Mortgage Rates are great right now

[Gainster]

Someone please correct me if I am wrong but I have been told that when the fed lowers the prime it does not affect the mortgage interest. It is more tied to the stockmarket.

Yes, I am far from the expert here but they way I understand it is rates are set by the companys of www.freddiemac.com & www.fanniemae.com No doubt the rates will be lower soon which is good, Problem around here is appraisals are coming in so damn low refi is not a option. Way too many bad loans out there that have people upside down. My wife works for a mortgage co & had almost 100 loans last month...... All on foreclosures that people are buying.

 

[NDflatlander]

I don't know how much this is going to help those who were already dangerously close to or in foreclosure. A refi will cost the owner the fees again and likely the real estate won't be worth what is owed on it. Those individuals haven't been able to come up with the cash for their payments, how are they going to pay the refi costs? As far as bailing those who are in danger of losing their homes it probably won't help them much.

I agree with halfwayM7, I hope that people don't hope right back on home buying since the interest is low and buy more than they can afford and continue the cycle.

I'm not a homeowner yet, mainly because my job here is only a 2 year position and the real estate market here is really stagnant. I do have farmland that I will be refinancing and will likely look into purchasing more land if the interest rates really drop.

 

[khaddon2110]

Someone please correct me if I am wrong but I have been told that when the fed lowers the prime it does not affect the mortgage interest. It is more tied to the stockmarket.

You are correct. The rate that you hear about being dropped is the rate the banks are borrowing money at. It usually takes a week or so for it to trickle into the consumer mortgage market but it does eventually get there.'

everyone that went and checked rates yesterday after they announced this rate cut found that the rates were exactly the same as before the cut. Probably will be for a few more days.. Patience people

My vision into the crystal ball tells me rates on 30 conv will be below 5% and probably stable out around 4.875%. Thank you, and I will be in town until Thursday.

 

[Diesel99]

Rates on the 30 year will not go down much if any from Fed rate cuts. Fed rate cuts basically will show up on bank prime rates such as HELOC's.
The 30/15 year rates will come down if the economy keeps goin into the crapper as these are tied to the bond market.
Banks have tightened their lending requirements also so it will be tougher to get a mortage as they want verified income and high downpayments and good credit.
Remember it's the cost of the home that is more important than the mortage rates, you can refinance most anytime but can't lower your purchase price once you have bought. With average home prices expected too fall for the next couple of years it might not be the right time to purchase but every area is different.
If you are Canadian and want to buy in the US you are going to have to have the cash or remortage your house to buy US property. Most Canadian banks won't lend on US property and US banks won't lend because you don't work in the US also go see a tax expert on implications to your income if you want to rent it out or buying for an investment.

 

[zgriff40]

Mortgage Information

All of you have some pretty good info/insight on this topic. To answer some of the questions that have come up.
1.Currently there are still great financing options for first time home buyers with low to no payment. the difference for 2 years ago to now is that borrowers have to have good credit and fit into debt to income guildlines as most high LTV stated products and sub prime programs have gone away. The government has stepped in to help with by expanding the guildines on FHA financing.
2.All of us are in different areas, but most of us are in similar situations as far as no apperication in our markets so it makes it difficult to refinance as comps are low. FHA is trying to step in to help this out a little, but this situation is why fixed rate loans are so important. Although its never good when property values dont appericate, at least you are protected from rate adjustments and being forced to refi if you are locked in on a fixed rate loan. This is why I recomend anybody on an ARM to seriously look at converting to a fixed loan. Rates are great now you should take advantage of them, I know i am.
3.On to the prime rate: the prime rate does not directly effect long term mortgage rates, but more directly effects credit card rates, car loans, some ARM mortgages, and HELOC's etc. many times long term rates move oppisite the prime rate for a short time after the fed announcment. Long term rates are follow mortgage backed securities and the US 10 year tresuary. As investors fear recession they pull money from the stock market and invest in mortgage backed securities driving prices up and in turn bring mortgage rates down. the 10 year bond is a good quick reference as to what the mortgage market is doing on a daily basis.
Sorry for being so long winded, Im sure there are many more questions as everybodies situation is unique and different.
Feel free to get in touch with more questions
thanks,
Zach

 

[Gainster]

The rate market is seeing solid follow-through to gains with the flight-to-quality still mostly guiding sentiment. Globally, equities are digging deeper into their hole with expectations for weak growth ahead and eventual central bank action to loosen policy. The central banks in Europe, particularly the ECB, have yet to see the light as the banks continue to focus on inflation rather than the sinking economic ship. Central banks will cut rates, the only concern is when. The sooner the better as losses accumulate in banks in Europe and credit has all but dried up.

Keeping their eyes on the ball has been difficult for the Fed; until yesterday the Fed was fixated on fighting a spook that doesn't exist. The Fed's emergency rate cut yesterday signals a dramatic shift by policy makers from inflation to growth concerns. It indicates they now see a risk of lower home and stock values feeding back into tighter credit conditions that threaten to choke off growth. All key central banks have missed the target with inflation fears clouding the real problems; as long as home sales and valuations are falling and auto sales are at their lowest in 10 years, the US economy can not grow----this country is economically built on homes and autos, if they slow the overall economy will fall as will inflation fears. Better late than never.

More rate cuts are coming; next Wednesday the FOMC meeting will likely yield another 50 basis point cut, taking the FF rate to 3.00%. The Fed's cut yesterday has done little so far to alter the attitudes in the stock world; however, based on the indexes the stock market is getting to levels that should entice some bottom fishing.

This e-mail made for a interesting read!

 

[Supplicate]

also will be a first time home purchaser. Ive been waiting a year for this, but still dont have 20% down... guess the sled is going to have to go next month...

Thats what I'm thinking too But I think I'll wait till march to list it and one of the dirtbikes.

 

[Scott]

When we locked in last week, the rate on a 30 year fixed was 5.5.

Ours was at 5.875 becuase of the type of loan we are going with.

 

[phatty]

Thats what I'm thinking too But I think I'll wait till march to list it and one of the dirtbikes.

the dirt bike will bring more money in march... sled has to go now while the snow is awesome...

finally a useful thread on snowest.

 

[Ex-Member]

Yeah, closed on a condo on the 11th. $0 at closing, 0% interest down payment loan.

Buy now.

 

[03rmking]

Is it best to go with a larger lender, like Bank Of America? Or a smaller lender who specializes in first time buyers? For the self employed do they review tax records to verify your stated income? Soooo many questions....

 

[Yeti]

If you are thinking of refinancing, I'd recommend calling your current lender and seeing what they will do for you. We had a 30 year fixed through Wells Fargo and they hooked me up when we refinanced a couple of years ago. We went to a 15 year fixed at 5.6 %. The sweet part was that they waived all of the closing costs, fees, appraisal, etc. I got lower payments, a lower interest rate, a shorter term on the loan, and it cost me nothing! What's not to like? The drawback a lot of times is paying those closing costs. I'd call and ask them what they will do as far as waiving closing costs, etc. You never know, it might be worth it.

 

[xrated]

Is it best to go with a larger lender, like Bank Of America? Or a smaller lender who specializes in first time buyers? For the self employed do they review tax records to verify your stated income? Soooo many questions....

i wondered this too. Ended up with the credit union at my work. It was easy to deal with, and I hoped if I had future problems I would deal with them. What they(and I think alot of others do) is that after the mortgage is all done with, the bank will sell it out to a bigger mortgage company.

I don't mind that the loan gets sold out because all of my concerns for first time buying were very up front and had to do with the basics of getting started. From that stand point I would say go smaller just because it's easier to deal witht them and they are very willing to sit down and talk with you.

 

[Goin For Snow]

not to hijack the thread, but if your mortage is good, it is a very good time to dump some extra money into you retirement accounts..

The "buy low" time is now. I am glad i am not living on the returns, but returns down the road will be nice.

 

[Gainster]

We have some have good friends that went with a bad loan, Their mortgage was sold & their house payment went from $800.00 to almost $1500.00 in 3 years. Not sure how much longer they will be able to hold on w/out loseing it. The house just aint worth what they borrowed. I think it is called preditory lending & that is what our goverment sould have protected us from.... Just my opinion.

 

[HalfwayM7]

We have some have good friends that went with a bad loan, Their mortgage was sold & their house payment went from $800.00 to almost $1500.00 in 3 years. Not sure how much longer they will be able to hold on w/out loseing it. The house just aint worth what they borrowed. I think it is called preditory lending & that is what our goverment sould have protected us from.... Just my opinion.

The government cannot protect you from yourself. No matter how many laws are on the books, you are your own best protection or your own worst enemy, as the case may be.

I am sincerely sorry your friends are in that situation. However, it appears as if they signed a contract when they did not know everything they should have known, before they signed on the dotted line.

As far as a bad loan, when a mortgage is sold, the terms of a mortgage do not change. It sounds like they have an adjustable rate mortgage where the interest rate has gone up and created a much larger house payment.

Your friend's situation happens when people get lazy or choose to remain ignorant or uninformed of the repercussions of their own actions or choices. It certainly sounds like they did not ask the correct informed consumer questions. I am assuming they would not have taken the mortgage, knowing what they know now.

Based on the timeframe you stated, mortgage rates were at historic lows. Anybody getting a mortgage, in that environment, had to know the rates would go back up. It was always splashed all over the news as to how low the rates were, at the time. I was getting 15 spam emails a day on low mortgage rates and how easy it would be to get into a house. I still get some these days.

If they failed to consider what would happen when the rate went up on their mortgage, sorry, that is their own fault.

I say again, just because you can, does not mean you should.

Quit blaming the govenrment for something they should have protected themselves from in first place.

If it looks to good to be true, it is!!!!!!!!

 

[Gainster]

Halfway I am with ya, My wife had our friends into a fixed loan but my buddy thought he could do better & went with a ARM from someone else. Penny smart & dollar foolish is the saying. He saved himself $75.00 a month going with the other guy.... Guess it wasnt a wise move for him/them. I just feel very lucky right now because I have had debt since the age of 18 & now finally @ 39 we are on our second month of being debt free. Still have lots of wants but finally to the age of knowing wants & needs are two totally different things.

I still think that with all the laws the governmet passes to protect ourselves from ourselves they could do something about the ARM loans & high intrest credit cards that have hurt so many. Who know? jmho.

 

[03rmking]

Has anyone worked with Quicken Loans? Are they a reputable lender?

 

[24footjet]

Well said halfway. It's ALWAYS somebody elses fault.

It's your friends fault, not the government...

 

[03rmking]

Are there any small business owners on here who've gone through the mortgage process? Wondering how they treat you different if you don't have a traditional pay stub, where most of your income is with the business, income varies annually, and so forth?