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Mortgage Rates: Fourth Quarter Home Price Appreciation Best in Seven Years

By: | February 11th, 2013

The fourth quarter of 2012 home price appreciation was the best for any quarter in seven years, since 2005, according to the National Association of Realtors (NAR) most recent report. Based on closings in the fourth quarter and compared to the same time 2011, the median home price for existing single-family homes increased in 133 out of 152 metropolitan areas; 19 areas had price declines. According to Lawrence Yun, NAR chief economist, “Home sales are on a sustained uptrend, mortgage interest rates are hovering near record lows and unsold inventory is at the lowest level in 12 years”. During the fourth quarter of 2012, the national median home price for existing single family homes was $178,900 which is up 10.0% from $162,600 during the fourth quarter of 2011.

Today’s 30 year fixed mortgage interest rates are as low as 3.125%, 15 year fixed mortgage rates are as low as 2.375% and 5/1 ARM loan rates are as low as 2.375%. In order to receive low rates, borrowers must have maintained a history of good credit. In addition, qualifications must meet lender guidelines. Mortgage approval is dependent on several factors including stable employment and income. Sufficient assets must be available for the down payment and required reserves. Everything must be documented and will be verified by the lender. Lenders will often request additional information after examining the loan file for a home purchase loan or regular refinance. On the other hand, HARP refinances are streamlined and require less documentation and no appraisal in most cases. The HARP 2.0 program is available for borrowers who have loans that were sold to Fannie Mae or Freddie Mac prior to June 1, 2009. Underwater homeowners can obtain a HARP loan refinance even for extremely high loan to values that are above 125%. Borrowers can use any HARP lender for this refinance and should inquire even if denied in the past. This can be easily done by submitting the online form which does not require the input of a social security number.

Current FHA 30 year fixed mortgage rates are as low as 3.250%, FHA 15 year fixed mortgage interest rates are as low as 3.125% and FHA 5/1 ARM loan rates are as low as 2.500%. Consumers who are looking to obtain an FHA loan should try to do so prior to April 1st when mortgage insurance fees will be increasing. Even though FHA is consumer friendly and makes it possible for consumers to become homeowners, they are making changes in order to protect themselves from loss. Borrowers still can use housing grants or loans and gifts to keep mortgage expenses to a minimum. Seller concessions up to 6% are also often used to offset the higher FHA closing costs (APR) which are due to the upfront mortgage insurance premium and other FHA fees. Refinancing with the FHA streamline is popular because it does not require an appraisal, a credit history or other documentation as long as there is no cash taken out. Homeowners who have loans that were endorsed prior to June 1, 2009 can use the FHA streamline and will receive drastically reduced upfront and annual mortgage insurance premiums. This offer is available until the end of 2013. FHA approved lenders and information about FHA mortgages, including the FHA streamline program, can be obtained when submitting the online form which will return a response almost instantly.

Today’s jumbo 30 year fixed mortgage interest rates are as low as 3.375%, jumbo 15 year fixed mortgage rates are as low as 2.700% and jumbo 5/1 ARM loan rates are as low as 2.750%. Jumbo loans are usually held within a lender’s portfolio and, therefore, require that borrowers have excellent credit in order to receive low rates. These loans require full documentation which will be verified by the lender. In many cases, larger down payments and additional months of reserves are also required. As more lenders enter the jumbo loan market, borrowers should shop around to compare what is being offered. This can be quickly done by submitting the online form which will return a response almost immediately.

MBS prices (mortgage backed securities) are up +2/32 (FNMA 30 yr 3.0 at 103.04) which is above earlier levels. Mortgage rates are affected by MBS prices and move in the opposite direction. There is no economic data scheduled for release today.

FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders’ rate sheets to determine the most accurate mortgage rates available to well qualified consumers at about a 1 point origination fee.

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