Tag: interest rates

Affect on Mortgage Rates from Bernanke Announcement

Federal ReserveFederal Reserve chairman Ben Bernanke announced today that they may be easing the quantitative easing programs as early as this year.  This program includes the purchases of mortgage backed securities (MBS) which are the packaged residential mortgages sold by banks and mortgage companies.  The slowing of these purchases would take affect if the unemployment rates hits 6.5% and inflation reaches 2%.  The phase out may be completed by 2014 which changes the mortgage lending landscape by pushing higher mortgage interest rates.

The quantitate easing programs were put in place to help stabilize the housing market and United States economy after the economic collapse a few year ago. Bernanke goes on to explain that the mortgage markets, Fannie Mae, and Freddie Mac, have become too reliant on the Fed’s buying program. Other than this crutch, the markets seem to be functioning well.

The effects on mortgage rates will be drastic which will lead to sharp increases in interest rates for both refinances and new purchase loans. Without the support of the government and the Fed’s buying program it is rumored that the 30 year mortgage may in itself be phased out. As it currently stands, the 30 year fixed rate mortgage is the most popular mortgage term as it allows low fixed payments.

Immediately following today’s announcement, both the treasuries and MBS market saw a massive selloff which has an immediate negative affect on interest rates.  If you are purchasing a home or considering refinancing your current mortgage it is highly recommended that you work with your loan officer to quickly lock your interest rate when possible to avoid further rate increases.

How to get a Low Rate Mortgage: April Mortgage Rates

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April Showers Low Mortgage Rates

Another month has passed by as we enter the month of April. For those buying a home or in the process of refinancing their mortgage you may be wondering what is in store for mortgage rates in April.
While quantitative easing continues with the Fed purchasing 85 billion dollars in Mortgage Backed Securities (MBS), mortgage rates remain to be artificially lowered. This coupled with the economic uncertainty in Europe and the possible bailout for Cyprus brings good news for low mortgage rates moving forward.

How to Qualify of Low Mortgage Rates

With the mortgage rates low, not all homeowners are able to automatically get a low rate. The specific mortgage rate that you may qualify will depend on several factors. While some program inherently have lower rates than other, there may be things you can do to qualify for a low rate mortgage.

Factors determining mortgage rates include:

  • Mortgage program (Conventional, FHA, VA, USDA)
  • Loan Term (15 year, 20 year, 30 year)
  • Credit Score (Higher the Better)
  • Loan-to-Value (Loan amount divided by Home Value)
  • Property Type (Stick Built Home, Condo, Manufactured)
  • and Residency Type (Primary, Secondary or Investment)

Qualifying for a Low Rate Mortgage

To get the lowest rate that you may qualify it is important to review the factors listed above and see what you can help do in qualifying for a low rate mortgage. While the value of your home is determined by recent home sales which is clearly out of your control, your credit score, loan term and mortgage program may be controlled by you when you apply for a mortgage loan.

How to get a Low Rate Mortgage: Improved your Credit Score

Paying off collections, paying down credit card bills and making on time monthly payments contribute to higher credit scores. Also be sure to not have your credit pulled many times within four months of applying for a home loan. Inquiries lower credit scores thus increasing your mortgage rates.
How to get a Low Rate Mortgage: Lower your Loan Term

Typically mortgage rates are lower with shorter loan terms. A 30 year fixed rate may be a lower payment however if you plan on paying your house off soon then you may want to consider a 15 year or even a 10 year mortgage to take advantage of lower mortgage rates.

How to get a Low Rate Mortgage: Review mortgage programs

You may be limited to what loan types you qualify for however many times homeowners have options to choose what mortgage program to apply for. For example a USDA Rural Development Mortgage or a FHA mortgage are two great loan options that may have different interest rates. Be sure to speak with your loan officer to see what home loan with have the best rates for your situation.

How to get a Low Rate Mortgage: Lock your Rate

Many time clients applying for a mortgage want to wait to see if mortgage rates will go down even lower. This is essentially gambling with your biggest investment, your mortgage. If you are satisfied with the current rates and it is bettering your situation then get locked in a rate now. Get started with a rate quote from Riverbank Finance and see what today’s mortgage rates can do for you.

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**NOTE: Rates and terms may vary based on each individual’s situation. Above example is for illustration purposes only and assumes a 100% or less loan-to-value, 740+ credit, and $200,000 loan amount for a 30 year fixed rate mortgage. Not all will qualify, call a loan officer at Riverbank Finance for additional information and details on programs based on your situation.