How to Deal With Volatile Mortgage Rates. If you plan to buy and are concerned about rising rates, don't procrastinate.
In June, the Federal Reserve confirmed that as the economy continued to improve, it would begin to wind down its purchase of mortgage-backed securities, a program designed to support the housing market by keeping mortgage interest rates low. Reacting to the Fed's announcement, the average for a 30-year fixed-rate mortgage shot up to nearly 4.5% -- almost a point higher than six weeks earlier. But that's still historically low, and as the markets settle, rates should go back down a bit. Kiplinger expects the 30-year loan rate to be 4.25% by year-end. If you need a mortgage, lock in the best rate you can get now, and don't worry about having missed out on the lowest-ever rates. Plus, even in places with double-digit increases in home prices, values still haven't returned to the housing market's peak nationally in 2006. Still, buyers who were on the edge of qualifying for a home may have to rethink their options.
Mortgage Lenders Relax the Rules. In the wake of the mortgage meltdown, home buyers with a down payment of less than 20% were limited to borrowing from the Federal Housing Administration (FHA), which offers mortgages with as little as 3.5% down.
You have more options now. Lenders are still tough on borrowers, but if you have good credit and a stable job, you may qualify for a low- or even a no-down-payment mortgage. Lenders will make loans (and private mortgage insurance companies will insure) with 5% to 10% down, provided you meet all other, still-conservative loan criteria, such as requirements for credit score, debt-to-income ratio and supporting documentation. You must pay for private mortgage insurance (PMI), but it may prove cheaper than FHA's insurance.
A few lenders even offer 100% loans. Cash In on the Housing Rebound-Page 3. Whether you're buying or selling -- or both -- now is a good time to make a move.
Staying put? You can tap your growing home equity. If you have no plans to sell or buy, you can still cash in on your home. Rising home prices mean you have more equity and more options. You can refinance to cut your monthly mortgage payment and total interest, do a cash-out refi to simultaneously refinance and extract equity for other purposes, or borrow against your home equity for, say, home improvements. When Susie Brown and her husband, Tim, looked into increasing the limit on their $10,000 home-equity line of credit, they weren't planning to refinance their mortgage, too. Tap your home's equity. Some lenders are willing to stretch total borrowing, including both the mortgage and the home-equity loan or line of credit, beyond the usual comfort level of 75% to 80% of the home's market value.
Making Home Affordable. We all stand to benefit by simplifying refinancing. Why refinance?
Today, home interest rates are at historic lows—on average, below 4 percent. The average homeowner could save $3,000 a year by refinancing at today’s low rates, but far too many borrowers are locked out of a chance to do so. Complicated application processes and eligibility requirements, costly appraisals, and the fact that many homeowners owe more on their mortgage than the value of their home make refinancing all but impossible for millions of Americans. How would the proposed plan help homeowners?
The plan to expand access to refinance is simple: make it easier for millions of responsible homeowners to refinance, even if they are underwater. What about underwater homeowners? When the housing bubble burst, home values dropped, and millions of homeowners who did the right and responsible thing—shopped for a home, secured a mortgage, and made their payments on time each month—were left with houses worth less than they paid for them and mortgages worth more than their homes. Bank. Mortgage Reference Library. There is a lot of information involved when it comes to buying a home, obtaining a mortgage or refinancing a mortgage.
You have closing costs to consider, interest rates to look at, mortgage loan programs to decide between, and much, much more as well. While having a home can be a very rewarding experience obtaining a mortgage loan can sometimes be a very scary and overwhelming experience. There is way too much information for the average consumer to learn, to become an expert in the area of mortgages.
However by taking a little time to learn the basics of mortgages and the mortgage process, a consumer can end up saving tens and possibly hundreds of thousands of dollars on a home loan, which is normally the biggest investment in a consumer's life. The first place to start would be to check your credit. On your report you will be given three credit scores. Consider being pre-approved before shopping for a new home.