Mortgage Refinance Levels Reach High Levels as Mortgage Interest Rates Remain at Low Levels

According to the latest records from the Mortgage Bankers Association or more famously known as the MBA as of July. 20, 2012, the applications for mortgage loans have significantly grown by 0.9 percent compared to last week.

The tool used to measure the volume of the applications is the Market Composite Index, and the final result of last week’s mortgage loans has equaled to a 0.9 increase in the results of both the adjusted and unadjusted percentages compared to the previous week. The Refinance Index however, increased to about 2 percent this is the highest it has been since the April of 2009. The only results that have decreased are the Purchase Index which is being adjusted every season. The decrease has been noted at 3 percent, which is its lowest point since June of 2012.

Other results show that the refinance share for the mortgages has increased by 1 percent compared to the preceding weeks, the adjusted-rate mortgage or the ARM share is now 4 percent of the accumulated activities compared to the previous week as well.

The 3.74 percent average contract interest for a fixed mortgage rate has remained. This is the lowest it has been since the survey had begun. The points have also slipped to 0.43 from the previous 0.45 that included the origination fee in a loan-to-value ratio loan for 80 percent. Furthermore, the 30-year fixed rate has been under 4 percent since May 4 this year and the effective rate has also fallen from the previous week.

The 30 year fixed-rate mortgage loan’s average contract interest which is more than $417,500 has risen from 3.98 to 3.99 percent and its points have fallen from 0.32 to 0.28 with the origination fee for LVT loans offered in 80 percent rate.

The average contract interest rate for a 30 year fixed mortgage according to the FHA has fallen to only 3.52 percent which is the lowest it has ever been.

Mortgage Deals: What You Should Know

Feeling discouraged with the current situation in finding a mortgage fit for your needs? You may have heard from various stories from relatives and friends about how difficult it is to shop for mortgage nowadays. Borrowers are still provided the loans that they need by lenders, and these deals often have rates that are low and budget friendly. But if you want a good deal like this one, then you have to learn how to find them.

The first step in looking for a great deal is to get organized. In this process you have to look for information, gather and look over many potential lenders. To help you with this stage, the HUD provides free good faith estimate forms that you can use to compare the offers of different companies for a loan. The CFPB also has a standardized mortgage disclosure it is working on in the present which can help you in your search for mortgage companies.

The next step is to check your credit. It is a rule of thumb that one must know his credit information. You can get a copy of your credit report from the three major reporting institutions through this site: AnnualCreditReport.com. Knowing where your credit stands is vital in negotiating the rate and the loan you are going to get. Furthermore, you need to be firm on what you want. You have to know how much you can afford in a month; you have to determine if you would settle for a 30-year or 15-year rate.

Another step is to look for different alternatives. This may be a confusing experience because when you start applying to many lenders, they will give you different statements on your loan. You have to make sure you really understand the terms of your loan. You also have to keep in mind that full application and a credit background check will often not result to an accurate rate estimate from the lenders.

Shopping for mortgage can be a real hassle and often times you might get frustrated, but you have to keep in mind that if you are to succeed in this endeavor, you are more likely to get the dream home or the business you always wanted.

Rates on Mortgage Loans Decline Again

The interest rates on US fixed mortgage loans decreased once again to its lowest ever. As a result, potential buyers have more motivation to face the housing market.

According to Freddie Mac, a mortgage buyer, the average interest rate on the 30-year mortgage loan declined to 3.56 percent, which is down from 3.62 percent in the previous week and the lowest ever since the 1950s, when long-term mortgages started.

Moreover, the average interest rate on the 15-year mortgage decreased to 2.86 percent, which was down from 2.89 percent in the previous week.

One of the reasons for the moderate housing recovery this 2012 is the inexpensive mortgages. In fact, home sales increased for the month May compared to the same period in the previous year.

The low interest rates for mortgages could offer assistance to the economy as well, if a larger number of people refinance. People who refinance at lower rates will be charged with a lower interest on their loans, thereby having more money to consume and save. A lot of homeowners allocate their savings on renovation, furniture, appliances and other developments, which causes the economy to grow further.

However, the rate of home sales is still under strong levels because there are still a lot of people who find it hard to be eligible for a mortgage loan or do not have enough money to pay a large amount for deposit as demanded by banks.

In addition, the weak job market could also discourage some people from buying homes. According to a report from the government in the previous week, only 80,000 jobs were added by US employers during the month of June, causing the unemployment rate of 8.2 percent to remain the same. This slow job creation leads to less spending of consumers.

There has been a decline in the mortgage rates since they tend to trace the yield on the 10-year Treasury note. Because of the weaker US economy and uncertainty concerning how the Europe debt crisis can be solved, investors buy Treasury securities, which are deemed as harmless investments. When there is a greater demand for Treasury securities, there is a corresponding decrease in the yield.

Why is it Hard to Refinance a Mortgage?

Years ago, when the loaning business was not in the crisis it is in today, one thing is always for certain. When the interest rates would drop, the homeowners would refinance their mortgages to be able to take advantage of the lower rates. This would help them save about a hundred bucks in their monthly bills.

However, things do not work that simple anymore. Mortgages rates have been at their lowest now. The average mortgage loan is a 30 year loan at 3.56% rate this is almost 1 percent lower than it used to be last year.As the rates have decreased, the number of refinancing applicants has also fallen for the third time this week.

According to CNBC, the unusual trend is not new, and it may mirror the new reality of housing in the coming years. But there is definitely something you should worry about further about a mortgage than just its rate. If the value of a property has fallen, then it can lead to being declined for a refinanced loan. The government has stretched out the authority of Fannie Mae and Fannie Mac so that they could refinance loans in the Home Affordable Refinance Program. This will allow them to make refinancing transactions to happen by getting rid of constraints on the unequal position of the current market.

Banks are still being cautious with their transactions in mortgages. The Bank of America, JPMorgan Chase, Citigroup and the Wells Fargo are currently revolving around the $25 billion settlement money they have with the state authorities and federal officials. They are trying to avoid being stuck on the same situation in the foreclosure-abuse they had last year. The most civil thing to do is for them to demand higher loans.

So, if you have the opportunity to refinance your loan, do not hesitate to take the opportunity to talk to your lender about it. For it may be able to help you in reducing your liabilities in the mortgage loan in the future.

Subprime Lending Gets New High

Subprime lending is recovering again in the United States. Although there is still a limited number of subprime mortgages available in the market, because of the large amount of loans that still remain unpaid by home buyers.

Lending to people with less than stellar credit has increased for both auto loans and credit cards, banks are anticipating the number of loans to rise up to $600 billion for car loan purchases in the near future. Lenders are being less tight with car loans because it is surprisingly a profitable business today.

Only 25 percent of lenders think that subprime lending will continue to be profitable in the next few months. Half of them see that this increase will come from automobile loans; this is according to the latest survey released this week.

Andrew Jennings, the chief analytics officer of Minneapolis Fair Isaac Corp., believes that it is a significant figure to take note of. It just means that the lenders in the industry are currently starting to loosen up, although it does not necessarily mean that the number of subprime loans will increase rapidly.

Experian says that 44 percent of all the citizens in America that had loaned for a car in the first three months of this year had FICO scores lower than 680. The ratio is up by 2 percent compared to last year, however still 2 percent lesser than the ratio prior to the recession in 2008. Most of the loans still came from commercial banks.

When the housing industry fell into a flop, the number of subprime mortgage lending has been inexistent. However, loans for cars to people with less than fair credit have continued to be profitable even after the failure of the housing industry.

Customers continue to progress and work hard in paying back every last cent they had borrowed for their car mortgages. Though the sudden increase in the automobile industry still remains a mystery to many analogists, it does prove on thing: subprime lending to cars are safer for money lenders and consumers alike.