It’s a Buy Now-er’s Market
Mortgage company Freddie Mac announced a rise in the standard 30 year fixed mortgage rate. The average rate rose from 4.82% to 4.91% in a week’s time.
Real estate agents and agencies continually sell the fact that it is a buyer’s market. It is a buyer’s market, that is, for those who will buy now. Like the car commercial says, “You may never have this kind of buying power again!”
And you probably won’t anytime soon. If you are thinking that you can wait around for the best rate and will catch the “big deal” you are only hurting yourself. If you are going to buy, buy now. Rates are only rising. A nine-hundredth percent raise may not seem like much, but if you do the math, .09% of 10,000 is 900. Now, every $10,000 you finance has an additional $900 to it. Those dollars add up fast.
If you are looking to buy a home, now is the time to buy. Focus on your important factors and get ready to finance. Rates will only continue to rise.
According to MBA 14.2% Fall in Mortgage Applications
The Mortgage Bankers Association’s weekly survey reports a seasonally adjusted 14.2% drop in mortgage applications compared to the weeks previous.
Survey results of the week ending in May 22 showed a 28.5% increase compared to 2008 results. Now, a drop of nearly 15% in applications.
For prospective home buyers, this drop could mean more attainable mortgage lending practices as bankers seek to fill the gap. If you are looking to obtain a mortgage, keep looking until you find. This Mortgage Bankers Association weekly survey covers about half of the retail mortgage market, and while mortgage applications may drop, interest rates continue to as well. By now, you have heard the phrase “buyer’s market” but it is time to take another listen. The pot continues to sweeten for prospective home buyers.
To keep up with mortgage rate changes, visit the MBA website at www.mbaa.org where you can find cutting edge news from a trusted industry source.
Mortgage Rates Continue To Slide
Considering that most mortgages will take 30 years or more to pay off, its not a surprise that many people are losing their homes. However mortgage rates have slumped and they continue to decline. They are the lowest anyone has seen in six months and continue to worsen.
Rates on 30-year mortgages drop to lowest level in 6 months
Florida Mortgage Foreclosures On The Rise
Here in Florida millions of families have homes and mortgages but that number is sharply decreasing. The housing boom has cooled and now many can’t seem to afford the houses that were once their dream homes.
In August of this year alone there were 16,533 closures in Florida and it doesn’t look like this problem will get better anytime soon. In Miami-Dade there is 1 new foreclosure for every 195 homes.
There are a few different reasons for these forclosures and those include rising gas prices, interest rates, insurance premiums and even job losses.
Costs of New Homes Rise
Everyone has been predicting the real estate bubble bust but surprisingly the price of new homes is rising instead of falling. This number was shown in May and managed to surprise even those in the business.
The Commerce Department reported that sales of new single-family homes increased by 4.6 percent in May to a seasonally adjusted annual rate of 1.234 million units. The median price of homes sold did decline to $235,300, a drop of 4.3 percent from the April sales price.
Analysts are still looking for sales of both new and existing homes to fall by around 10 percent this year as rising mortgage rates crimp demand. The lowest mortgage rates in four decades helped to propel sales to five straight annual records.
The 4.6 percent increase in sales pushed the sales rate to the highest level since last December and followed increases of 5.9 percent in April and 7.3 percent in March. The previous months’ increases had been helped by unusually mild weather.
The Housing Bubble Could Blow Very Soon
In a recent report Freddie Mac has been trying to soothe everyone and using words such as “orderly and moderate cooling”. Last I checked we were not talking about an apple pie. Carefully worded statements and a soothing tone will not calm down consumers and business men and women who stand to lose a lot of money if things keep going down hill in the real estate game.
Freddie Mac stated that it expects that gradually rising interest rates will “slacken” demand further and that home sales and construction will decline about 7 percent in 2006. This would, the report said, still result in the third best year ever for those figures, outstripped only by 2005 and 2004. Still, housing starts are expected to decline 16 percent on an annualized basis from 2.13 million units in the first quarter to 1.79 million in the forth quarter, averaging 1.93 million for the year. The May report had projected 1.93 million housing starts for 2007 but that projection quietly became 1.78 million in the June summary tables.
Hawaii Mortgage Rates Ease
The mortgage rates in Hawaii had been on the rise for some time now. I can understand that, who doesn’t want a home in beautiful Hawaii? I would move their if I could afford it, but alas I can’t and the way that rates were going up, it appears that many others couldn’t as well.
That has now eased as two of the largest banks in Hawaii and a few others in the mortgage industry have lowered their 30-year home loan to 6.25%.
Mortgage Rates Keep Going And Going And…
It seems that week after week there are reports of mortgage rate increases and there are. Almost every week in the last four years there has been a rise in the rates and it doesn’t look as though it will end anytime soon.
Freddie Mac, the mortgage company, reported Thursday that for the week ending April 20, rates on 30-year, fixed-rate mortgages averaged 6.53%, up from 6.49% last week.
This week’s rate was the highest since the week ending July 12, 2002, when 30-year mortgage rates stood at 6.54%.
Mortgage rates rose as Wall Street investors fretted that inflation might pick up, analysts said. These worries were fanned by government reports released earlier this week showing big increases in both wholesale and consumer prices for March.
Source: USAToday
Mortgage Rate Woes
I saw a story the other night (which you can veiw by goint here and clicking on “Housing Hangover”) about the number of forclosures going up because people with adjustable rate mortgages now can’t pay their mortgages.
Adjustable rate mortgages typically have a lower interest rate than fixed rate mortgages for an introductory period. I emphasize this because after that initial period, which can be one, three, five, seven or 10 years, depending on your mortgage terms, the rate then adjusts every year based on what the current interest rate is.
Many people who bought homes with adjustable rate mortgages in the last few years, when interest rates across the board were low, are now facing that variable rate time (rates on adjustable rate mortgages typically change once a year). According to the story mentioned about, it’s estimated that a quarter of all mortgages will have an adjustment in interest rates in the next two years.
That means people who were barely making their payments before now can’t afford their mortgage payments. When they get behind they can default on their loans and go into foreclosure. Some experts are already seeing the rate of forclosures going up.
A woman profiled in the story is selling her home in Texas because her family couldn’t keep up wth payments after the introductory period. She said her mortgage payment went from $1,709 to $3,000, making their situation go “from bad to worse.”
That’s a telling statement. Things were already bad before the mortgage increase. That’s a pretty good indication that this family bought a house that was more expensive than they should have. They got a bigger loan, and thus a bigger mortgage payment, than they could comfortably afford. They chose an adjustable rate mortgage because it was cheaper at the time, and didn’t really think about the fact that they would have higher costs down the road.
It seems like more banks are willing to give huge loans to people, without much concern for whether the person can actually afford the payments. Of course they care somewhat because they lose money when a loan defaults, but it doesn’t seem like there’s enough credit counseling when it comes to a purchase as huge as a home.
So heed this advice if you’re looking for a home: don’t buy more home than you can afford. Your housing costs should be no more than 30 percent of your income. Consider carefully what an interest rate change would do to your ability to pay if you choose an adjustable rate mortgage, and think about any changes you might be thinking about making in your financial situation before you sign (for example, if one parent wants to stay home when you have kids, can you pay the mortgage on the other person’s salary?).
Review of LendingTree.com
Recently, we found a need to do some work on our house. Our roof had a leak, and the guys we had come take a look at it said they wouldn’t touch it without putting a whole new roof on. That, combined with a desire to lock in a fixed rate on our mortgage and also to do some work on our kitchen led us to start looking around to see what our options for refinancing our mortgage were.
We first contacted QuickenLoans since they had refinanced us once before and we had liked the process – quick and painless. We got a quote from our contact there, for a 15 year fixed rate loan taking out some of the equity from our house to pay for the roof and kitchen work.
Then, we also contacted LendingTree.com, since I had heard their ads on NPR about “when banks compete, you win”. The process of filling out their site was easy enough, but the real process didn’t begin until I got a call from one of their lending specialists.
He explained that basically, the banks that deal with LendingTree have an arrangement that says that if there is a better offer, they have to beat it. So, having an offer in-hand from the Quicken guy was helpful, and in the end we focused our attention on minimizing the closing costs, even if it meant a little bit higher interest rate.
We liked the overall process, it took about 3 1/2 weeks total from start to finish, and the check for our cash-out arrived just the other day. All in all, I’d have to say that LendingTree provided a good service and value, and we now have a solid new mortgage.