If you are looking to take out a 30 year fixed mortgage rate you would be offered deals in the region of 5.5 percent and in some cases you may find even lower interest rate depending on your chosen lender.
You would need to match a certain lending criteria to qualify for the 30 year fixed rate mortgage deal that are being offered including a credit score of 720 or more, have a solid credit history and substantial deposit or equity.
Well the US Government announced a $800 billion plan to shore up consumer loans and mortgage, the plan had immediate effect and many lenders cut their mortgage rates.
The 30 year fixed mortgage rates fell on average 0.5 percent on Tuesday, with the rates lowered, it is thought that it will entice home buyers into the market that had been waiting for the rates to be cut. Although the drop in rates will not help homeowners who are in negative equity, mortgage brokers have said they expect the rates could fall even further.
It was a new Fed program announced on Tuesday that did the trick. With this new program the Fed will directly buy up to $600 billion in Fannie Mae and Freddie Mac and other mortgage backed securities, as well as another $200 billion in other consumer credit obligations. This is huge news, and something the Fed hasn’t done in the last 50 years. By moving into the market the Fed is sending a clear signal that they are going to stay in the market and do whatever is needed to keep rates down and get the market moving again. The markets reacted with a buying frenzy, and mortgage rates are about a half point lower now than they were at the end of last week.
If you are about to buy a home, this is great news. If you are thinking about refinancing your home, this could be great news, but it is not going to help everyone.
Refinancing your mortgage is a great way to lower your payment and it can help those who need to restructure their debt and those who want to move from an ARM into a fixed rate loan. But many of the people who would get the most benefit from refinancing are those who bought in the last several years, when home prices were at their highest and mortgage underwriting was easier. One issue we are facing now is low appraisal values.
Home prices have moved sharply lower, and the value may not be enough to support the mortgage. If you bought with a low down payment the mortgage may be higher than the current value of the home. I’ve seen other cases where the borrower bought the home with 20% or more for a down payment, but if they were to refinance now they would have to pay mortgage insurance. Another issue comes in with those who have a second mortgage or home equity line.
When refinancing, the lender on the second mortgage needs to subordinate their mortgage to the new first mortgage, that is, they aren’t going to try and jump in line and take over the first position. This used to be almost automatic. Now it depends on the guidelines and position of the lender on the home equity loan.
Still, there are a lot of people who will benefit from a refinance (no-closing cost refinance), and it makes sense to look into your options. If you have an FHA mortgage, you may have the easiest option with an FHA streamlined refinance. This mortgage offers no credit qualifying, often no appraisal and it can lower your payment by a lot. It is worth looking into.
If you are buying a home, the news is all good. With home prices down you get more home for the money, and with mortgage rates down your payment goes even further. If you are a first time home buyer (you haven’t owned a home in the last 3 years) you also can qualify for the first time home buyer tax credit, which means up to $7,500 off of your tax bill next year. As we come into the Holiday season, this is traditionally the slowest time of the year for real estate. If you are in the market and ready to buy, that means you have leverage and there are bargains to be had. The first step to buying a new home is to be pre-approved for a mortgage.
Source: http://ptmortgage.com
