Mortgage Rates: Rates Holding On as Consumer Sentiment Bounces Back

Home loan rates are holding on as Consumer Sentiment bounces back to a three month high, according to The Thomson Reuters/ University of Michigan’s preliminary index. Sentiment jumped to 76.3 in February from 73.8 in January; predictions were for a rise to 74.8. With an increase in property values and a job market that is showing strength, confidence is growing and may push consumers towards more spending which will feed economic growth.

Current 30 year fixed mortgage rates are as low as 3.125%, 15 year fixed mortgage interest rates are as low as 2.375% and 5/1 ARM loan rates are as low as 2.375%. Mortgage Lending requires that borrowers have good credit in order to obtain low rates. Guidelines require documenting employment, income and assets and will be lender verified. In some cases, lenders will require additional information prior to issuing a final approval. The loan process for purchase loans and regular refinances can be made easier if the borrower has the required documentation prepared and ready for submission to the lender. Until the end of 2013, homeowners who have loans that were sold to Fannie Mae or Freddie Mac prior to June 1, 2009 can refinance through the HARP loan program. HARP refinances have no loan to value caps and are designed for underwater homeowners, even those with LTVs over 125%. Since HARP loans provide a more streamlined process, most applications do not require an appraisal, although lender restrictions do make it difficult for some homeowners to obtain a HARP refinance approval. These borrowers must continue to look for a lender who will work with them. Since borrowers can use any HARP lender, the online form is available for submission and will make this process easier and quicker. This form can be used for any type of mortgage including home purchase loans and traditional refinances.

Today’s FHA 30 year fixed mortgage interest rates are as low as 3.250%, FHA 15 year fixed mortgage rates are as low as 3.125% and FHA 5/1 ARM loan rates are as low as 2.500%. With the current announcement of changes coming to FHA, many consumers may be reluctant to use FHA mortgages. For this reason, home buyers should inquire about current housing grants or loans that are available for first time home buyers. These options are used to make the home purchase and final loan transaction more affordable for the borrower. Using gifts that meet FHA guidelines is another way to bring down the cost of the loan. The upfront mortgage insurance premium and other FHA fees tend to make FHA closing costs (APR) higher than conventional loans. In many cases, seller concessions up to 6% are used to bring down these expenses. FHA offers many benefits, one of which is the FHA streamline refinance. By using the FHA streamline, homeowners can refinance without the need of an appraisal, a credit history or any other information as long as there is no cash out. Approval is mainly based on mortgage payment history and a required benefit to the borrower through the new refinance. For homeowners who have loans that were endorsed prior to June 1, 2009, the upfront and annual mortgage insurance premiums have been drastically reduced when using the FHA streamline program. For all FHA mortgages, including the FHA streamline refinance, the online form can be submitted and will return a response almost immediately. FHA approved lenders are available through this process.

Current jumbo 30 year fixed mortgage rates are as low as 3.375%, jumbo 15 year fixed rates are as low as 2.700% and jumbo 5/1 ARM loan rates are as low as 2.750%. Receiving low jumbo loan rates is possible for borrowers who have a history of excellent credit. Jumbo loans require that borrowers document employment, income and assets, all of which will be lender verified. Due to the large amount of financing, large down payments and additional months of reserves are usually required. Jumbo loans are normally kept within a lender’s portfolio and, therefore, guidelines will differ. For this reason, borrowers should shop around in order to better compare the differences in requirements, as well as, interest rates. To make this process easier, the online form is available for submission. Borrowers can expect to receive a response back almost instantly.

MBS prices (mortgage backed securities) are down -7/32 (FNMA 30 yr 3.0 at 102.07) which is lower than earlier levels. Mortgage rates are affected by MBS prices and move in the opposite direction. Industrial Production for January fell 0.1% from December and was below expectations of an increase of 0.2%. The Empire State Manufacturing increased to 10.0, which was the highest level since May 2012.

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