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Mortgage Interest Rates-the Current Situation By Grant Eckert There has always been much talk about current rates, and what exactly is going on with them. It seems that the scene is always shifting. One moment you could be told that rates are at an all time low, and you should invest and buy property. This is what some people refer to as a buyer's market - because it is a market that benefits those that are buying. However, at the next moment, you will be told that you should sell your properties, because rates are too high and it would be best to get rid of them and make money off of them. This is what is called a seller's market, because it is a market that benefits the people who are selling their properties.
No matter what type of market you are currently sitting in, you also have to understand that the situation always varies. Depending on what type of property you are looking at, and where the property is located, you are going to have different markets. Indeed, each market is going to be different, and therefore the current market situation is going to vary depending on where you are and what type of property you are purchasing.
The interest rates are also going to vary on one other important detail, and that is your personal credit history as well as you income. Even if you are in a market that has very low interest rates and very low payments, it isn't going to make a difference if you are not accepted by a bank for a loan. Therefore, the current state of your own market might have a lot to do with you and where you currently sit.
There are several ways that you can look at the current market in order to make sure you are making the right real estate decisions.
First of all, examine what home prices are like in the exact area you are looking at, and then look at them a few months ago. Have they gone up, or gone down? Remember that the best way to truly look at these trends is to look further back on each of the various properties. You should be able to see if the houses are truly gaining worth or not.
Then, you want to look at the two main types of mortgages that you would be applying for - a fixed rate or an adjustable rate mortgage. Depending on what you decide to do with your mortgage, the current rates are going to be different. For instance, if you go with a fixed rate mortgage, you are going to find that they are currently at a somewhat medium rate. They aren't as low as they have been, but they certainly aren't as high as they have been. What this means is that it might be
Proposed RESPA Reform
Mortgage brokers may have some intrusive rules from HUD to deal with.
When I read the news on HUD?s proposed reform of the Real Estate Settlement and Procedures Act (RESPA) I was skeptical. Cathy from Sequim challenged me to read the 96-page federal register document so we could all figure out what?s going on. I am here to tell you that there is one very good change coming out of this proposal. In fact, it?s so good that I am borderline hopeful that this change might do what legislation is suppose to do and what HUD forgot to do when they signed the original version of RESPA in 1974. But first, the changes that will have many, but not all mortgage brokers screaming bloody murder:
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Neocon-omics
How much can the Fed and the U.S. government do in the face of declining housing prices?
That?s been my worry since I saw the housing bubble peak in 2005. Historically, declines in housing prices take 3-4 years to bottom, which means we still should be at least half a year away. But after that, the economy doesn?t rebound instantly. It yo-yos for a bit - essentially running horizontal.
Fannie Mae and Freddie Mac have entered into cooperation agreements with New York?s attorney general to only purchase loans that meet a new home valuation protection code, the state announced. The code is effected on Jan. 1, 2009. Under the new code, mortgage brokers and loan originators are prohibited from choosing or communicating with appraisers.
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Choosing Second-best
How to leverage your second choice into seller concessions and a better deal.
So, rather than competing for the best house and paying top dollar, you can use it as leverage to get a lower price and seller concessions on a home that could be even more ideal for you ? after you do a little work.
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Price Depression
A forecast for more housing price depression.
My theory is that housing prices will continue to wilt as long as large levels of foreclosures and new home inventories run high. These are not traditional homeowners, and are motivated to slash prices, thus continuing to depress prices.
You should try to get pre-approved by a lender prior to shopping for a home. A pre-approval is a strong marketing tool when making an offer that may contain many a number of seller concessions. Telling a seller that you are already approved for a loan makes the acceptance of a low offer or one where he may be paying the closing costs much more palatable.
US News and World Report implies (hopes?) we may be nearing a bottom in housing prices but with a mountain of resets coming in the next few months, it?s difficult to see how a bottom can be seen or even predicted.
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Strike One
A look at role of mortgage insurance in FHA loans.
Regarding the second point: By not raising the loan limits they fail in one of the 11 ways they can help. I believe they will fail in almost all, but let us have hope. To be specific as to why I support this: FHA is not a government gimme. It is a government guarantee the mortgage will be paid or the lender compensated for losses. The program pays positive cash flow to the government in that there is a type of mortgage insurance fee charged the borrower. It is reasonable and more than pays for the reimbursements made to the lenders that suffer a default.
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Who's To Blame
Mortgage brokers share the blame with the rest of the industry in the current real estate mess.
Who is not to blame for the mortgage mess? Take one step back. As lenders, money was flowing from the spigot like there was no tomorrow. As mortgage brokers, there was money to be made by cranking the faucet, and it was a foot race to see who could get to the sink first. As agents, we sang the ?Houses are expensive, but money is cheap? refrain until we were blue in the face. And, as for the consumer, it really doesn?t matter in the final analysis whether they were motivated by necessity, opportunity or unadulterated greed. We all helped make this bed in which we now must lie.
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Trying To Move
Hard to move when you're house loses value.
I will continue to work from Los Angeles while we work on selling our house, which unfortunately is bad timing as housing prices have taken a bit of a dive around here. Once we have things settled over here, we?ll pack our things and move up to Seattle.
What else can you say to such a ridiculous report, such obvious sensationalism? The sad thing is, many people will read this wild hyperbole and imagine that the TV station?s salacious report has a ?point? to it.
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Home Buyers Returning This Fall
This blogger says lower mortgage rates will drive buyers to the residential real estate market soon.
Ten days ago after the Fed calmed the markets' credit panic with a 1/2 point cut in the Discount rate, I postulated that home buyers will come back this fall when the Fed finally drops the Fed Funds rate, and mortgage rates drop. It's now almost certain to happen. Here are the parameters in play now:
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Lead Scrub Rates
A look at the cost of a lead for a mortgage broker.
Joel has a good interview with Dave Wengel of TargusInfo around Mortgage lead scrub rates. Specifically that lendingtree and lowermybills have a 15% scrub rate whereas the free ipod guys (lure people in with promise of a free ipod but they and their friends have to signup for credit cards, netflix and talk to mortgage brokers to get it) have around a 50-60% scrub rate.
Having been an FHA lender I can attest it is a pain at times. FHA requires annual financial audits of the mortgage brokers financial condition and more. We always have survived the several day pain, and the expenses tied to it, but only FHA drags brokers through this. The actual banks that sponsor the mortgage broker go through even more red tape and grief. Loan officers have to know more rules. FHA doesn?t rely on the easy automated underwriting or the quick answer from a subprime lender. FHA restricts how the borrowers pay for certain expenses and how much the lender can charge.
a good time to enter into a fixed rate mortgage. Sure, you are going to end up paying the same amount even if interest rates plummet in the next few months or years, but you will also be confident in knowing that your own rates are not going to go up unexpectedly either. On the other hand, if you are looking at an adjustable rate mortgage, it might appear that this is a great time to get invested. With these rates, the interest payment is going to fluctuate depending on the market. So, in some markets, it might appear that this is the best time to get involved in real estate because these rates are at an all time low. However, you should be very careful because this might mean your interest rate goes up very quickly, and without any warning. This will mean that you are suddenly responsible for what might amount to a doubling in your house payment each month. With these types of rates, you can either have the best of the real estate world, or the worst of it.
When you are looking at the current rates, and trying to decide what they mean, you want to take a look at all of your options. After you have looked at the homes that are available and how much they cost, you want to take a look at the different rates that might be offered. Last, you want to take a look at your own credit and your income history. Are you making enough money for a bank to give you a home loan? And is your credit good enough? If not, you might want to consider one of the many options that are available for you in the way of non traditional home loans. You might be able to find what you are looking for there.
About Author: Grant Eckert is a freelance writer who writes about topics concerning the industry such as Mortgage Rates | Lender
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