Tag Archives: rates

Rates Continue to Fall Hitting New Lows Amid Economic Concerns

Just when it seemed like rates could not fall any further, Freddie Mac reported fixed mortgage rates sunk even further for the week ending May 10.

The 30-year fixed-rate mortgage averaged 3.83 percent (0.7 point), down slightly from last week’s average of 3.84 percent. A year ago at this time, the 30-year was 4.63 percent.

The 15-year fixed also moved downward, ending at 3.05 percent (0.7 point) this week. Last week it averaged 3.07 percent, and last year at this time it was 3.82 percent.

The 5-year ARM dropped to 2.81 percent (0.5 point) compared to 2.85 percent last week and 3.41 percent a year ago at this time.

The 1-year ARM moved up to 2.73 percent (0.5 point). Last week the 1-year ARM averaged 2.70 percent and 3.11 percent a year ago…

Read the rest of DSNews.com’s article here: “Rates Continue to Fall Hitting New Lows Amid Economic Concerns”.

Why should you get a 15-year mortgage?

Benefits of 15-year mortgage hard to beat

Why those lured by smaller payments on 30-year loan should reconsider

By Jack Guttentag, Monday, April 30, 2012. Inman News®

The case for 15-year fixed-rate mortgages has never been stronger because, in the post-crisis market, the rate advantage over the 30-year has never been larger. The rate advantage is about 0.875 percent, whereas prior to the crisis, it was 0.375 percent to 0.5 percent.

Consider two $100,000 loans, one a 15-year at 3.125 percent and the other a 30-year at 4 percent. The respective payments are $696.61 and 477.42. After 15 years, the borrower with the 15-year loan has paid $39,454 more but is out of debt whereas the borrower with the 30-year loan still owes $64,543.

But there is a counterargument. A disciplined borrower can choose the 30-year loan and invest the difference in payment between the 30- and the 15-year loans, in that way offsetting the higher interest rate on the 30-year loan. Some financial planners recommend this approach to their clients as part of a program to build wealth faster.

The challenge in making such a program work is that the rate of return on the invested cash flow must exceed the rate on the 30-year loan by an amount that depends on how much higher the 30-year rate is than the 15-year rate…

Read the rest of this article by Jack Guttentag at Inman News here: “Benefits of 15-year mortgage hard to beat”.

Payment calculator

If you’ve been shopping around for a home to buy, it can be difficult to know what price range to stay in.  Unfortunately, you cannot look just at the sales price as the total amount you will be paying over the years; you must also calculate in the loan and interest rate on the mortgage to figure out the monthly and yearly amount you will be paying.  Want a quick way to figure that all out?  You can use this easy calculator below; just click on the picture to be directed to it.

payment calculator

Guest Post: Managing your finances before homeownership to save your home from a foreclosure

Managing your finances before homeownership to save your home from a foreclosure

Are you planning to purchase a new home? If yes, you have to buck up your finances so that you don’t fall in trouble in the near future and then risk losing your home to a forced foreclosure. Managing your finances is the most important job that you have to do when you plan to take out a home mortgage loan from a bank. The mortgage loan entails your home as collateral so that when the borrower defaults to make the payments on time, the lender can foreclose the house and recuperate the money. How much house can I afford is the most important question a borrower should ask himself before taking the plunge. Here are some important steps that you should take in order to manage your finances once you plan to take out a home loan.

  • Stop all the unnecessary expenses: Whenever you contemplate buying a new house and forget paying further rent, you should stop making all the unnecessary expenses that you can do without. If you don’t read magazines, stop the monthly subscriptions to magazines. If you can cook well, stop dining out every weekend as this will save your dollars in the long run. You can even do without the cable connection at home. If you can build an emergency fund, you can easily take out a mortgage loan at an affordable rate.
  • Stop using your credit cards: Are you aware of the fact that the mortgage lender will check your DTI ratio or the debt-to-income ratio that is the ratio between the total monthly debt obligations with your monthly income. If you keep on purchasing things with your credit cards, you’ll drown in unsecured debt and thereby be forced to take out a home mortgage loan at an unaffordable interest rate. Therefore, stuff your wallet with cash so that you may stop buying things when you’re exhausted.
  • Save enough money: Yes, this is the ultimate secret that will take you to the path of a smooth mortgage loan approval. The mortgage loan underwriter will check the amount you’re paying down while taking out the loan amount. The more you pay down, the lower will be the rate offered to you. You should save enough money so that you can at least pay down 20% of the loan amount and avoid paying PMIs later on.
  • Keep track on your credit score: Don’t take any wrong step that can hit your credit score. Pull out a copy of your credit score time to time so that you know where you stand financially. Repair your credit as much as possible so as to grab the best mortgage loan at the most covetable cost.

When you’re dreaming of homeownership, make sure you follow the money tips mentioned above. By taking all the tips mentioned above, you can get the most appropriate loan in accordance with your affordability. Don’t forget to ask yourself “how much house can I afford” before taking out the loan.

REO Inventory in 2011

RealtyTrac’s year-end report released Thursday shows foreclosure filings – including default, auction, and bank repossession notices – were reported on 1,887,777 U.S. properties in 2011. Of that total, 804,423 homes were taken back by lenders as REO.

Last year’s tally of nearly 1.9 million properties with a foreclosure filing seems staggering, but it’s actually the lowest reported since 2007. It’s 34 percent below 2010, 33 percent below 2009, and 19 percent below the 2008 total.

RealtyTrac’s newly appointed CEO Brandon Moore describes foreclosure activity last year as being in “full delay mode.”

“The lack of clarity regarding many of the documentation and legal issues plaguing the foreclosure industry means that we are continuing to see a highly dysfunctional foreclosure process that is inefficiently dealing with delinquent mortgages – particularly in states with a judicial foreclosure process,” Moore said.

These delays, however, may be coming to an end. Moore says there were strong signs in the second half of 2011 that indicate lenders are finally beginning to push stalled foreclosures through in select local markets.

“We expect that trend to continue this year, boosting foreclosure activity for 2012 higher than it was in 2011, though still below the peak of 2010,” Moore said.

Despite signs that some markets are experiencing a pickup in foreclosures, RealtyTrac’s analysis shows that processing timelines continued to increase.

On the national stage, properties foreclosed in the fourth quarter took an average of 348 days to complete the process, up from 336 days in the third quarter and up from 305 days in the fourth quarter of 2010.

RealtyTrac says the length of the average foreclosure process has increased 24 percent from the third quarter of 2010, when lenders began to re-evaluate foreclosure procedures as a result of documentation and affidavit errors.

New York holds the title of ‘longest foreclosure process in the nation’ – an average of 1,019 days.

New Jersey documented the nation’s second longest end-to-end foreclosure process, at 964 days. Florida has the third longest at 806 days. Foreclosure activity in both these states dropped more than 60 percent from 2010 to 2011.

All three states with the longest foreclosure timelines employ the judicial foreclosure process.

Texas continues to register the shortest average foreclosure process of any state, at 90 days, but that still represents an increase from 86 days in the third quarter and 81 days in the fourth quarter of 2010.

At 106 days, Delaware has the second shortest foreclosure timeline in the nation, and Kentucky lays claim to the third shortest, at 108 days.

More than 6 percent of Nevada housing units (one in 16) had at least one foreclosure filing in 2011, giving it the nation’s highest state foreclosure rate for the fifth consecutive year. That’s despite a 31 percent decrease in foreclosure activity from 2010.

Arizona registered the nation’s second highest foreclosure rate for the third year in a row, with 4.14 percent of its homes (one in 24) receiving at least one filing in 2011.

California registered the nation’s third highest foreclosure rate for all of 2011, with 3.19 percent (one in every 31 homes).

Other states with 2011 foreclosure rates ranking among the nation’s 10 highest include: Georgia (2.71 percent), Utah (2.32 percent), Michigan (2.21 percent), Florida (2.06 percent), Illinois (1.95 percent), Colorado (1.78 percent), and Idaho (1.77 percent).

This article is by DSNews.com: “New REO Inventory in 2011=804,423 Homes.”

Unemployment Rate Falls to 8.5%

The nation’s unemployment rate continues to trend down. It slipped to 8.5 percent during the month of December as the economy added 200,000 new jobs, the U.S. Department of Labor said Friday morning.

The reported rate is down from 8.6 percent in November. The change in total nonfarm payroll employment for November was revised downward from +120,000 to +100,000. October’s data was revised upward from +100,000 to +112,000.

December’s results were better than expected, with the consensus forecast among analysts looking for the rate to inch up to 8.7 percent and net job growth over the month to tally 150,000.

December marks the sixth consecutive month of 100,000-plus job gains and the first such stretch employers have been able to string together since 2006.

The number of long-term unemployed – those jobless for 27 weeks or more – was little changed in December at 5.6 million and accounted for 42.5 percent of the unemployed.

The unemployment rate has declined by 0.6 percentage point since August, according to the Labor Department. At 8.5 percent, the rate ended 2011 at its lowest level in nearly three years.

Over the 2011 calendar year, nonfarm payroll employment rose by 1.6 million, up sharply from the 940,000 jobs added in 2010.

Employment in the private sector rose by 212,000 in December and by 1.9 million over the year.

Government employment changed little over the month but fell by 280,000 over the year.

The national unemployment rate averaged 8.9 percent in 2011, compared to 9.6 percent in 2010.

This article is from DSNews.com: “Unemployment Rate Falls to 8.5%“.

2011 had lowest mortgage rates on record

You’ve probably been hearing all year long how mortgage interest rates were at record lows.

Now, the final data is in. And it shows that 2011 had the lowest average interest rates in the 41 years that mortgage giant Freddie Mac has been tracking loan rates.

Specifically, the U.S. average was 4.45% on the 30-year fixed-rate mortgage, Freddie Mac reported. That beats the previous low of 4.69% set in 2010.

The past two years are the only ones in Freddie Mac’s records in which the annual average rates were below 5% for a 30-year, fixed-rate loan. In 1981, 30-year mortgage rates averaged nearly 17%. As recently as 2008, rates were averaging above 6%.

Interest rates fell below 4% for the first time in Freddie Mac’s data in October – and stayed at or below 4% for the last nine weeks of the year. Thirty-year rates set six records last year, falling to an all-time low of 3.91% on Dec. 22.

Other types of mortgages were in record territory as well. According to Freddie Mac:

  • Fifteen-year, fixed-rate mortgages set eight records in 2011, falling to an all-time low of 3.21% on Dec. 15.
  • Five-year, adjustable-rate mortgages set nine records in 2011, falling to an all-time low of 2.85% on Dec. 22.
  • One-year, adjustable-rate mortgages set 14 records in 2011, falling to an all-time low of 2.77% on Dec. 22.

The record low mortgage rates failed to spark a revival in the housing market, with fewer buyers able to qualify for a loan or able to afford to purchase a home. Overall, local and U.S. home sales remain well below average levels.

This article is from the Orange County Register; read it here: 2011 had lowest mortgage rates on record.”

What’s in store for the housing market in 2012?

2011 was supposed to ratchet up steady, if not, robust growth in the US economy. However, several economic and geo-political events tripped up the economy during the year that have left would be home buyers dazed and confused about jumping into the housing market.
2011: A Year of Wild CardsLooking in the rearview mirror: 2011

Here’s what we know–2011 has been wrought with uncertainty and unexpected shocks that has hobbled output in the US and around the globe and caused a huge crisis of confidence for consumers, investors, and businesses alike. The list of wildcards is long: the DC midterm elections, the change of power in the House, the Japanese earthquake and tsunami, the Arab uprising, the oil price shocks, the European debt crisis, the battle over debt ceiling, the downgrading of the US long-term debt, and the fallout with the volatility in the stock market. All of which have left output through the first half of the year below the growth rates that accompany a recovery. The probability of a double-dip recession has gone up and has caused economists far and wide to downgrade their outlook for this year and next.

What does next year have in store for housing?

California Housing Market OutlookHere is what C.A.R. is forecasting for 2012:
  • While the probability for a double-dip recession is higher, the most likely scenario is for a continuation of the slow-moderate growth we have seen for the last few years. The outlook is for modest but positive growth with GDP coming in at 1.7% in 2011, 2.0% in 2012.
  • We are moving forward, albeit bouncing along the bottom for most of 2011 and we can expect the same for next year, with a flat sales forecast for 2011/2012 (-0.1% year-to-year loss in 2011 and 1.0% gain in 2012).
  • Prices are expected to come in 4% below 2010 levels and should show a modest gain in 2012 (+1.7% year-over-year).

Overall, we’ve seen uncertainty and a lack of urgency put a damper on the housing market in 2011.

Hopefully, 2012 will prove less uncertain and could even show signs of urgency as current prices and mortgage rates are phenomenal and will not stay this low forever.