October 8th, 2009 11:27 AM by Preston Ware
According to the Mortgage Bankers Association mortgage rates are officially under 5% with purchase applications jumping 13.2% and refinance applications jumping a whopping 18.2% compared to the previous week’s results. Remember when we are quoting averages of mortgage interest rates, the average usually assumes there is .6 % of an origination point or fee involved. Having historically low mortgage rates is always great news but here are a few things to keep in mind concerning our current marketplace.
The current deadline on the $8000 homebuyer tax credit is Dec 1st, 2009. A spike in purchase applications might be a bubble due to the deadline of the homebuyer tax credit going away. Do I think our government will extend this credit? Yes When do I think they will extend this credit? November 30th. In my mind it wouldn’t make sense to extend the $8000 first time homebuyer tax credit prematurely otherwise it would only encourage buyers to go sit on the fence a little while longer. Personally, I would like to see Washington take this whole idea one step further. The Home Ownership Moves the Economy (HOME) Act of 2009, introduced by Howard Coble (R-NC) would continue the availability of the credit into 2010 and allow all home buyers to take advantage of the program. This would have a tremendous effect on places like Florida where for the first time in 60 years the state lost population rather than gained it. Why not provide the tax savings opportunity to other demographics of our population. I am sure many seniors who have owned homes for years would love to go find a bargain condo in Florida or similar places. They also would probably have the 20% necessary to get around some of the tough condo-commando ownership rules.
Refinance applications are back to the levels we had in May. I recall missing a few applications back then on that dreadful Thursday when rates jumped .25% in a day. Needless to say I have called those customers back. FHA customers should be looking at streamline refinances as well. The Home Affordable Refinance loans are still available until June of 2010. These types of mortgage loans help homeowners who put their 20% down when they purchased or had existing equity when they refinanced and saw their values whither away. Customers can still do a rate/term refinance up to 105% of the value of their home without force placed lender mortgage insurance. Restrictions do apply but this is a great loan for good Fannie Mae/Freddie Mac customers. Homeowners who obtained their previous financing in the spring and summer of 2006 and 2007 and the end of 2008 should take a look at the above market pricing that they are paying.
One big difference between May 2009 and now is that we presently have some amazingly low adjustable rate mortgages as well. Adjustable rate mortgages have burst back on to the marketplace. Where you can go get a 30 fixed rate loan under 5% now, you can also go get a 5/1 ARM lower than 4%. This allows mortgage holders to capture huge savings in the short term. These loans are great for customers who are expecting a five year time frame or less in their existing homes. Adjustable rate mortgages can translate into even larger savings for Jumbo and Super Jumbo mortgage customers who typically are not offered a fixed rate. These loans are calculated with low margins so we shouldn’t hear the horror stories associated with the sub-prime adjustable rate loans. When looking at this loan make sure you get a copy of the Federal “CHARM” booklet and study your Truth in Lending disclosure (TIL) to make sure you understand what you are signing. If you are an executive who gets transferred a lot or a senior getting ready to move to a new retirement place, this loan might be a good option for you.
Written by Preston WareFirst South MortgageTel: 704-542-8057* http://www.prestonware.comEmail is firstname.lastname@example.org.