680.

Of seven major housing markets, Redfin Corp. reports that less than half of active listings in 2009 resulted in sales. But, the aggressive pursuit of jumbo mortgages loans has provided a much needed boost in the luxury housing market. Pending sales in the luxury housing market is the only pricing category that increased in the past month. According to National Association of Realtors spokesman, Walter Maloney, the sales volume for homes over $1 million is up more than 35 percent from this time last year and homes between $700,000 and $1 million is up by 29 percent over last year. Maloney attributes these increases to the recent affordability and availability of jumbo mortgage loans.

The government could feasible put a wrench into the positive movement of jumbo loans by way of the Dodd-Frank Act. Just released Monday, the Federal Reserve Board is proposing a revision of escrow account requirements for first-lien jumbo loans. In order to determine whether a lender ought to establish an escrow account for property taxes and insurance, an APR threshold of 1.5 percentage points is currently applied. The Fed will increase the APR limit to 2.5 percentage points.

Although it is tough to determine how low interest rates will go, it is reasonable to assume that a rate increase will hurt the housing market. As unemployment grazes double digits and Fannie and Freddie file for additional government bailouts, a double-dip in the housing market is not in the best interest of the current administration and definitely not beneficial for Americans.

Mortgage Rates 8/17: Today’s Mortgage Rates Could Elevate

August 17, 2010 (FreeRateUpdate.com) – Today’s mortgage rates could elevate. 30-year fixed mortgage rates could rise from a current record low-level of 4%, but only if mortgage-backed securities prices, which drive mortgage rates in the opposite direction, continue to fall. MBS prices are down -10/32 (FNMA 30-yr 4.0 at 102.16) today on rising stocks.

For now current 30 year fixed mortgage interest rates are at 4% for highly qualified borrowers paying a standard origination fee of .07 to 1 point. Current 15-year fixed mortgage rates are at 3.5, also an all time low.

FHA mortgage rates, which are driven by the same securities as conventional mortgage interest rates, continue to mirror conventional mortgage rates for the most part. Today’s 30-year fixed FHA loan rate is 4%. Costs ares higher on FHA insured mortgages than on conventional loans even at the same note rate and origination.

Jumbo mortgage rates, also at record lows, are steady. Today’s 30-year fixed jumbo loan rate is 5%.

Wells Fargo mortgage rates are unchanged according to their website. Wells Fargo’s 30-year fixed rate is advertised at 4.5% with an APR of 4.686.

Mortgage Rates 8/16: Current Mortgage Rates Set New Low

August 16, 2010 (FreeRateUpdate.com) – Current mortgage rates are at yet another new record low.

Current 30-year fixed mortgage interest rates are at 4% for qualified consumers paying a point origination. Today’s 15-year fixed mortgage rate is 3.5. Both conforming fixed mortgage rates have been verified by FreeRateUpdate.com research of wholesale lenders’ rate sheets.

Today’s FHA mortgage rates continue to match conforming interest rates.

Current jumbo mortgage rates are at a new record low as well. Today’s jumbo 30-year fixed loan rate is 5%.

Wells Fargo is advertising a conforming 30-year fixed rate of 4.5.

Mortgage-backed securities prices, which drive current mortgage rates in the opposite direction, continue to perform well and are up +5/32 (FNMA 30-yr 4.0 at 102.26) today. As a result, mortgage rates are stable.

Better Deal: 30 or 15 Year Fixed Mortgage Rate?

August 16, 2010 (FreeRateUpdate.com) – As mortgage rates have hit record lows during the past few weeks, many people are beginning to look into the various options available to them. For those who are able to qualify, it is a great time to purchase a home or refinance an existing mortgage. With the 30 year fixed mortgage rate at 4.250% and the 15 year fixed mortgage rate at 3.750%, many are wondering which is the better deal: 30 or 15 year fixed mortgage rate?

Taking a look at the 15 year fixed mortgage rate which is lower than the 30 year fixed mortgage rate, the difference is usually only % to 1% . The actual savings comes from the shorter term and the amount of overall interest paid over the 15 years. The mortgage is paid in half the time with a large amount of interest saved during the life of the loan. Equity in the home also increases at a faster rate. On the other hand, when looking at the monthly payment of the 15 year fixed rate mortgage, the amount can be too much for the normal home owner to risk. In fact, many people who qualify for a 30 year fixed rate mortgage may not be able to qualify for a 15 year fixed rate mortgage. Although the interest rate is lower, the amortization of the loan makes each monthly payment higher since the term is shorter. While less interest is paid, there is a lower tax benefit at the end of each year. With standard deductions higher, many people are not even able to claim the mortgage interest tax deduction unless they have other items that warrant a 1040 long form income tax return. For those nearing retirement who are financially stable, having their home paid off makes the 15 year fixed rate mortgage more attractive. For those refinancing a 30 year fixed rate mortgage with an interest rate that is 2% or more higher than the current 15 year rate, the payment might actually be the same and, therefore, would be a good option. For example, a $100,000 15 years fixed rate mortgage at 3.750% calculates to a $727.22 monthly mortgage payment.

The 30 year fixed mortgage rate has always been the preferred loan. Even though the interest rate is higher, the fixed monthly payments are lower. Enough interest is usually paid each year so that the borrower is allowed the mortgage tax deduction on their income tax return. Financially, this can be a better option for borrowers. Home owners can make extra payments towards principal each month or as often as they wish. By doing so, the length of the loan will become shorter, equity in the home is built faster and less interest will be paid over the length of the loan. If for some reason, an extra principal payment cannot be made, the borrower just makes the regular payment that is due. It is the financial stability and available cash flow that attracts most people to the 30 year fixed rate mortgage. For the new home buyer, even if they can afford the 15 year fixed rate mortgage, the 30 year fixed rate mortgage is more practical because it will allow them to have available cash to perform upgrades or repairs. A $100,000 30 year fixed rate mortgage at 4.250% will warrant a monthly payment of $491.94 with the final payment in 2040. Making a $100 extra principal payment each month will cut 8 years off the life of the loan with a final payment due in 2032. Any time the extra payment cannot be made, there is flexibility as no penalty is attached to the borrower since it is completely optional.

There is no single or easy answer to determine the better deal: 30 or 15 year fixed mortgage rate. Each individual circumstance is unique and financial situations are different. When evaluating the differences, be conservative when calculating income and expect emergencies or other responsibilities to arise. Request a good faith estimate for each type of loan and compare the differences. Borrowers should choose the type of mortgage that they can realistically and comfortably pay off.

When Will Mortgage Rates Finally Rise?

August 11, 2010 (FreeRateUpdate.com) – With so many people sitting back and waiting to see what is going to happen in the housing and mortgage markets, it is now clear that the summer season is not turning out like it normally would. While summer is a time to move when children are out of school, this year’s season did very little to stimulate the market. With the current record low mortgage rates, everyone is trying to predict when mortgage rates will finally rise.

Earlier this year, the Feds had planned to pull back some of their emergency decisions that were made during the financial crisis. At that time, they were preparing to begin raising interest rates in the spring in order to keep the economy growing. During the first quarter of this year, mortgage rates dropped because mortgage loans could be packaged and sold to Fannie Mae and Freddie Mac who then sold them to the Feds. It was at that time that many people refinanced their mortgages not knowing if the lower mortgage rates would continue. With the global crisis continuing after March and into the spring season, mortgage rates continued to stay down to a reasonable level.

Now, fears over the possibility of a double dip recession has prompted the Feds to make their latest move. In an effort to support economic growth, the Feds have said that they will use the payments received from the Fannie Mae and Freddie Mac debts and mortgage backed securities to purchase long term U.S. Treasury securities. By buying long term government bonds, the Feds are trying to move interest rates on mortgages and corporate loans even lower in an effort to help the economy grow at a quicker pace. As yields on Fannie Mae and Freddie Mac mortgage securities guide the U.S. mortgage rates, it is a possibility that mortgage rates will go even lower with the goal of increasing bank lending.

Unfortunately, until the unemployment rate moves lower and consumer spending moves higher, the economy is destined to be at a standstill. While the financial system has money to lend, the standards have become so strict, banks are unable to find acceptable loans to close. Money is just not flowing the way that is necessary to spur the economy. Unemployment is keeping many people out of the mortgage arena while underwater home owners are finding it impossible to refinance.

For right now, anyone and everyone who can take advantage of the lower mortgage rates should do so while they are here. Given the latest Fed announcement and their continued involvement in trying to grow the economy, mortgage rates may continue to stay low. But as everyone knows, this can change overnight and no one will want to be caught sitting on the sidelines wondering when will mortgage rates finally rise. There is a great opportunity out there right now that may not be there in the near future.

Obstacles You May Face When Trying to Refinance to Today’s Low Mortgage Rates.

August 11, 2010 (FreeRateUpdate.com) – As we are all well aware by now, mortgage lending standards were lax during the housing boom. Now, many of the people who bought back then with little down payment and not-so-great credit and who have since lost their jobs or had to take a pay cut due to the financial crisis are behind on their payments or have had to foreclose on their homes. In response, mortgage lending standards have made a 180 degree turn. So, if you do not have stellar credit, a stable job, or the home equity required to refinance in today’s housing market, you probably won’t qualify.

The main obstacle you face is answering the question: Are you eligible to refinance? And, the answer unfortunately is not simple because the process used to determine your eligibility for refinancing is similar to the approval process used when you obtained your original mortgage. Your lender is going to consider your income, assets, debits, credit score, current value of your property and the amount you want to borrow. So, for example, if your credit score has improved, you may be able to get a loan at a lower rate. But, if your credit score has weakened, you could end up having to pay a higher interest rate and, in that case, won’t want to refinance.

Additionally, a lender will look at the amount of the loan you are requesting and the value of your home, as determined by an appraisal. The result of this evaluation is called LTV or loan-to-value ratio. If the LTV ratio does not fall within your lender’s guidelines (each lender has different guidelines, so it pays to shop around), you may again be offered a loan with less favorable terms than you already have.

Lenders want to know if you earn enough money to repay the loan. Housing costs should be 28% or less of your gross (pretax) income. Count all recurring expenses including principal and interest on your mortgage, property taxes, condo or association fees and insurance. If you are a two-income family, you can consider income from both jobs. You can also consider money made from part-time and seasonal work.

Currently about 38% of homeowners with a mortgage spend more than 30% of their income on housing. About 15% spend half of their income or more on housing. Many of them can’t make their payments, are defaulting on their loans or are already in foreclosure. Don’t become one of them.
Total monthly debt payments should be 36% or less of your income. Add up all your expenses: auto loans, student loans, credit card bills, child support, etc against your 401(k) plan. The more non-mortgage debt you have, the less you can afford to spend on a home.

The housing bust dropped home values and depleted home equity for at least 25% of the American homeowner population. Even if you have good credit and a solid job, you may be rejected when you try to refinance because your home is worth less than what you owe on your mortgage. If your loan has negative amortization, (when your monthly payment is less than the interest you owe, that unpaid interest is added to the amount you owe) it will difficult to refinance. If this is the case, you may actually owe more on your mortgage than what you originally borrowed.

Want to know more about mortgage rates, refinancing or want to get a quote? Visit us at FreeRateUpdate.com.

Mortgage Rates 8/9: Record Low Mortgage Rates Still Available

August 9, 2010 (FreeRateUpdate.com) – Mortgage rates are still at record lows. Mortgage-backed securities prices, which drive mortgage rates in the opposite direction, continue to waiver, rising Friday on weak unemployment data before dipping slightly this morning.

30-year fixed mortgage rates are at 4.25% for well-qualified borrowers with a 20% down payment who pay .07 to 1 point origination. 15-year fixed mortgage rates are at 3.75%. Both conforming fixed mortgage rates are record lows and verified as available by FreeRateUpdate.com through research of over 2 dozen wholesale lenders’ rate sheets for brokers.

Today’s FHA 30-year fixed loan rate is 4.25%, the same as today’s 30-year fixed conforming mortgage rate. The difference is in closing costs. FHA loans typically have higher closing fees than conforming mortgages because of MI and other FHA fees. FHA still offers the smallest down payment on the market of just 3.5% making FHA loans most popular with those buying a home.

Jumbo mortgage rates are holding at their record low. Today’s 30-year fixed jumbo loan rate is 5.125%.

Wells Fargo, the nations number one mortgage originator by volume, is offering on their website a conforming 30-year fixed mortgage rate of 4.5% with an APR of 4.686.

To display today’s mortgage rates on your website or blog please use FreeRateUpdate.com’s current mortgage rates widget.

Lower Mortgage Rates Helping Baby Boomers Beginning Retirement

August 6, 2010 (FreeRateUpdate.com) – With the housing market looking bleak for a large part of the population and the economy making a slow recovery, there is still a bright side for some, especially the baby boomers. The baby boomers are those who were born post World War II during the years 1946 and 1964. Just as they are leaving the workforce, lower mortgage rates are helping baby boomers beginning retirement by putting more money in their pocket.

The past several years have taken its toll on the retirement investments held by the baby boomers. Many saw their lifelong savings dwindle as the stock market continued to fall lower and lower. To make up for their losses, many baby boomers are turning to other options available to them. Historically low mortgage rates is the answer many of them have been waiting for to help them make it through their retirement years.

Many older home owners are refinancing their existing homes at the current lower mortgage rates. By doing so, they are lowering their monthly mortgage payments thus giving themselves more available cash each month to spend on other things. Since many baby boomers hold a lot of equity in their homes, they are staying put and refinancing with cash out and using the cash to make home improvements to fit their retired lifestyle. Others are investing the lump sum cash from their cash out refinance hoping that a market rebound
will replenish their retirement savings and make their equity productive. For some, using the cash to buy a second home while home prices are so low is what they have been patiently waiting for.

During the housing boom, many baby boomers were put out of the market because of the skyrocketing home prices. As many baby boomers had planned to retire to another area, they are finding that now is the time to make their move. With home values declining, many are moving to their dream location and purchasing homes for a fraction of what they would have paid just a few years ago. Lower home prices and lower mortgage rates are just what baby boomers beginning retirement need after seeing their retirement funds shrivel up during the past few years.

For the baby boomers close to retirement, refinancing to a 15 year mortgage could mean paying off the mortgage before they actually retire. By doing this now at the current lower mortgage rates, they are securing more available cash for themselves when they retire. Even those who only have a few years left to pay on their mortgage are finding that refinancing to a lower 7 or 5 year adjustable rate mortgage can put more money in their pocket now while the note will be paid off just as it is about to adjust.

After being hit so hard over the past few years during the financial crisis, the baby boomers may have just found their pot of gold. As the country continues with its sluggish economy and many people are pushed out of the mortgage market, these lower mortgage rates are helping baby boomers beginning retirement and bringing back a sense of security that they thought had been lost.

Demand for Adjustable Rate Mortgages at a Record Low

August 4, 2010 (FreeRateUpdate.com) – All mortgage rates, including fixed rates and adjustable rates, are at record lows at the same time that housing prices remain depressed. While the demand for mortgages and homes has declined, there is still business taking place. The difference is that the once sought after adjustable rate mortgage is being shunned. Current market conditions show that the fixed rate mortgage is now the king with demand for adjustable rate mortgages at a record low.

Not too long ago, the adjustable rate mortgage was designed to get buyers into a mortgage and possibly a larger mortgage than they could afford. A borrower applied for a mortgage and was qualified and approved on the lower adjustable rate.

There were several explanations to justify this. It was reasonable to think that most borrowers did not stay in their homes more than three to five years. If they did remain, their income would increase during that period while, at the same time, the value of the home would increase. When the adjustable rate mortgage actually adjusted to possibly a higher rate, the borrower could then easily refinance and qualify for a fixed rate mortgage. Unfortunately, these scenarios did not happen as the market went against borrowers holding adjustable rate mortgages. Rates went up, monthly mortgage payments increased and home values declined. Combining these factors with unemployment, foreclosures skyrocketed with over two-thirds of all foreclosures resulting from adjustment rate mortgages.

There is so much uncertainty of future mortgage rates, borrowers are no longer interested in taking risks and are turning their backs on the adjustable rate mortgage. While the total number of all types of new mortgages has fallen, the adjustable rate mortgage has dropped drastically. Those who currently have these mortgages are refinancing into fixed rate mortgages that provide security in order to ward off the possibility of higher payments. Today people have more confidence in the fixed rate mortgage that guarantees the interest rate over the entire life of the loan. With mortgage rates and housing prices both abnormally low, fear and a lack of confidence is driving the market with consumers looking for some type of stability.

Looking at the 30 year fixed rate at 4.25%, the 15 years fixed rate at 3.625% and the 5/1 ARM at 3/375%, the majority of borrowers feel that it does not make sense to apply for an adjustable rate mortgage. With such a small difference in rates, it is only logical that consumers will opt for the security of a fixed rate mortgage instead of risking a higher rate in future years with the adjustable rate. With demand for adjustable rate mortgages at a record low and today’s low fixed rate mortgage such a valuable offering, it is clear that borrowers are choosing to take advantage of a good thing.

Can Mortgage Rates Go Below 4%?

August 3, 2010 (FreeRateUpdate.com) – Mortgage rates are currently at records lows that have not been seen since the 1950s. With the 30 year fixed rate at 4.25%, the 15 year fixed rate at 3.625% and the 5/1 ARM at 3.375%, everyone is wondering which way mortgage rates will be tomorrow. With predictability of the rates now questionable, borrowers might be sitting on the fence waiting and asking can mortgage rates go below 4%?

Going back to early 2009, the government started a massive purchase of mortgages from Fannie Mae and Freddie Mac in order to give the housing market a boost and, in effect, reduce mortgage rates. These purchases stopped at the end of April of this year, as planned by the Federal Reserve. It was expected that mortgage rates would rise at this point. Now eighteen months from the start, rates are falling and the housing market is still in a slump. Although, today’s record low rates increase afford-ability, the housing market continues to struggle to make a comeback as high unemployment continues and the economy appears to be sluggish. If the economy continues to weaken, so will mortgage rates come down further, possibly below 4%.

As investors continue to look for safety for their investments, they will normally turn to government backed mortgage bonds. These bonds are insured by the government and considered to be risk free. When this happens, mortgage bond yields are pushed down which in turn pushes down mortgage rates.

At the same time, high down payments and tough lending standards are making it impossible for the majority of people to take advantage of the current low rates which could ultimately push mortgage rates lower. As none of the major lenders are facing a shortage of funding, it is possible for mortgage rates to continue to rally as the ups and downs of these rates are being driven by the funding capacity of these lenders, thus, creating their own loan pricing war. With low amounts of purchase and refinance applications coming in, these lenders will look for ways to stimulate activity through these lower mortgage rates. If these circumstances continue, refinances may again boom if mortgage rates go below 4%.

With all of these scenarios in place at the same time, it is very possible that mortgage rates will go below 4%. As people question can mortgage rates go below 4% or how low can mortgage rates go, it is only these same people who will be able to bring back the housing market. As long as consumers do not have enough confidence to believe that real estate values will not fall and enough confidence that they will not lose their job, these same people will not purchase homes to get the ball rolling.