Ki Gray asked:


For the second week in a row mortgage rates have fallen. For those that don’t read my updates regularly I wanted to give a short background on what rates have been doing. From the end of April to the beginning of June 30 year mortgage rates hovered around 6 percent. Then during the month of June 30 year mortgage interest rates rose peaking out at 6.45 at the end of June. But since then rates have fallen through the month of July ot 6.26. So we are not down to 6 but rates have come down quite a bit from their recent high. Its also interesting rates have fallen although the FED has cut the Fed Funds rate or the discount rate since April 30th. Below are mortage interest rates for the major mortgage products for the last 5 weeks.

July 17,2008

30-yr 6.26 15-yr 5.78 5-yr ARM 5.80 1-yr ARM 5.10

July 10,2008

30-yr 6.37 15-yr 5.91 5-yr ARM 5.82 1-yr ARM 5.17

July 3,2008

30-yr 6.35 15-yr 5.92 5-yr ARM 5.78 1-yr ARM 5.17

June 26,2008

30-yr 6.45 15-yr 6.04 5-yr ARM 5.99 1-yr ARM 5.27

June 19,2008

30-yr 6.42 15-yr 6.02 5-yr ARM 5.89 1-yr ARM 5.19

Mortgage rates are nice to look at but what do these mortgage rates flucatuations mean for a mortgage. Using our free mortgage calculator we can run the numbers and see how these mortgage rate changes would affect the mortgage on a 200k loan.

July 17th

30-yr $1232.73

15-yr $1664.03

5-yr ARM $1173.5

1-yr ARM $1085.89

June 26th

30-yr $1257.56

15-yr $1692.03

5-yr ARM $1197.81

1-yr ARM $1106.88

June 5th

30-yr $1210.69

15-yr $1650.11

5-yr ARM $1136.83

1-yr ARM $1080.98

For a 30 Year mortgage on June 5th the monthly mortgage payment would have been $1210.69. Three week later on June 26th a mortgage on the same amount would have risen 4% to $1257.56. Now another 3 weeks the mortgage payment has fallen 2% to $1232.73

The other major change occuring with mortgages is that banks are becoming more selective in giving out mortgages. We have noticed over the last month that more restrictions from lenders have been coming into play. So although mortgage rates are relatively low it has become more difficult to get a loan. Over the last few years lenders would give a loan to anyone that could walk in the door this has changed over the last year. This is why potential home buyers should start paying more attention to their credit scores. Also lenders are expecting larger downpayments. Lenders are also cracking down on investment loans. The biggest change has been that most lenders are not allowing borrowers to get more than 4 investment loans. This has essentially stopped many investors from purchasing new properties.

So what do we expect to happen in the future. The general feeling among mortgage brokers is that lenders are unlikely to return to the free wheeling style we saw in 2006. But at the same time its likely that the current extreme restrictions in lending might ease up some over the next six months.



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Laissez-Faire Guy asked:


Supposedly, investors who invested in these mortage backed securities are taking a bath, and the securities have declined big time, right?

Well, these securities must have some value, I mean not every loan is defaulting, and even the ones that are are backed by homes with some real value.

So I figure since everyone is freaking out about these securities, they must be really cheap now. How can I invest in them at today’s sale prices?

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Liam G asked:


When buying a home there are a number of types of insurance you may have to take out.

Mortgage Payment Protection Insurance (MPPI) is one of them. Its purpose is to ensure that mortgage repayments will be met in the events of unemployment, sickness or accidents.

Although this may afford the buyer peace of mind, whether to take out this type of insurance is a personal decision.

For example, if you have good accident or sickness protection through your employer, or if the company you work for has a good redundancy policy, MPPI may not be necessary.

If you have access to savings, for example up to three times your monthly salary, you can use those instead until you find another job.

Another type of insurance lenders often recommended is life cover, which pays off the mortgage in the event of a borrower’s death. Until recently, most lenders made life insurance obligatory. Nowadays, many don’t.

But for most families, especially with young children, it still makes sense to consider this type of cover, as it means the loan will be paid off if one of the main breadwinners dies.

One type of cover that lenders will insist on is buildings insurance, in case of disasters such as fire, floods and so on.

From the insurer’s point of view, this is essentially to protect their investment, as until the loan is fully paid off the home is still technically theirs.

But it also ensures that if anything happens to your home, it can be repaired or rebuilt and you can continue to live in it.

Either way, the number one rule with regards to mortgages is to not automatically take out lenders’ own insurance cover.

‘Tied in’ insurance – whether MPPI, household or even life cover – is often more expensive when taken out through a lender and can generally be found more cheaply from an independent supplier.



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Tebyus Kringle asked:


I have a friend who is buying a condo with a friend. Her name will be on the deed but not the mortage.

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Kevin Sorbo asked:


With all of the mortgage problems that you hear about in the news lately combined with the lower interest rates we are seeing today, many people are wondering whether refinancing your mortgage is a good idea or not. Here are a few pointers that will help you decide of refinancing is the right decision for you.

Ignore the “Two Percent Rule”

Many people will say that you shouldn’t refinance unless you can get a mortgage rate that is two percent lower than your current rate. This rule oversimplifies the decision and only focuses on a single factor.

You need to realize that refinancing your mortgage is going to cost you money up front. You will need to pay fees to your loan originator, the lender, and possibly some third parties as well when closing the new mortgage. Because you are probably going to want this process to save you money, you should consider how long it will take you to recoup these expenses. To calculate this, add up all of your fees and divide that buy the savings that you will receive with your new monthly payment. This will give you the number of months required to recoup thee mortgage refinance expenses.

When deciding whether to refinance, you need to consider how long you plan on staying in your home as well. The longer you plan on staying, the more time you will have to recoup the refinancing costs and start saving money which makes refinancing your mortgage a better choice.

Refinance To Consolidate Bills

One of the main advantages of refinancing to consolidate bills is that you will get a tax deduction for the interest that you are paying on your debt. When you refinance your mortgage for debt consolidation, you are basically borrowing more money then you need to pay off your existing mortgage and using the extra money to pay off your other bills such as high interest credit cards, or car and student loans.

Adjustable Rate Mortgage

If you currently have an adjustable rate mortgage that is going to reset within the next couple of years you need to start thinking about refinancing now if you are concerned that you will not be able to afford the new payments, don’t wait until the last minute! Start doing some research now and look for the best person to originate your loan. Because of the current situation in the economy with mortgages, customers who have done their homework will be able to take advantage of this and get the best deal.



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