Mortgage-Bond Yields Tumble, Signaling Home Loan Rates Nearing Record Lows Bloomberg
Yields on Fannie Mae and Freddie Mac mortgage securities that guide U.S. home-loan rates fell to the lowest in almost nine months, signaling borrowing costs to purchase and refinance houses may reach new lows.
Fannie Mae’s current-coupon 30-year fixed-rate bonds dropped 0.18 percentage point to 3.45 percent as of 3:05 p.m. in New York, according to data compiled by Bloomberg. Yields tumbled to the lowest level since Nov. 10, generally tracking drops in Treasuries, as concern the economy is slowing and Europe ’s fiscal crisis will spread drove investors to U.S. debt .
The average rate on a typical 30-year home loan slumped to 4.39 percent in the week ended today, nearing the record low of 4.17 percent set in November, according to a Freddie Mac survey compiled before the additional gains in the bonds. Falling rates should in the short term help depress yields relative to Treasuries on agency mortgage securities trading the closest to face value, even though they may create wider spreads over time, according to Nomura Securities International Inc. analysts.
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California interest mortgage rate refinance and hard money
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10 yrs to go on a 30 yr mortgage, want to refinance?
My parents have paid for their house for 20 years with a variable interest rate. Now they want to make it into a fix rate. What is some refinancing advice for their remaning 10 years? Owe probably 90K, they have excellent credit.
Good luck to them!
If they really want to refinance, they should do a 15 year loan and then compute what their payments would be for 10 years. Then, pay that extra amount for all 120 payments.
Example based on 90K left with 10 years remaining on a 30 year loan:
Original balance in 1989 = $160K
Average Interest = 6.75%
Current Balance in 2/2009 = 90K
Payment = $1,038 (you'll pay $124,560 in payments)
Refinance at 5% over 15 years:
Original balance = 90K
Payment = $711.71 (BUT - you'll pay $128,108 in payments)
See - so far, staying with the current loan saves them almost $4,000 dollars. But, if they pay that same 15 year loan with higher payments:
Refinance at 5% over 15 years:
Original balance = 90K
Payment = Replace $711.71 with $955 payments - total paid will be $114,600.
In the last case, with this type of discipline, they'll save $8,000.
They may be better off, keeping the old loan.
And trying to pay a little extra each month towards principal.
A paid off home - is a wonderful experience.
PLUS this is a great way to "hide" money when you go to college.
Financial aid does not look at retirement accounts or home loans.
They look at financial savings that earn taxable interest.
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How good is an interest only refinance loan fixed for 7 or ten years at 6.125 interest rate?
We bought a home in FEBRUARY of 2005 the payments are pretty high we have a fixed 30 years mortgage at 6.125 and we are trying to reduce our mortgage payments, we are being offerd a 7 years fixed at 5.37 and a 10 years fixed at 6.125 both which is interest only which is the best refinance plan or should we stay with our present mortgage of 6.125 for 30 years.
Depends on what your looking to accomplish in the refinance..
what i mean by that is there are different ways to take advantage of a homes equity, and home ownership itself...
If you want to have your mortgage paid off ASAP, at the least amount of itnerest as possible, then definitely stay with your mortgage.. You are alreasy paying principal, and there is no sense in starting over..
If thats no the MAIN concern, and the main thing is that you need to save money or have a lower payement, then paying off the house quickly may bot be the best bet...
How long do you paln to live in this house? If for the rest of your life, again stay with your current mortgage...
If less then 10 years, then you need to focus on what is the best way to get the lowest possible monthly payment on a monthly basis...
What i suggest is a new loan program on the market called a flexpay...
Basically it is a program that gives you 3 monthly payment options each month...
1. principal and interest payemnt (what you have now)
2. interest only payment (only obligates you to interest)
MINIMUM PAYEMNT (Obligates you to pay less then the interest due each month)
For instance if you have a mortgage with a principal and interest payment of $2000, your interest only would be roughly $1800, and your minimum payment would only be $1000 (half of p&i)
Again this program works if you are simply looking for the added flexibility of knowing when money is tight, you are only obligated to half of the full payment each month..
This program is really strong for people who own their own business.. They dont know how much $$ they wil lmake each and every month... On good months, they will send the full payment..On bad months, when unexpected expenses arise, you are only obligated to the minimum payment option..
Now be advised if you ONLy send the minimum payment all year long, you will actually owe more money on your mortgage because you arent satisfying all of the interest due each month...
Thi sprogram is primarily to give you flexibility (hence the flexpay)
it isnt to have a low payemt at all times, unless of course if you live in an appreciating area..
For instance, if house prices are rising, then adding interest to your loan at the end of the year (by makin gonly minimum payemnts) wouldn tbe that bad.. As your principal balance increases, you rhouses value goes up as well..
There are many things to consider, and it would be easier for me if i knew more about what you are looking to accomplish...
Any one can answer your question here, but truly the answers given are only going to be an opinion of what they think of these 2 options you ahve listed... Without knowing what you want to do, its impossinble to accurately give you advice...
If you want, i am available mon-sat every week to s\assist you with a mortgage refinance.. I work with Providential Bancorp, we are a nationwide mortgage lender...
Feel free to call me at your earliest convenience!
Jason Fry
Licensed Mortgage Banker of 13 years
Providential Bancorp
jasonf@providential.com
312-264-6448
W/ your conventional loan, you are building equity, be it ever so slowly. Some of each payment goes to owning the home.
Interest only loans are a financial institution's way of renting you your home. At the end of the 7 or 10 years, you owe just as much on your home as you do now. These sound soooo good, but are only ways to shovel people into homes where banks have no risks and all rewards.
Why can't I make headway with my fixed-rate mortgage?
We purchased a new mobile home 9 years ago. At that time, we financed approx. $37,000, a 30-year mortage, with the fixed interest rate of 9.25%. Our montly payment is only $300. Here it is, nearly 10 years later, we still owe $33,000 and no bank will refinance because they say the home is not worth it. SO, I've been making add'l payments, usually about an extra $25 a month. My question is, when I apply that add'l pymt. (which is on a separate check and indicates "add'l principal") why does nearly all of my initial $300 pymt. go to interest?
If I only make my $300 payment, more goes towards the principal. I'm not making headway either way it seems. I don't understand this. We were young & naive when we bought this home, and now we're stuck.
Currently we do not own the land it is on, but we do own 6 acres that we plan to move the home onto. Would this qualify me for a FHA loan then?
Generally when you buy a home, the majority of your payments go to interest. In the first years, frequently it's $10-25 for principal and it takes a long time to pay down that loan when so little goes to principal. At 10-15 years, a larger amount should be applied because you have gradually reduced your principal balance. Your extra principal payments should not impact your regular $300 payments as described, so suggest you speak to some one at your lender. It's a good idea to make those extra principal payments--so keep it up. This is the best way to reduce the amount of interest you pay--pay down the principal. Put as much as you can into extra principal payments!
The problem with a MMH is that they depreciate over time, while generally homes appreciate. Right now the housing market is horrible and homes are losing value or staying steady.
Interest rates are lower now than what you are paying, but refinancing costs money, too. With such a low loan amount, refinancing wouldn't gain you much difference in payments. Go ahead with additional payments of principal to pay down this loan. $300 a month is very cheap housing payment. It probably would have made a lot more sense (considering it's a mobile home, and low mortgage amount) for you to get a 15 year loan when you bought rather than a 30yr, and the payments wouldn't have been much higher, either.
By the way if it is permanently affixed on your own property then FHA will refinance the property and you can put it on a 15 year note and pay about what you are paying now
I am a mortgage banker in TN & KY
To put it in perspective, this year, only $700 dollars of your payments will go towards principal.
I'm no financial expert, but I would definately consider re-financing. If that's not an option, throw an additional40-50 dollars more towards principal each month.
Not counting additional payments here's your balances after...
10 years $33,235
15 years $29,575
20 years $23,774
25 years $14,578
As the balance decreases more of your payment goes to principal therefore it gets paid down more. At $300/month you're paying $3600/year...so in the first year 9.25% on the $37000 is (rough math I know) is ~$3400 so very little went to pay down your principal, but in the 25th years only about $1350 in interest therefore more of thtat $300 is going to principal. So those additional payments can really speed up the schedule. An additional $25 per month here forward would knock the loan down in ~16 more years...instead of 20.
Bottom line is it's just the way the math works. Hope that helps.
I have a mortgage for about $68,000 at 6.875% 30 year fixed and an auto loan for $10,000. Should I refinance?
I would like to consolidate and make only 1 payment per month (which is ideally less than my current combined two payments). Is now a good time to refinance? I would consider a 7 year ARM to get a lower rate since I plan on selling my home when I am finished with grad school.
I've been in the mortgage business forever so I and my kind would benefit if I told you yes, but no. Don't refinance.
Firstly, ARM rates are currently higher than Fixed because of volatility with the LIBOR. Second, unless you are having major money problems NEVER finance an auto loan in to your mortgage. Sure it would be nice having only one bill but your turning your car loan in to a 30-year debt.
Finally, If you refinance now for a rate of say, 6% you are going to need to pay that payment for close to 5 years before you realize the cost of the loan (closing costs) as savings. You mention you are going to sell the house as soon as you are out of Grad School. I assume that is roughly 3-years? It's not worth the time, effort or money.
Stay put.
So, to answer, wait. Interest rates are going lower. Go fixed on the mortgage, trust me. Rates are going to be higher in 36 months.
Your first and foremost option is to find another way to pay off debt on the car.
1. Do you have a vaulable possession that you can sell using the proceeds to refinance/pay down or payoff your car?
2. Can you rent out a room?
3. Can you take on a part-time job or run a small business that is more likely provide the funds you need to meet debt payments?
4. Can you find someone who is willing to take over car payments while you buy a car that runs out of pocket?
5. Will your parents or other family member give you a small loan to pay off the car or keep up with payments?
6. Is it time to tap into the reserves?
If these options are not doable then and only then should you consider cash-back or cashout home refinancing. Using the cash to payoff the car as well as other debt can give you peace of mind.
If your credit is not bad you can get a loan rate as low as 5%.
Not only can refinancing lower your interest rate but it can also lower your monthly home mortgage payments. This is ideal for those who need immediate debt relief. Your next challenge would be finding a good refinance deal at lowest refinance rates.
Regarding how to shop home loan refinance programs at low rates consider the following sources...
Is a mortgage refinance a good option for me? (revised)?
Is a mortgage refinance a good option for me?
Scenario: 1st. mortgage owed is a fixed rate $42,000.00 at 5.125% and 11 years left to pay off. Also a HELOC owed is $22,500.00 at current rate of 4% for 16 years to pay off.
Max cap is 12.9% on the HELOC.
I want to refinance to a new 10 year mortgage combining both at a fixed rate of 5% for $68,500.00. Zero points. (Closing costs of $3000.00 rolled into new mortgage). Home value is approximately $130,000.00.
Am I making a smart move?
Actually, I would keep the loans you have right now. If you refinance the entire $64,500 to a 10 year loan, your total payment will actually increase. I recommend that you make that larger payment NOW without refinancing. If you are nervous about the HELOC, then pay that one down first.
Still, check with a financial advisor...make sure you have solid numbers on everything...and of course make sure you're comfortable with the payments.
Hope that helps.
Should I refinance my fixed 15 year 5% mortgage for a fixed 30 year 5.75% mortgage to free up cash flow???
I am thinking of refinancing so I can free up monthly cash flow to invest.
I have been looking at a refi from www.madrate.com (yes, 5.75% check it out!!!) and they offer a $289 fee (includes credit, doc prep, processing, underwriting, tax service & flood certification fees)
I have been reading various advisor recommendations to have a 30 year mortgage rather than a 10 or 15 so to free up investment cash flow. (www.ricedelman.com) Rates are still pretty low right now and are very attractive.
I know that when I pay mortgage interest, it is paid from my after tax income. It is also tax deductible at the end of the year.
I also know that when I earn interest in the stock market, this is pretax interest. If I earn 8% in stocks, my effective rate earned will be lower since I need to pay taxes on it at the end of the year as well.
I can handle the 15 year payment just fine
No PMI
Home is worth $300k - balance is $178k
I have 11.5 years left on the mortgage - got it in 2005
I think you're missing a MAJOR factor here.
Even if you're successful in investing the difference over the remainder of the 15 years (that assumes that the earnings on the invested part, after taxes, is more than 5.75%)... will the earnings in years 16-30 beat what you could earn by investing the entire sum (since you would have paid off the mortgage).?
The trick is making sure that you make more in interest than you spend on the mortgage interest, dollar for dollar. If you can do that, and are willing to accept the risk of not being able to do so, then you've got a winner of an idea.
Assuming my current rate of return holds steady, I should be able to pay off the house (should I choose to do so) at just about the time that the mortgage resets. Of course, with a 30-yr fixed you won't even have that to worry about. You can just keep plugging away until you're paid off!
Most people never stop to think that their equity really doesn't impact the rate of return that they get on their home. Besides the obvious-- the reduction of the amount of interest they pay, it really does very little towards your net worth. It simply provides security for the bank should the bank have to ever foreclose on you.
Why not set aside the principal payments into equities that can make money for you instead, and if you ever get sick or injured you can fall back on the cash instead of trying to get the bank to waive your next mortgage payment because of all of that equity that you already have paid in. ;)
Way to think outside of the box. Go for it!
Becoming wealthy is a matter of minimizing your risks while maximizing your returns.
I personally advise staying with the 15 year 5% loan (great loan) as you have said you are able to meet the cashflow needs.
While you are probably able to beat the 5% return with a relatively conservative set of fund investments, you change 2 dynamics. The first is risk. You never know when the market is going to struggle. Life can be cruel. Just when the market takes a down turn, you are forced to draw cash for some reason. I hope this never happens, however. The second dynamic is where your personality comes in. The investment money would be visible and reachable, and you may be tempted. Equity in a house is invisible and harder to get at, except for expensive loans (HELOC for example, which it sounds like you will avoid). Someone you trust may approach you to participate (invest) in a venture and you may consider this if you can see the cash.
I am going for the paid off home loan first then investing later, just due to the risk . I don't want to have to think about it. Perhaps too conservative.
Either way, you have an excellent prospect for the future, so good luck
Madrate will charge you a $289 fee but what they aren't telling you is the $8000+ you'll have to pay in order to buy the "points" needed to get that rate.
Plus if you can handle the payment, just keeping paying it. You'll have already paid a significant portion of the interest on your loan.
I have a 30yr fixed loan 6.625% and I want to change my mortgage over to a 15yr fixed loan. I contacted Madrate because i was intrigued by your question, basically it would take me over 10 years to return that $9K investment needed to get that rate.
5% rate on your house and a pile of equity, you are sitting pretty sweet my friend. I wish i was in your shoes.
With the way housing is going, i would continue on the path you're on. Rates will eventually get down to the level you have then refinance to free up the cash flow. But you can't be putting out $8k -$9k in Point costs just to get a lower rate.
I would say this time next year is when you are going to want to pull that trigger. I'm in the same boat as you are in some respects, except i'm looking to go to a 15yr fixed. Rates will continue to fall through next year.
If you can afford the payment, pay extra, maybe you can pay it off in 8years. That would free up some cash flow. Plus keep in mind you are still getting a 5% effective rate of return on your extra money.
When housing value is going up = you want debt in your house
When housing value is going down = you don't want debt in your house
more often than not housing generally goes up, but the time we are in is pretty rare. Get as much equity in your house you can, because you don't know what is going to happen in the market. Plus if you were forced to sell your house do you think you could really get $300k?
Accelerate the debt down in your house, then in a year re-evaluate. Maybe refinance if housing starts to go up in value again, maybe wait 2 or 3 years till the housing market is cooking again. Then pull out a pile of money, invest it, and have the best of both worlds.
But that is what I would do, you need to find your own path
Should I pay $500 to fix my mortgage rate for five more years?
I currently have a mortgage that recently went from a fixed rate (for the first five years of the loan) to a variable rate (to be assessed annually for the rest of the 30 year mortgage). The loan goes variable for the first time this month. Original interest rate = 4.375%. New rate for this coming year = 5.0%. The bank has offered to fix the rate for 5 more years at 6% for a fee of $500 (we pick up where we left off--not reestablishing 360 more payments, no closing costs, etc.) Is this a good deal?
Two more pieces of information: The interest rate cannot increase by more than 2% this year and next year. And it cannot go up by more than 6% over the life of the loan (in other words, it will never be more than 10.375%, and if it ever did, I would obviously refinance.)
But how 'bout this $500 deal? Is it worth it?
As a former mortgage broker, I would suggest finding out what it would cost to refi into a fixed for 30 yrs conventional mtg. and what the rate would be paying 0 pts. And compare the payment difference between this deal and the refi. The best thing is only answered by how long you plan on staying in the home and what market values are doing in your area.
Is this a good time to refinance (now that the federal funds rate has reduced by 1.25% in 10 days to 3%)?
How long does it take for the decline in the federal funds rate to impact the mortgage rate? Is this a good time to refinance, or should I wait a week or month for a better rate? (PS: I'm interested in a 15 year fixed loan, the current rate is 5.125%, but drops to 4.875% if I pay 0.5% origination fee.)
15yr vs 30yr mortgage what's going on?
so I go to my bank to see if refinancing my mortgage is worth it.
I've got about 10 years left. Here's what the rates are:
Fixed-Rate Mortgages
Loans to $417,000
30-year5.0001.0005.151
15-year5.2501.0255.533
Loans over $417,000
Now how can a 30-year loan be a higher rate than a 15-year?
That makes absolutely no sense. I mean there is absolutely nothing stopping me from using a 15 year payment schedule on the 30 year mortgage, and enjoy the lower rate and still have the benefit of if I get into financial trouble, changing my payment to a 30 year:
$240,000
5.00%
360
==========
$1,288.37
$240,000
5.00%
180
==========
$1,897.90
All I have to do is pay the $1897.90 every month instead of the $1288, and I'm effectively turned my 30 year into a 15 year with an automatic "dont pay $603 a month if you don't want to " option?
this instead of:
$240,000
5.25%
180
==========
$1,929.30
I'm totally confused.
edit:
ok good we are in agreement, this makes no sense. no 15 year should ever be at a higher rate than a 30 year.
as a followup, isn't it illegal to have a prepayment penalty on a mortgage? Maybe just in NY?
I'm at 5.5% right now, so I'm sure it doesn't make sense to do it for 1 point reduction in rates, but I'm just trying to figure out how a bank could possibly make such a blatant error, then again, we are talking about the current state of our banking industry...
I'm also a bit confused. You show:
Fixed-Rate Mortgages
Loans to $417,000
30-year 5.000 1.000 5.151
15-year 5.250 1.025 5.533
Loans over $417,000
This says that the 30 year rate is lower than the 15 year rate by 1/4 %.
Most 15 year mortgages are at a lower rate than the 30 year mortgages since the 15 year mortgages are less risky to the mortgage lender than the 30 year mortgage because the loan term is half the time.
As far as the other part of your question, I agree that it is smarter to take the 30 year mortgage, even at the higher rate, just for the flexibility that you describe. As long as there is no prepayment penalty in the contract, anyone can turn their 30 year mortgage into a 15 year mortgage, or a 10 year, or a 5 year mortgage.
Is now a good time to refinance?
I'm almost 4 years into my 30 year fixed rate mortgage, at 5.25%, with a balance of $79K. My second loan on the house is for $10K, it has 8.75%, and a baloon payment after 10 years. Would it be wise to refinance both loans into one. I have aprox $30K equity in the house. Thanks
If you really have to the now if OK, but if you can wait maybe a month, that maybe better. The Fed. just lowed the bank lending rate which is OK for the banks, but does little for the consumer. Their next move is to try and lower the prime rate by buying loans from the banks. The theory is that by doing this banks will get rid of loans they don't want and will start lending again. Will it work? Who knows? Still it worth the wait.
That being said did you have an appraisal done recently? If not get the ball rolling, they are usually good for 6 months to a year so if the rates do drop you are ready to lock one in.