Will Mortgage Rates Decrease?

Will Mortgage Rates Decrease?



In these turbulent times, the question on everyone's mind is what will the market do next? Can it get worse or have we seen the bottom? What will interest rates do? Will they continue to fall in an attempt to spur the economy or will the fed begin raising them soon? Correctly answering these questions can lead to sound financial decisions, but unfortunately things are not that simple.

Many people who are in a position to purchase a home can find some great deals on the market. Prices are lower than they have been in years and it is a total buyer's market. But many potential buyers are hesitant to make the purchase because they think mortgage interest rates will continue to fall.

While it is true that a drop in it of even .5% can translate into a lot of money over the life of a 30 year mortgage, the truth is that waiting might not be the best option. Here's why. Mortgage rates are not tied directly to the Federal Reserve interest rate. They are affected as much by shifts in the housing market itself as anything else. Let's say that you choose wrong and it begins to rise again. It's likely that a lot of people will be rushing to close on mortgages before it gets too high. This in turn will lead to a rise in home prices. Even an increase of $10,000 in the price of the average home can more than offset the savings that a half percent drop in interest rate will bring. Interest Rate move slowly but home prices can change overnight.

As the demand for homes begins to grow, this will spurn interest rates. Rises in mortgage interest rates are directly related to investor demand for mortgage backed securities. Right now demand is low, but the smallest hint of a recovery could send hedge fund and mutual fund managers into a buying frenzy. Overnight things could change dramatically.

Current expert opinion is that this will neither rise nor fall for the foreseeable future. But keep in mind that the market has a mind of its own formed from the unpredictable collective mind of millions of investors. The only thing that we know for sure is that the current housing market is the best we have seen for buyers in many years. Is it possible that you will save a little by waiting a month or two to buy a home? Yes. But is it really worth waiting for your dream home for savings that may never come?

By Todd Fletcher

The Advantages Of A Fixed Rate Mortgage

The major advantage of a fixed rate mortgage is that it presents a predictable housing costs for the life of the loan. A fixed rate mortgage guarantees that your interest rate stays the same, which means that your monthly principle and interest payments through the entire term of the mortgage remain unchanged. With a fixed rate mortgage, your monthly payments would only increase due to increases in property taxes or insurance rates.

A fixed rate mortgage allows you to budget accurately and enjoy lasting peace of mind. Knowing that your mortgage payment will remain the same month after month allows you to plan for lifes other pleasures, like vacations, college educations and retirement. It's pretty simple, if you don't like risk, then a fixed rate mortgage is right for you.

If the interest rates rise above the fixed rate on your mortgage, you will see the real benefits of the fixed rate mortgage. You can use a Fixed Rate Mortgage to finance primary residences, second homes or investment property, or to refinance your current mortgage. You always know that no matter what happens with interest rates, your payments won't change if you've used a fixed rate mortgage.

In general, fixed rate mortgages are seen as the safer alternative to an adjustable rate mortgage. An ARM is considered riskier than a fixed rate mortgage because your payment may change significantly. If you have an ARM, it may be best to lock in a fixed rate mortgage now, in advance of your current loan adjustment.

By Jeremy Redlinger

How to Get Good Mortgage Rates - Tips For Getting the Best Mortgage Interest Rates on Your Next Loan

Do You Want To Get Good Mortgage Rates?

Everyone wants the best mortgage rates that they can qualify for but many people are not sure how to actually get those rates. Follow these short tips in order to secure really great deals for your home financing.

Your Current FICO Score - One of the biggest factors that will affect your final mortgage rate is your credit score. Knowing what it is before you refinance is very important to getting the best home loan rates. The ideal situation is you having a credit score of close to or over 700, if possible. If it's not anywhere near that number then consider beginning to pay off your credit card debt and other debt and be mindful of not missing any payments. These will help boost your credit score.

Proper Documentation - Before applying for financing, always be sure to keep tax records, pay stubs/receipts, and other income streams well documented. Do not give your lenders any reason to be suspicious about the way you produce income on a monthly basis or your loan could be denied or rate increased.

Down Payment - A larger down payment is sure to bring your costs down. A 20% down payment on a new house will save you on costs in the long run and eliminate any costs associated with mortgage insurance. It also reduces risk for the lender who will reward you with a low mortgage rate on your loan.

Shop Around - Call all of the banks in your area and give them your credit score, the size of the loan, the value of your home and the amount you want to pay up front (down payment). Get the initial quotes from the banks then call around and compare until you find the best deal.

By Andrea D Johnson

Pay Off Mortgage Early

Any extra or additional payments on mortgage pay off mortgage early. There are three avenues to pay off mortgage early without paying a penalty. The borrower can use bi-weekly mortgage payment, lump sum mortgage payment, or additional mortgage payment.

The terms and conditions of your mortgage tell how much you can pay extra or additional without paying penalty. The mortgagor or borrower pays penalty when the extra or additional payment exceeds the limitations. Mortgage is an asset to mortgage lender. Since mortgage lender losses interest as you pay extra or additional over the limitations, the mortgage lender charges penalty to the mortgagor or borrower.

In bi-weekly mortgage payment, the borrower pays off the mortgage every two weeks. This option is the most affordable and convenient way to pay off mortgage sooner from the three options to pay off mortgage early. For the annual lump sum and additional mortgage payment, the borrower needs to come up with larger funds. The borrower makes twelve payments on regular monthly mortgage payment, while the borrower makes twenty six payments on bi-weekly mortgage payment. Since the borrower makes more payment, the borrower put more money to reduce the mortgage. To calculate the bi-weekly mortgage payment, you simply divide the mortgage monthly payment by two. For example, the borrower pays $1,000 monthly mortgage payment. The borrower pays $500 ($1,000 monthly mortgage payment / 2) in bi-weekly mortgage payment. Another example, the borrower took $100,000 principal, 6.5% interest rate, and 30 year mortgage. The borrower pays $316 bi-weekly mortgage payment ($632 monthly mortgage payment / 2) to pay off mortgage early. The borrower saves 5 years and 11 months.

The annual lump sum mortgage payment is one big extra or additional mortgage payment every year. Mortgage lender usually allow up to fifteen percent of the principal amount which is the outstanding balance of the mortgage. For example, the borrower took $100,000 principal, 6.5% interest rate, and 30 year mortgage. The borrower pays $632 monthly mortgage payment. At the anniversary date of the following year, the borrower pays an extra payment of $15,000 ($100,000 x 15%) to pay off mortgage early. The borrower saves 5 years and 7 months.

The additional mortgage payments act like annual lump sum payment. The only difference is the borrower pays additional sum of money on top of regular mortgage payment on regular basis. For example, the borrower took $100,000 principal, 6.5% interest rate, and 30 year mortgage. The borrower pays $632 monthly mortgage payment. At the anniversary date of the following year, the borrower pays an extra payment of $500 on top of $632 monthly mortgage payment for 12 months. So, the borrower pays $1,132 per month. The borrower saves 10 years and 11 months.

Most borrower dreams to fully own the property by paying off mortgage. Without mortgage, the borrower gets personal peace and financial freedom. And, it allows the borrower to save for their retirement. The money goes to savings, or investments instead of mortgage interest.

By Dennis Estrada

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Home Mortgage Rates - Get the Best Loan For You at the Best Rate

Finding the best home mortgage terms for you can save you a lot of money, as well as untold headaches. When you look for a home mortgage you'll want to look both online and with a mortgage broker to find the best mortgage terms The most common mortgage terms are how many years the mortgage will be paid off (typically 15 or 30 years) and the interest rate. Home mortgage products are not always straightforward. The basic plan is a 30 year fixed rate, where you pay the same amount of money each month for 30 years. Some mortgage terms offer a lower interest rate for the first few years, converting to a higher rate later on. This adjustable rate mortgage is typically cheaper in the beginning, but can cause a lot of financial problems for the home owner, who might not be able to afford the higher rates down the line.

Mortgage financing is important because of the difficulty in paying for home in cash. The mortgage financing comes from a lender, also known as a creditor. The creditor provides the money for the loan, and you are the debtor. The creditor has legal rights to the keep the home if you default on your mortgage and you have legal rights as well, spelled out in the mortgage agreement.

A mortgage broker can recommend the best mortgage terms for your finances and comfort level. If you don't know a mortgage broker, ask your friends who they used, or ask your real estate agent for a recommendation. While it's great to compare rates online, using a mortgage broker who really knows the loan products can save you a lot of money and get you the mortgage terms you need.


By Bryan Burbank


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