Mortgage Interest Rate Report – May 2009

Mortgage Rate News & Analysis

U.S. mortgage interest rates fell to a new record low at the beginning of April, according to information from mortgage company Freddie Mac, and then jumped back up into familiar territory for the rest of the month.

April 2

The first week of the month saw rates on 30-year fixed rate mortgages (FRMs) pushed to their lowest point in the 30-year history of the Freddie Mac survey. The average interest rate fell to 4.78 percent, excluding points, down from 4.85 percent the previous week.

“Mortgage rates followed other interest rates lower this week amid reports of slower economic growth” said Frank Nothaft, Freddie Mac vice president and chief economist. “The final estimate of economic growth in the fourth quarter was revised lower and personal incomes fell 0.2 percent in February, below the market consensus.”

The average rate on a 15-year FRM also fell, dropping from 4.58 to 4.52 percent, while one-year adjustable rate mortgages (ARMs) averaged 4.75 percent, down from 4.85 percent one week earlier.

April 9

The average interest rate on the 30-year FRM loan bounced back up to 4.87 percent in the second week, and the average rate on the 15-year FRM grew to 4.54 percent. One-year ARMs carried an average rate of 4.83 percent, also up from the previous week. Freddie Mac offered no explanation for the rise in rates, but instead assured the nation that the current figures were still at historic lows and well within the affordable range.

April 16

Rates on 30-year FRM loans eased in the third week to 4.82 percent, as 15-year FRMs fell to an average commitment rate of 4.48 percent. One-year ARM rates, however, actually increased to an average of 4.91, making it unusually more expensive than the traditional 30-year mortgage.

April 23

Long-term rates continued to fall in the fourth week of April, inching down to an average of 4.80 percent on the 30-year FRM. Fifteen-year FRM interest rates remained unchanged, and one-year ARM rates moved back down

What’s Next for Interest Rates?

From the looks of several Internet polls, most analysts expect interest rates to stay where they are or decrease only slightly in the next 30 days. The consensus seems to be that as the U.S. Treasury Department continues to buy up troubled mortgage-backed securities, interest rates will be kept artificially low. Most think this will be the case until the mortgage market really starts to show signs of recovery.

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Source: Real Estate ABC

A Home Buyers Guide to finding the Perfect Home – The Appraisal

Buying a home can be a complex process with many important steps. You have probably looked at several homes before finding the right one. Then you submitted a purchase offer. After one or several counteroffers, the purchase offer has finally been accepted. Congratulations, you have almost bought a home.

There are still several steps necessary, which must take place to satisfy the conditions of the purchase agreement. The first of these steps is getting the appraisal done. In most instances, the lender will only loan about 80% – 90% of the value of the loan. The buyer must come up with the balance, called the down payment. Some types of loan may allow the lender to lend 100% of the appraised value. However, the key to this is still the appraised value of the property.

A licensed real estate appraiser performs this service. The lender, in most circumstances, will want to use their own appraiser. The appraiser will assess the property using a complex set is criteria to arrive at the appraised value of the property. Technically, this value is just the opinion of the appraiser of what the property is worth, but the result of the appraisal is king when it comes to getting your home loan.

If the property appraises for less than the purchase price, then you will have decisions to make. The bank probably will still loan you the money, but only a percentage of it. You can still buy, but you will have to make up the balance some other way. Alternatively, allow the purchase agreement to lapse and keep looking at other properties. If the purchase agreement lapses because the property did not appraise to the purchase price, the buyer’s money should be returned.

If the property does appraise, the deal moves forward with the other conditions of the contract. Still on the agenda as you move towards closing are the home inspection and title search.

The appraisal is the most important condition met in the purchase agreement. It can make or break the deal, depending upon the results. However, once the property appraises, you are well on the way to closing.


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Source: Realestateabc

How to Sell Your Home in a Slow Market

Even though the real estate market has slowed down in recent months, there are still plenty of homebuyers eager to make a purchase. Knowing how to prepare your home for sale, when to allow access for showings, and how you can offer buyer incentives will help you find the right buyer, even in a declining market.

Before you even put your home on the market, make sure that all basic repairs are completed. Nothing can turn off a prospective buyer quicker than loose railings, torn screens or missing hardware on cupboard doors. These easy repairs do not cost a lot of money. If a homebuyer sees that the little things are not attended to, they are likely to believe that the larger things are neglected too. Let buyers know that you have pride in your home by making sure that all of the small repairs are taken care of.

Keep your home clean throughout the time it is on the market. In a slow real estate market, it is important to have your home available to show at a moment’s notice. The more often your home is shown, the likelier it is that your home will sell. Keep your home available to your realtor and they will be able to show your home quickly to any buyer that shows interest.

Have your home staged by a professional. Home staging has become a booming business and a professional home stager will help you remove clutter and depersonalize your space. Prospective homebuyers want to picture their family in the home, not yours and a home full of personal clutter will not show off the potential of your home.

Keep pets contained during a real estate showing and make sure that your cat litter box is always clean. Pet owners tend to get used to the odors caused by litter boxes and it is important that you remember to clean it every day. Nothing will turn off a prospective home buyer like a home that smells. Many people are fearful of dogs, especially ones that they do not know. Make sure that you either take your dog with you for a showing or put them on a leash outside.

Be realistic in your expectations of the price you will be able to sell your home. Forget about what could have been if you had sold it last year and focus on what your home is worth now. In a buyer’s market, buyers don’t have to negotiate much. Buyers know that you want to sell your home and a home that is priced too high is likely to be looked over. Ask a fair price for your home to avoid the need for too much negotiation.

In a slow market, hiring a real estate agent is crucial to get your home sold in a reasonable amount of time. Yes, there are ways you can list your home for sale by owner using the internet, but nothing beats the experience that comes from a real estate agent who is able to take care of everything in order to sell your home.

Selling your home can be a stressful time, but you can be successful in selling your home if you remain patient, reasonable and flexible. There are buyers out there and the key is to find them and get them to fall in love with your home.

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Source: Realestateabc.com

Take Advantage of Homeowner Programs to Avoid Foreclosure

Widespread foreclosures create numerous problems for both individual neighborhoods and for the country as a whole. Obviously, on a national level, soured loans have cost companies millions of dollars and in some cases, their very existence. On a local scale, abandoned foreclosed properties that fall into disrepair are magnets for vagrants and criminal activity. Nearby homes also fall in value as foreclosed homes make the neighborhood less desirable to live in.

Millions more of American homeowners are expected to fall into foreclosure during the next few years. In some cases, there may be no way to save their home. Yet in many other cases, homeowners can avoid foreclosure by talking with their lenders and possibly taking advantage of new federal programs.

Talk to Your Lender

The first step to avoiding default and foreclosure is to approach your lender and tell him of your situation. If your ability to keep up with your payments is lagging, talk to your mortgage lender before you actually have to make a late payment. Foreclosure means a huge loss of money for lenders, plus a lot of hassle to resell the property. Many would rather renegotiate the terms with you and possibly even write-down your mortgage balance a bit, instead of losing out completely on their investment when you default.

HOPE for Homeowners

In addition to early programs for struggling homeowners, the federal government started a new initiative in early on October 1, called HOPE for Homeowners, which could save as many as 400,000 American mortgage borrowers.

The program authorizes the Federal Housing Authority to back more adjustable rate mortgage (ARM) loans in danger of failure. It works like this: a worried homeowner contacts a HOPE representative. The representative works with the lender and voluntarily gets them to agree to write down the loan balance to 90 percent of the current value of the home. Then, they refinance the original mortgage into an FHA-guaranteed 30-year fixed rate mortgage with predictable monthly payments. As the value of the home appreciates in the future, the homeowner agrees to share some of that equity with the government.
In order to qualify for this program, borrowers must be able to fully document their income, occupy the property involved (no investment properties will qualify) and their housing costs after the refinance must total no more than 31 percent of their income (38 percent if they participate and in a 3-month trial period with timely payments.)

Borrowers interested in participating in the FHA program can contact their lenders, speak with a HUD counselor, or call 1-888-995-HOPE.

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Source: Realestateabc.com

Location! Location! Location!

Buying a Home With Resale Value

There are many things that should be considered when buying a home. Since most homebuyers expect to buy a bigger and better home someday in the future, resale value is an important factor in decision-making. You use the proceeds from selling one home to buy the next one.

While no one can guarantee that your home will grow in value, there are steps you can take that maximize your potential gain.

“Location! Location! Location!”

“Location, location, location,” is a common and almost hackneyed phrase in real estate literature. Your agent may even throw it at you when you ask for advice about buying a home. However, what does “location, location, location,” actually mean? Why repeat it three times?

Mostly, “location” is repeated to emphasize that it is extremely important to the resale value of your home. The idea is to buy a house that will appeal to the largest number of potential future homebuyers. A careful choice of location can minimize potential negative influences on future resale value, and maximize positive influences.

Focusing on resale value requires you to make several different “location” choices. The first choice you have to make is “which community?” At the very least, you should narrow your choice down to just a few local communities.

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Tips for first time buyers in purchasing real estate in Florida

Florida is definitely a treasure trove of prime properties that can be a sound investment if you plan to settle down in the region. If it’s your first time to purchase a residential property in area, then here are some tips to help you out.

Choose Your Location Wisely

The first tip in purchasing a residential real estate property in Florida is to first choose the location of your very own home. This is a very important factor to plan ahead of time so that you can maximize its use, as well as enjoying the amenities in the surrounding area.

You can look for them on the Internet, since many real estate firms are now going online with their business. They feature different properties in assorted locations in Florida; check out their features, like architectural designs, furnishings, recreational areas and government agencies in the locale, and so on. Knowing these in advance can really help you determine the perfect location for your family home.

Comparing Home Value

Another tip is to determine the actual price of the properties that will fit your budget. Note, however, that the median prices of this residential real estate differ according to location depending on the popularity of the place. Cities that are known to have expensive real estate properties include Miami Beach, Fort Lauderdale, Sarasota, and Aventura.

Check Your Financial Resources

Now that you have some idea regarding the location and prices of residential properties in Florida, you need to prepare yourself financially for the acquisition. In which case, many individuals plan to purchase a property using mortgage loans to give their wallet enough elbow room to survive.

While you’re at it, check your credit scores since this is one of the main requirements for a mortgage loan. Inquire different lenders when it comes to their interest rates and payment terms, and compare each one carefully so that you can pick out the best deals that would suit your needs.

Hire A Professional

If you have no idea on the different processes and intricacies of real estate acquisition in Florida, then it would be best to hire a professional to do it for you. In this case, you can contact assorted real estate agents or brokers to help you out with this project.

They can help you in searching for a real estate property that will suit your specification and budget. They can also aid you in processing many of the legal documents that is included in the acquisition. They can also haggle in your best interest with sellers to lower the price value of the home, or with the terms and conditions that might put you on the lower end of the bargain.

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Source: eZineArticles