Mortgage Rate Watch

Provided courtesy of: http://www.mortgagenewsdaily.com/consumer_rates/

Huge Housing Rebound, All-Time Low Rates, But At What Cost?
Thu, 02 Jul 2020 19:26:00 GMT -

This week's economic data included the biggest-ever gain in Pending Home Sales, a leading indicator for the housing market. Meanwhile, mortgage rates pushed down to new all-time lows yet again. 

But at what cost?

The most pessimistic way to explain the surge in home sales is to say it was only made possible by the record-setting declines in the past few months. 

That's mostly true, but it fails to give credit to what the industry and government officials have been doing to help jump start economic activity.  Would sales bounce back like this without all-time low mortgage rates and a stock market recovery (both made possible by emergency intervention from the Federal Reserve)?  Would consumers be as comfortable spending money without the promise of additional fiscal stimulus and other support programs already in place?

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Rates at All-Time Lows Ahead of Important Jobs Data
Wed, 01 Jul 2020 20:48:00 GMT -

Mortgage rates were generally unchanged today, thus leaving the average lender at all-time lows for conventional 30yr fixed scenarios.  It continues to be the case that loan scenarios with additional risk factors have NOT seen nearly as much improvement as those in the top tier.  In general, however, things are starting to improve.

When coronavirus rocked the financial markets in March, mortgage rates were particularly hard hit.  This had a lot to do with the anticipated inability of millions of homeowners to make their mortgage payments.  While the government and the mortgage industry rushed to put programs in place to help those homeowners, there were/are unavoidable consequences for mortgages in the eyes of investors.  Simply put, each additional risk factor that makes forbearance (a temporary non-payment agreement) more likely from a statistical standpoint also made the available rates incrementally higher.  

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Best Month Ever For Mortgage Rates
Tue, 30 Jun 2020 19:36:00 GMT -

Mortgage rates managed another slight improvement today, which means the average lender is offering new all-time low rates for the 4th time this month.  Even if rates had lurched unexpectedly higher today, June still would have gone down as the best month in the history of the mortgage market with many lenders now offering conventional 30yr fixed rates under 3% on top tier scenarios. 

The low rate environment has been made possible first and foremost by the economic contraction resulting from coronavirus.  In and of itself, however, that still likely wouldn't be sufficient to get rates as low as they are.  The rest of the heavy lifting has been done by the Federal Reserve, which stepped in when markets were experiencing the height of their recent volatility in early March 2020.  The Fed helped restore liquidity by buying Treasuries and mortgage-backed bonds directly.  This helps push interest rates down not only for mortgages, but also for the US government (which needs to borrower more heavily than ever before in order to finance the fiscal response to coronavirus).

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Home Refinance Loan

Home Refinance Loan

What is 'Refinance'

A refinance occurs when a business or person revises a payment schedule for repaying debt. Mechanically, the old loan is paid off and replaced with a new loan offering different terms. When a company refinances, it typically extends the maturity date.  Companies or individuals refinancing loans may have to pay a penalty or fee.

BREAKING DOWN 'Refinance'

The most common forms of consumer debt are mortgages, car loans and student loans. The borrower agrees to make certain payments based on a rate of interest. Companies operate the same way. The most common types of corporate loans are term loans, bonds and lines of credit. The company agrees to the terms of each loan type, and the bank lends it money. Terms provide the details of the loan and specify the interest rate, payment amount and payment date(s).

When the terms of the loan are revised in a way that changes the payments associated with the loan, the loan has been refinanced. In a refinanced loan, the old loan is paid off with the new loan, and the old terms are replaced with new terms. Some loan terms come with fees associated with prepaying, which makes refinancing less rewarding. The most common changes in loan terms are maturity date and interest rate.

Why Refinance

Borrowers refinance for a myriad of reasons. A common goal is to pay less interest over the life of the loan. Borrowers may also want to change the duration of the loan or switch from a fixed-rate to an adjustable-rate mortgage, or vice versa. The reasons and motivations behind refinancing a loan are as varied as the loan types offered.

Refinance Loan Types

There are several different types of refinancing options. The type of loan a borrower decides on is dependent on the needs of the borrower. The most common type of refinancing is called the rate-and-term. This occurs when the original loan is paid and replaced with a new loan. Another type of refinancing is the cash-out. Cash-outs are common when the underlying asset collateralizing the loan increases in value. The transaction involves withdrawing the value or equity in the asset in exchange for a higher amount. In other words, when an asset increases in value on paper, you can gain access to that value with a loan rather than selling it. This option increases the total loan amount but gives the borrower access to cash immediately while still maintaining ownership of the asset. Another refinancing option is referred to as the cash-in. The cash-in refinance allows the borrower to pay down the loan for a lower loan-to-value ratio or smaller loan payments.

Like many other Americans, you may be considering using the equity you've built in your home to re-invest in your dreams or consolidate debt. A mortgage refinance allows you to borrow additional money on your mortgage, so you can afford the things you've always wanted. It will also help save you money and help consolidate your debt into one convenient payment.

Mortgage refinance can prove beneficial in several ways:

  • Helps Obtain a Lower Fixed Rate
    The interest on a fixed rate mortgage that you took several years ago may have dropped drastically. Refinancing the existing mortgage will entitle you to avail of the reduced interest rate.
  • Do the things you always wanted
    A Mortgage refinance could provide you with peace of mind in doing things you always wanted such as help with kids' education costs, take that dream vacation, buy the perfect vehicle, get a home renovation and so much more. You could purchase a residential property, including rental properties of up to four units.
  • Consolidating Multiple Mortgages into One
    Paying the installments of two or more mortgages at the same time can be quite a burden for most individuals. The best solution in this case is to consolidate the multiple mortgages into one, with a fixed monthly interest rate and a longer repayment duration.
  • Pay Off Other Debts
    The proceeds from your refinanced mortgage can be used to pay off credit card bills and other similar expenses. Since mortgage interest is 100% tax deductible, you end up saving a considerable amount.
  • Make Cash Provisions for Emergency Situations
    You can refinance your existing mortgage to free a larger amount of cash, depending on your home equity. Since a mortgage is a secured loan, the interest applied is considerably lower than that of an unsecured loan.

We help you decide whether it is the right time for you to refinance. The decision to refinance should be carefully evaluated to avoid any complications at a later stage. By carefully studying the status of your current mortgage and comparing it to your income and other debts, we help you pick the refinance solution that best suits your current financial status.

We offer some of the lowest and most competitive mortgage refinance rates in the market. Regardless of your requirement, whether it is to consolidate existing mortgages or obtain a better rate, we get you the best deal possible. Our experienced mortgage professionals, who have extensive knowledge of the mortgage industry, will provide the necessary guidance that you need in making the right refinance decision.

 

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