Fed’s $1.2 Trillion Announcement Great for Mortgage Refinance Rates
Last Wednesday, the Fed announced a bold new effort to lower interest rates on mortgages and other consumer credit. The Fed announced that it will spend up to $300 billion for long-term government bonds, plus an additional $750 billion for mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac.
On this news, the 10-year Treasury yield dropped by almost one-half percentage points and mortgage refinance rates dropped almost immediately. Since the initial rate-drop off the news, the market has been moving sideways, with maybe a slight blip up in rates.
You know how they say that you usually don’t get a second chance? Not this year. Those that were sitting on the refinancing fence in January and missed out on the big rate drop now have the chance to refinance at awesome interest rate levels once again.
The government’s announcement on Monday for a plan to buy back toxic bank assets really didn’t cause much movement in mortgage rates. Most likely, last week’s rate drop already had that figured in to the mortgage spread premium.
The latest released numbers on per-existing home sales and new home sales shows the first percentage increases in months, but it’s way to early to get excited about that. The underlying numbers are still dismal and on the pre-existing home sales side, a large percentage of the increase is attributed to foreclosure sales at rock bottom prices, which is continuing to hammer on national home sale prices.
Yes, mortgage rates are great, but remember that the very best offered rates will be to those refinancing conventional with good to great credit and a loan-to-value (LTV) ratio under 80 percent. The value of your home and credit score is key!
FHA mortgage rates are still the way to go for LTV’s over 85 percent (even over 80 percent in some instances). The qualifying credit scores for FHA loans seem to be creeping upward from the 580 minimum score requirement for many lenders, but offer great rates for those in the 620 credit score range and up.
Many people shopping loans right now feel that rates will drop even further, so they are waiting on the fence. Unfortunately, many people get burned with this rationale, trying to pick the bottom. Same as the stock market, those who try to pick the bottom either end up with no transaction or end up buying at a higher than originally available price in panic as the market moves up.
The bottom line is that if you have a current offered loan scenario that creates a significant financial benefit for short-term goals and for your long-term horizon, it’s better to lock now and forget about picking the bottom. Yes, rates could drop further, but is it worth the risk of forgoing a beneficial loan in hand, on the gamble that rates might drop by another quarter to half percent? That is a big gamble, especially when considering where mortgage rates are at currently.
May the Mortgage Refinance Rates be with You!
Refinance Tool Box
On this news, the 10-year Treasury yield dropped by almost one-half percentage points and mortgage refinance rates dropped almost immediately. Since the initial rate-drop off the news, the market has been moving sideways, with maybe a slight blip up in rates.
You know how they say that you usually don’t get a second chance? Not this year. Those that were sitting on the refinancing fence in January and missed out on the big rate drop now have the chance to refinance at awesome interest rate levels once again.
The government’s announcement on Monday for a plan to buy back toxic bank assets really didn’t cause much movement in mortgage rates. Most likely, last week’s rate drop already had that figured in to the mortgage spread premium.
The latest released numbers on per-existing home sales and new home sales shows the first percentage increases in months, but it’s way to early to get excited about that. The underlying numbers are still dismal and on the pre-existing home sales side, a large percentage of the increase is attributed to foreclosure sales at rock bottom prices, which is continuing to hammer on national home sale prices.
Yes, mortgage rates are great, but remember that the very best offered rates will be to those refinancing conventional with good to great credit and a loan-to-value (LTV) ratio under 80 percent. The value of your home and credit score is key!
FHA mortgage rates are still the way to go for LTV’s over 85 percent (even over 80 percent in some instances). The qualifying credit scores for FHA loans seem to be creeping upward from the 580 minimum score requirement for many lenders, but offer great rates for those in the 620 credit score range and up.
Many people shopping loans right now feel that rates will drop even further, so they are waiting on the fence. Unfortunately, many people get burned with this rationale, trying to pick the bottom. Same as the stock market, those who try to pick the bottom either end up with no transaction or end up buying at a higher than originally available price in panic as the market moves up.
The bottom line is that if you have a current offered loan scenario that creates a significant financial benefit for short-term goals and for your long-term horizon, it’s better to lock now and forget about picking the bottom. Yes, rates could drop further, but is it worth the risk of forgoing a beneficial loan in hand, on the gamble that rates might drop by another quarter to half percent? That is a big gamble, especially when considering where mortgage rates are at currently.
May the Mortgage Refinance Rates be with You!
Refinance Tool Box
Labels: business, credit scores, economy, finance, home loans, money, mortgage rates, refinance, refinance rates, refinancing
posted by Jim Bisnett at
11:03 AM
2 Comments:
Make sure to know the state of your finances before contacting your lender. Determine how much income you're bringing in each month, how much you're paying in bills and where you can cut costs. Just a tip!
Although a loan does not start out as income to the borrower, it becomes income to the borrower if the borrower is discharged of indebtedness.
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