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Archive for Mortgage Rates

The Three Primary Benefits of a Mortgage Refinance

You’ve heard that a mortgage refinance can be a beneficial step to take.  Maybe you’re considering such a step.  But what are the true benefits of a refinance?  Let’s go over the three primary ways that a mortgage refinance can improve your financial situation.

1.  Decrease your monthly payment. The amount of your monthly payment varies depending on your loan term length, the interest rate of the loan, the total loan amount, and other factors such as private mortgage insurance and expenses that have been rolled into the total loan amount.  A refinance allows you to adjust many of these variables.  If your interest rate is higher than the market’s current mortgage rates, you can refinance into a lower rate and decrease your monthly payment.  This is one of the most common motivating factors behind a refinance.

2.  Access home equity as cash. If you’ve built up equity in your home through consistent payments or through increased property values, a refinance allows you to withdraw some or all of this equity in the form of spendable cash.  The amount you withdraw will affect the total loan balance remaining, but if you need access to money to pay for medical bills, college tuition, or other expenses, a refinance is a far better option than a standard bank loan or consumer credit.

3.  Change the length of your loan term. Your original mortgage length may have been fifteen years, thirty years, or more.  Either way, a refinance allows you to alter this length, and this can have a significant impact on your financial situation.  Refinancing into a shorter term will increase your monthly payment amount but will save you money in the long run.  Refinancing into a longer term, which is much more common, will have the opposite effect.

These are the three primary benefits of a mortgage refinance.  Analyze your own financial needs and goals to determine the value that a refinance can offer you.

Bad Bank, Good For Economy

The Federal Deposit Insurance Corporation (FDIC) announced last night that it will create a “Bad Bank” to purchase the toxic assets on the books of the nations banking institutions.  This was originally part of the TARP plan but it didn’t work out as planned.

The idea is that because of Mark-To-Market accounting, these toxic assets are killing banks and there is no real hope for financial recovery until Mark-To-Market is repealed or an outlet to dump these assets is created.  Ideally, the best scenario would be both.

The stock market is reacting favorably to the news as it is a sign that the government is making strides in the right direction.

Mortgage Bonds Trading At Historic Highs

Today the jobless claims report came out for December with a total of 524,000 jobs lost.  This was worse than projections of 500,000, but far better than rumors of nearly 700,000.  So far this morning, bond traders are reacting to the rumor and not the projection by selling mortgage bonds.

As mortgage rates continue to be unbelieveably low, the stock market is struggling.  Wal-Mart reported that due to one of the worst holiday shopping seasons on record, they will not meet expectations for the 4th quarter.  This continues to fuel uncertainty in the greater economy, and economic uncertainty drives investors to sell stocks and buy bonds.  Long term, this is good for mortgage rates and the real estate market.

Also, the FED announced yesterday that through the first 3 days of this week, they bought $10.2 billion in Fannie Mae, Freddie Mac and Ginne Mae mortgage backed securities, part of their overall plan to buy up over $500 billion in MBS’s between now and June.

Friday November 14, 2008

This weeks financial news wrap up.

It is interesting the times that we live in right now.  The 500 point intraday swings in the stock market have become so commonplace that no one even gets excited about it anymore.  Even yesterday, there was an intraday low of -331 only to rally in the afternoon to +552, a nearly 900 point intraday swing.  What is even more curious is a buying rally after incredibly bad economic reports.

All of this leads to the conclusion that the markets are trading almost entirely on emotion.  Fundamentals appear to have no affect, and that uncertainty bleeds over to the bond market as well.

Mortgage bonds started the week on a downward slide, then recovered Wednesday and Thursday morning with a nice rally.  That rally began losing steam yesterday afternoon and continues to show weakness this morning.  Daily volatility aside, mortgage rates long term are better than they have been in about a month and continue to trade in a near sideways channel.

Conventional wisdom would lead us to believe that as poor economic data comes out, investors would pull money out of stocks, invest in bonds, driving up the yield and driving down mortgage rates.  But, as previously discuss, conventional wisdom does not appear to have a place in this market.

All in all, if you have a mortgage loan in process that you have not yet locked, my bias would be towards locking to protect against uncertainty.

For today’s mortgage rates, or to apply for a mortgage loan, go to SteveRussellOnline.com.  Or call 888-257-8383 for a free consultation.

Mortgage Rate Update

Due to the outstanding rally in stocks this afternoon, bonds sold off to their worst levels of the day.  So it is in fact a good time to lock your rate if you were floating to this point.  When rates are posted tomorrow they will likely be .125% to .25% higher than quotes this morning.  For more on the latest mortgage rates or to apply online, go to www.SteveRussellOnline.com.

Thursday November 13, 2008

Mortgage Bonds move higher.

After a sharp sell off earlier this week, mortgage bonds are making a comeback today and appear to be holding steady right at the 50 day and 200 day moving averages.  This has had a positive affect on rates this morning as I am quoting 30 year fixed conventional rates below 6% for the first time in over a week.

Initial jobless claims came out significantly worse than expected at 516,000 vs. the expected 479,000.  In addition, continuing jobless claims reached a 25 year high at 3.89 million.  This bad news for the economy is generally seen as a positive for the bond market as the likelihood of inflation lessens.

At the time of this post, the stock market is up slightly.

To keep up with the latest mortgage rates, go to www.SteveRussellOnline.com, or call 888-25-STEVE (78383)

Monday November 10, 2008

Stocks are higher this morning following a rally in the Chinese market after a government stimulus plan for $586 Billion was announced to help relieve their struggling economy.  As the stock market shows signs of life, it will continue to put pressure on bonds this week to hold their current levels above established resistance.

Also scheduled this week, the Treasury Department will be auctioning off $55 Billion in treasury notes which will no doubt put even greater pressure on the bond yield.  If the yield on mortgage bonds falls, mortgage rates will go up to meet the market demand.

Watch rates carefully this week.  If you have a loan in process, it would probably be prudent to lock ahead of potentially bad news in the financial markets.  If you are still looking for a house, or are not ready to lock, it may cost you on your mortgage rates later this week.