For example, from April to July rates have been dropping quite steadily, but for the last several weeks they have leveled out, and don’t seem to be dropping again.  In fact, all signs point to rates going back UP before we see any type of drop again.

What does this mean to you?  It means that if you are on the fence about refinancing your mortgage you should take advantage of these low rates NOW before they go back up.  This is the best we have seen since 1972, and if you don’t feel like waiting another 40 years you should CONTACT US as soon as possible. You can also SEND US AN EMAIL or FILL OUT THIS FORM and we will review your situation.

We can get your loan refinanced faster than you could even imagine. OK maybe not faster than you could even imagine, but I can guarantee you it’s quick.

WHY RIGHT NOW?

These low rates can be attributed to stock prices falling, which in turn made more people start purchasing treasury bonds (which is what investors do when they need a safer place to put their money).  The result are rates that are dipping extremely low for almost anyone with a solid job and a credit score over 640.

HOW LOW?

For example, Freddie Mac reported in their latest report that the average interest rate for 30-year fixed mortgages was 4.84 percent, which is easily the lowest its been all year.  As for 15-year fixed mortgages, the average is 4.24 percent, which is the lowest it’s been since 1991, which is when they initially tracking this type of data.  WOW.

What’s surprising is that this is the exact opposite of what everyone was predicting a couple of months ago when the FED stopped purchasing mortgage-backed securities.  Some “experts” even claimed that we would see rates jump as high as 10%, which LUCKILY didn’t (or hasn’t) happened.

WHATS NEXT?

So what exactly is the point of all this?  Well, obviously, lower rates make it MUCH cheaper to purchase a house, and you can save literally thousands of dollars over the life of your loan.  Furthermore, it actually IS a great time to buy a house right now!

If you would like to get a free rate quote, or if you would just like some information about getting a home loan, don’t hesitate to CONTACT US and we will get back to you as soon as possible.  You can also fill out our QUICK LOAN APPLICATION and we will review your situation and see what loan program might work best for you.

So if you’re in the market for a new home and you are concerned about this, there are a few things you should know before you get too preoccupied with your interest rate.

IMPORTANT INFO ABOUT RATES

First of all, mortgage rates change, and they change VERY OFTEN.  How often?  Well, last month lenders were re-pricing (changing rates) at an average of every 4 hours.  That’s right.  EVERY 4 HOURS.  Remember too that this is just an average, and many times rates have been known to change every 30 minutes or so.  So when your loan officer seems reluctant to speak with you about interest rates, it isn’t because he is trying to mess you over.  More than likely he is just scared to quote you something just to see it change an hour later.  After all, getting a “great mortgage rate” could end up saving you 1/8 % on your rate and consequently a couple hundred dollars in fees.

So what do most people do to “get the lowest rate?”  Society will tell you that the best way to achieve this is to “shop around” and get offers from multiple loan officers.  While in theory this is an excellent idea and supposed to make the process easier, the truth of the matter is that it doesn’t work perfectly.  At least not the way you want it to.

Why not?  Well, as I mentioned before, while you’re trying to figure out which loan is cheapest, or most appropriate, or has the lowest costs, mortgage rates are moving, and they are moving ALWAYS.  Furthermore, being that getting offers from different loan officers can take a week, rates can be totally different even a day later than when you started.  So, timing is everything with this.

RECOMMENDATIONS

So what do we recommend?  How do you get this lowest rate and still not feel like you’re getting the run around?  Well, the best thing you can do is get your shopping done early in the process, because the truth is, most loan officers have access to the same rates.  The better info you give them, whether it be about yourself, the home you desire, or how much you want to pay each month, the better than can serve you.

By doing this you will get a good feel of which individual you want to work with, and you will learn a lot in the process of potential rates and closing costs.  Some loan officers won’t return your calls, some will give you inflated estimates, and some will even tell you they can’t help you out.  These are the folks you need to weed out.  In the end you should be able to decide who you want to work with, and who can serve you the best.

The one you chose should be able to keep you informed about financial trends, and by planning accordingly, they can time your rate lock to when you desire to close, in turn getting you the best rate possible!

DON’T BE AFRAID TO GET YOUR CREDIT PULLED

Oh and one last thing, one of the biggest deciding factors for loan officers when shopping your rate is your credit score.  The higher your score, the better chance you have of getting a lower rate, and vice versa.  So be honest with the person you are working with, and don’t resist if they want to pull your credit.

Luckily, a formal credit pull by a loan officer working for a mortgage company is treated completely different than if you are applying to get 15% off your first purchase at The Gap.   Also, unlike applying for store credit cards, applying for multiple mortgage quotes won’t count as multiple, consumer-initiated inquiries, which is a good thing.

So, if you’re interested in getting a mortgage quote, don’t hesitate to CONTACT US, or you can fill out our QUICK LOAN APPLICATION FORM and we will get back to you as soon as possible.  It always helps to work with someone who is knowledgeable, and at the same time honest.

- Mike

Believe me, all the different types of loans can be quite intimidating to someone uneducated on the subject.  In fact, most people in America don’t know hardly anything about their financing options.  But don’t worry. That’s to be expected.

BASIC LOAN TYPES

The type of mortgage that the majority of people today will get is know as the traditional fixed rate mortgage, or FRM. Over 70% of homeowners this year will get this type of financing for their new home. The main reason for this is that the FRM offers a much stronger sense of stability over the other types of financing. Whether the life of your loan spans 15 or 30 years, the interest rate of this loan is locked in at origination and will not change, no matter what happens to the economy or the mortgage market.

The other main type of loan is called an Adjustable Rate Mortgage, or ARM loan.  This type has an interest rate that is tied to an index, and can rise or fall depending on the current mortgage market.  In general, if the prevailing market increased during one adjustment period (which is specified when you close the loan) then your interest rate will rise, along with your payment.  Adversely, your payment amount will drop if the market drops.

The main reason some people decide to go with an ARM loan is that it will initially offer you a much lower interest rate, which means your monthly payment will be significantly cheaper.  That dark side is that your interest rate can sky rocket, leaving you with a mortgage payment that can be hard to pay every month.  Luckily, though, when you go to your closing, caps are usually set on how high your rate can go.  Be careful though. Make sure you know what you’re doing before you get setup in one of these loans.

OTHER LOAN TYPES

Payment Option ARMs. You may hear this type of mortgage referred to as a “flexible payment ARM.”  These loans have an interest rate that adjusts every month (like a regular ARM loan) but with no adjustment caps, meaning the sky is the limit.  The draw of these loans is that they allow homeowners to make a very low initial monthly payment, but unfortunately the amount will often jump up over time, and usually quite steeply.

Interest Only Mortgages. This type of loan allows borrowers to pay only the interest portion of their payment for a certain amount of time.  This is a good type of financing for the short term, because the principle of the loan is not paid down, and the outcome  is a lower monthly payment for the homeowner.  That being said, the interest only period doesn’t last forever, and once it expires you can expect your payment to increase due to the fact that you are repaying all of your principle over a shorter period of time.  Basically, the longer your setup your interest only period, the higher your monthly payment will be once it expires.

Balloon Mortgages. At first glance, these types of loans will very much resemble a traditional 30 year fixed rate loan.  The difference being that the term of the loan is almost always much shorter, usually around 5-7 years.  After this time limit is over, the remaining balance must be paid in one single lump sum.  In most cases a borrower will refinance once this point is met, or else pay the entire amount.

Biweekly Mortgages. CLICK HERE to read more about these types of loans.  They can take years off the life of your loan if done correctly.

As always, if you have any questions about the different types of loans, please don’t hesitate to CONTACT US and we will get back to you with an answer ASAP.

- Pate

If you would like us to review your situation and give you an estimate of what closing costs you may encounter, please feel free to contact us.  If not, feel free to read the rest of the article!

Continued: Some of these closing costs are charged by the mortgage company itself, while others are payable to various parties. Here’s a little breakdown on some of the fees you may be charged, and who’s getting your money.

One of the first fees you’re going to run into is the Application Fee. This is charged when you fill out your initial application (the 1003) and is non-refundable. This covers the costs your lender pays in regard to paperwork, or maybe even your credit report when you got pre-approved.

Next is the Loan Origination Fee, which is charged by the lender to cover all the costs that are associated with processing your loan. This also covers their administrative costs. This fee is generally charged to you in the form of “points”, where one point equals one % of the amount you are planning on borrowing.  So for example, if you are borrowing $150,000, one point is equal to $1,500.

There is actually a symbiotic relationship between “points” and the interest rate you obtain.  It is possible to find a loan that charges little or no points, but you will see this reflected to you in a higher interest rate.  You can also obtain a lower interest rate by paying extra points up front.

One fee that you will regularly encounter (and which is actually usually optional) is the home inspection fee. In the beginning phases of obtaining a home loan you will be advised to get an inspection for your new house, and it is a very smart move.  Mortgages are often stopped dead in their tracks if you get as far as the appraisal and it turns out your foundation is destroyed, or if termites have infested the property.

Next on the list is the appraisal fee.  Depending on what type of loan you are getting, your lender will more than likely require a new appraisal of the house before they fund your mortgage.  This is done because the bank wants to make absolutely certain that the house you are buying is worth the amount you are paying for it. This fee is usually anywhere from $300-$500.

Some more of your closing costs will come from paying a premium for Private Mortgage Insurance (PMI). Mortgage insurance is paid to protect the lender in case you default on your loan, and if your down payment is less than twenty percent of the purchase price, you will be required to pay this premium no matter what.  For closing, you will have to prepay a portion of this when you sign the final documents. The good news is, though, once you reach 20% of the value, the Mortgage Insurance is removed from your monthly payment automatically, saving you money!

Prepaid “per diem” interest is another fee you will encounter at closing.  You’ll have to pay this to cover the amount of interest that accrues from the time your mortgage is funded until you make your first payment.

The last few random fees you will see can be things such as messenger, recording, and notary fees. These are all commonplace and not at all unusual.

In conclusion, while all these costs may seem a little daunting, it is worth noting that they will be all listed out for you in an organized fashion when you get to your closing and are ready to sign.  A good loan officer will notify and explain to you about all these costs beforehand, so you should have a good idea of how much money to bring to closing, and what all your cash is going towards. Soon enough you will be done with the paperwork and ready to move into your new home!

If you have any questions about closing costs, don’t hesitate to CONTACT US and we can explain it to you in even better detail!