BluefoxToday blog : Lew Corcoran (Best Choice Real Estate Services)

Why Should Homeowners Refinance Their Mortgage in a Falling Housing Market?
by Peter Harper

The current economical condition of the nation has both its positive and negative effects on the people – irrespective of what they are doing. So, in case of the housing market too, the economic condition has both its positive and negative effects. From the year 2010 on, mortgage interest rates have been low, and people have been refinancing their home mortgages. The only good thing of the economic downturn is that mortgage interest rates fell to historical lows.

Why Homeowners Should Refinance

Homeowners should refinance their home mortgages in this falling housing market:

1. In order to save home – Though the housing market is on the downslide, if a person faces problems in making the debt payments, then he/she can refinance the home loan. This helps in changing the terms and conditions of the home loan, thereby helping the person to go on making the mortgage payments. This is important because if you miss payments on your mortgage, you could lose your home as the lender will foreclose on it in order to get their money back.

2. In order to lower the interest rate – A refinance helps you in lowering the interest rate on your mortgage. Thus, as has been said before, it helps you to continue making the payments on your mortgage. In addition to the interest rate, the loan term may also get extended through the refinance. This too could help considerably lower the monthly payment.

3. In order to save money – Even if you aren’t having much problem in making the monthly payments on your mortgage, if you refinance the home mortgage, you may easily be able to save money on the mortgage payments. This is mainly because with refinancing, the monthly payment that you're required to make on your mortgage is lower.

4. In order to retain the investment – By refinancing your mortgage, you'll be able to retain the investment that you have made on your home. That is, as refinancing helps you in retaining your home even in case of financial crisis, you may be able to retain the investment. It may be important to retain the home as this may not be a good time to sell it.

5. In order to lock in a low rate – As mortgage interest rates are still low, now may be the best time to lock in a lower interest rate. This could prove advantageous to you if you're a struggling homeowner. You're required to pay more on the interest if you take out a long term refinance loan, but it might be worth it if the value of the home increases later on.

6. In order to build greater equity – Retaining the link from the previous point, you may note that as you go on making the monthly mortgage payments with a lower interest rate, you will be building equity in your home faster. This will also help in increasing the equity in your home. And, as home values will improve, you may be able to net a bigger profit when you do sell the home.

You can see that there are various reasons why homeowners should refinance their home mortgages in this falling housing market. Thus, you can see that even though the economic situation is poor and even though the housing marketing is struggling, it's important for the homeowners to refinance the home loan.

Banks Helping Homeowners Avoid Foreclosure?

Homeowners with Option ARM mortgages (sometimes called ‘Pick-A-Payment’ or ‘Neg Am’ (short for negative amortization) Loans) are getting unexpected help from 2 large banks to help them avoid foreclosure – JPMortgage Chase and Bank of America.

JPMortgage Chase and Bank of America?

Stung by the federal government for not doing enough to help homeowners who are struggling with their mortgages, both JPMortgage Chase and Bank of America are quietly helping homeowners who are underwater on their Option ARM mortgages avoid foreclosure by modifying their loans – even if they are not in default or haven’t otherwise asked for it.

These big banks are providing help to those they feel are “at risk” of defaulting on their Option ARM mortgages by easing the terms of the mortgage. While the banks are not reducing the balances owed on the mortgages, they are using all other available means to help homeowners who are underwater avoid foreclosure – either by waiving prepayment penalties, by refinancing current mortgages into more stable fixed-rate mortgages, by lowering the interest rates, by postponing some of the balance owed, or by extending the term of the loan.

The banks are not reducing the balances owed on the mortgages as that would be unfair to those who are making their mortgage payments on time. It would also be impractical because so many mortgages are securitized into pools owned by investors.

The questions remain, however: Why are these particular homeowners - the ones with the Options ARM mortgages - getting mortgage relief – even if they haven’t asked for it – while so many others who have asked for help are not? And how many of those who did not get help wind up losing their homes to foreclosure?

If I was the lucky homeowner who received unsolicited help from the bank, I’d be elated. However, if I was the unlucky homeowner who had to constantly deal with different representatives from these banks every time I called, was told repeatedly that my documents were either ‘lost’ or never submitted, or worse yet - lost my home to foreclosure because the bank wouldn’t modify my mortgage loan, I’d be angry.

It seems to me that if the banks have time to deal with homeowners who have never asked for a mortgage modification, then they have time to deal with all of the others who have already requested it and submitted their document.

Mortgage Rate Forecast for August 6, 2010 - Improving, or...?

Here are some of the events affecting mortgage rates today:

What Mortgage Backed Securities (MBS) Are Doing Today:

• The price of the FNMA 30-Year 4.0% MBS coupon opened at 102.50 this morning - the same as yesterday's close.
  
  
• At 9:30 AM, the 4.0% MBS coupon was trading at 102.62 - up 4/32 from its opening.

Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and so do mortgage rates. I expect that mortgage rates will be up to 0.125 points better in price this morning as compared to yesterday.

Price Trend in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.0% coupon over the past 30 days from 7-7-2010 to 8-6-2010:

Economic Reports, News, and Events Affecting Mortgage Rates Today:

• Employment Situation Report - according to the Bureau of Labor Statistics, non-farm payroll fell by 131,000 jobs in July; the loss is much more than expected. This follows a loss of 126,000 jobs in June, and a revised gain of 432,000 jobs in May and revised gain of 221,000 jobs in April. The unemployment rate remains at 9.5%. The private labor market is still growing, but is showing a continuous sign of slowing. This is raising concerns that the economic recovery is stalling. This data had a positive impact on the mortgage market this morning as prices of mortgage backed securities rose on the news. This initially led to lower mortgage rates this morning.

In other news, the Treasury Dept will be auctioning $38 billion in 2-Year notes, $37 billion in 5-Year notes, and $29 billion in 7-Year Notes for a total of $78 billion next week. The Notes and Bonds are used to finance the massive government debt. The results of these auctions could affect mortgage rates next week.

Trend in Mortgage Rates:

The chart below shows the trend in mortgage rates over the past 20 years:

Mortgage Rate Forecast:

Mortgage rates are at their historic lows - they haven't been this low since the early 1950s - and continue to go lower as the global economic crisis continues. However, the stock market is over sold while the bond market is over bought. Mortgage rates could head up soon as the markets begin to correct themselves. As such, I would not take too much of a chance in waiting for even lower mortgage rates.

If you're happy with the mortgage rate being offered to you today and if you don't want to risk mortgage rates moving higher, then you should apply and lock in now. It's better to have locked when you should have floated than it is to float when you should have locked.

Are you in need of a mortgage to purchase a home? Or want to refinance an existing mortgage into a lower permanent fixed rate? Or want to take cash out of the equity of your home? Or consolidate debt and reduce the monthly bills? Then be sure to request a mortgage rate quote today!

Trend and Forecast in Mortgage Rates on July 30, 2010 - Improving, or...?

Here are some of the events affecting mortgage rates today:

What Mortgage Backed Securities (MBS) Are Doing Today:

• The price of the FNMA 30-Year 4.0% MBS coupon opened at 102.09 this morning - the same as yesterday's close.
  
  
• At 9:30 AM, the 4.0% MBS coupon was trading at 102.56 - up 9/32 from its opening.

Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and so do mortgage rates. I expect that mortgage rates will be up to 0.250 points better in price this morning as compared to yesterday.

Price Trend in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.0% coupon over the past 30 days from 6-30-2010 to 7-30-2010:

Economic Reports, News, and Events Affecting Mortgage Rates Today:

• Preliminary Reading of the 2nd Quarter Gross Domestic Product (GDP) - the GDP in the 2nd Quarter of 2010 grew at an annualized rate of 2.4%, slightly less than expected, and much less than the 5.4% growth rate in the 4th Quarter of 2009 and the 3.7% growth rate of the first quarter of 2010. So far, this has been a jobless recovery, and weekly unemployment in recent weeks has continued at just above the 450,000 level. As confidence remains low and unemployment remains high, it's not expected that consumers will be purchasing more goods again any time soon. While significant, the data did not have an impact on the mortgage market or mortgage rates this morning.
  
• Employment Cost Index (ECI) - is up 0.5% for the 2nd quarter of 2010, slightly more than the 0.4% increase that was expected. The ECI measures the costs of employee wages and benefits, this providing us with an indication of the threat of wage inflation. Wages & salaries rose 0.4% while benefits rose 0.6%. The year-over-year rate for wages & salaries is up 1.8%. The ECI report did not have an impact on the mortgage market or mortgage rates this morning.
  
• University of Michigan's Index of Consumer Sentiment - came in with a reading this morning of 67.8, a little better than expected, but still down significantly from April's and May's readings. The past 3 readings were 66.5 in June, 75.5 in May, and 73.3 in April. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates. This report indicates that consumers are not very likely to make many purchases. The consumer sentiment report did not have an impact on the mortgage market or mortgage rates this morning.

Trend in Mortgage Rates:

The chart below shows the trend in mortgage rates over the past 3 years:

Mortgage Rate Forecast:

Mortgage rates are at their historic lows - they haven't been this low since the early 1950s - and continue to go lower as the global economic crisis continues. However, the stock market is over sold while the bond market is over bought. It also appears that banks in Europe are not as bad off as previously thought. Mortgage rates could head up soon as the markets begin to correct themselves. As such, I would not take too much of a chance in waiting for even lower mortgage rates.

If you're happy with the mortgage rate being offered to you today and if you don't want to risk mortgage rates moving higher, then you should apply and lock in now. It's better to have locked when you should have floated than it is to float when you should have locked.

Are you in need of a mortgage to purchase a home? Or want to refinance an existing mortgage into a lower permanent fixed rate? Or want to take cash out of the equity of your home? Or consolidate debt and reduce the monthly bills? Then be sure to request a mortgage rate quote today!

Trend and Forecast in Mortgage Rates on July 16, 2010 - Improving, or...?

Here are some of the events affecting mortgage rates today:

What Mortgage Backed Securities (MBS) Are Doing Today:

• The price of the FNMA 30-Year 4.0% MBS coupon opened at 101.72 this morning - the same as yesterday's close.
  
  
• At 9:30 AM, the 4.0% MBS coupon was trading at 101.69 - down 1/32 from its opening.

Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage rates. I expect that mortgage rates will be about the same in price this morning as compared to yesterday.

Price Trend in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.0% coupon over the past 30 days from 6-16-2010 to 7-16-2010:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

• Consumer Price Index (CPI) - as expected, the overall price index fell by 0.1% in June - mostly because of lower gasoline prices. The core data which excludes the more volatile food and energy prices rose 0.2% - slightly more than expected. This is one of the most important monthly reports that we see as it measures inflationary pressures at the consumer level of the economy. With unemployment still at high, this report shows that inflation continues to be held in check even as the overall economy is improving. This report had no impact on the mortgage market or mortgage rates this morning.
  
  
• University of Michigan's Index of Consumer Sentiment - came in with a reading this morning of 66.5, much worse than expected, indicating that consumer sentiment is waning. The past 3 readings were 76.0 in June, 75.5 in May, and 73.3 in April. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates. While this report indicates that consumers are not as likely to make large purchases soon, mortgage rates improved this morning as investors took money out of stocks and invested in bonds.

Trend in Mortgage Rates:

The chart below shows the trend in mortgage rates over the past 3 years:

Mortgage Rate Lock Advice:

Mortgage rates are at their historic lows - and haven't been this low since the early 1950s. They could possibly go even lower as the global economic crisis continues. However, the stock market is over sold while the bond market is over bought, and rates could begin to head up soon as the markets begin to correct themselves. As such, I would not risk the chance waiting for lower mortgage rates. That being said, rates continue to slowly fall. As such, I would float and be ready to lock at a moment's notice.

If I were financing a home or refinancing a mortgage today, I would:

• Float if my closing was taking place within 7 days
• Float if my closing was taking place between 8 and 15 days
• Float if my closing was taking place between 16 and 30 days
• Float if my closing was taking place more than 30 days from now

Be sure to check out today's mortgage rates.

Trend and Forecast in Mortgage Rates on July 14, 2010 - Improving, or...?

Here are some of the events affecting mortgage rates today:

What Mortgage Backed Securities (MBS) Are Doing Today:

• The price of the FNMA 30-Year 4.0% MBS coupon opened at 100.94 this morning - down 11/32 from yesterday's close.
  
  
• At 9:30 AM, the 4.0% MBS coupon was trading at 101.16 - up 8/32 from its opening.

Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and so do mortgage rates. I expect that mortgage rates will be up to 0.250 points better in price this morning as compared to Friday.

Price Trend in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.0% coupon over the past 30 days from 6-14-2010 to 7-14-2010:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

• Retail Sales Report - Consumers are still spending. Retail sales fell 0.5% in June, more than expected, but better than the 1.1% decline in May. When auto sales are excluded, retail sales fell only 0.1%. When auto and gasoline sales are excluded, retail sales actually rose 0.1%. However, retail sales are still up 4.8% from this same time last year. The retail sales report measures consumer spending by tracking sales at retail establishments. This is one of the more important reports we see each month because consumer spending makes up two-thirds of the economy. The retail sales report had a positive effect on mortgage rates this morning.

In other news, the Treasury Dept. will be auctioning $13 billion in 30-Year bonds today. The Notes are used to finance the massive government debt. If there is a strong demand for the Notes, we should see the bond market move higher (resulting in lower mortgage rates) during afternoon trading. However, a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to a broader selling in bonds and mortgage backed securities. The selling of mortgage backed securities could result in higher mortgage rates.

Trend in Mortgage Rates:

The chart below shows the trend in mortgage rates over the past 3 years:

Mortgage Rate Lock Advice:

Mortgage rates are at their historic lows - and haven't been this low since the early 1950s. They could possibly go even lower as the global economic crisis continues. However, the stock market is over sold while the bond market is over bought, and rates could begin to head up soon as the markets begin to correct themselves. As such, I would not risk the chance waiting for lower mortgage rates.

If I were financing a home or refinancing a mortgage today, I would:

• Lock if my closing was taking place within 7 days
• Lock if my closing was taking place between 8 and 15 days
• Lock if my closing was taking place between 16 and 30 days
• Float if my closing was taking place more than 30 days from now

Be sure to check out today's mortgage rates.

Mortgage Rates on July 2, 2010 - Improving, or...?

Here are some of the events affecting mortgage rates today:

What Mortgage Backed Securities (MBS) Are Doing Today:

• The price of the FNMA 30-Year 4.0% MBS coupon opened at 101.34 this morning - the same as yesterday's close.
  
  
• At 9:30 AM, the 4.0% MBS coupon was trading at 101.19 - down 5/32 from its opening.

Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage rates. I expect that mortgage rates will be up to 0.250 points worse in price this morning as compared to yesterday.

Price Trend in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.0% coupon over the past 30 days from 6-2-2010 to 7-2-2010:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

• Employment Situation Report - according to the Bureau of Labor Statistics, as expected, non-farm payroll fell by 125,000 jobs in June after increasing by 430,000 in May. This follows a gain of 313,000 jobs in April, and a gain of 208,000 jobs in March. The unemployment rate decreased to 9.5%. The private labor market continues to grow, but is showing signs of slowing. This is raising concerns that the economic recovery is stalling. This data had a positive impact on the mortgage market this morning as prices of mortgage backed securities rose on the news. This initially lead to lower mortgage rates this morning.
  
  
• Factory Orders - fell 1.4% in May, worse than the 0.5% decline that was expected, and follows a 1.2% rise in April. While down, this report also shows that, overall, the manufacturing sector is improving. This report is similar to the Durable Goods Orders report that was released late last week, except this report includes orders for both durable and non-durable goods. Durable goods are items that are expected to last three or more years such as electronics and autos. Examples of non-durable goods are food and clothing. This report had no impact on the mortgage market or mortgage rates this morning.

Trend in Mortgage Rates:

The chart below shows the trend in mortgage rates over the past year:

Mortgage Rate Lock Advice:

Mortgage rates are at historic lows - they have not been this low since 1953 - and could possibly go even lower as the global economic crisis continues. However, the US is continuing on its deficit spending spree, and is adding to its massive debt. This is causing consternation among the other members of the G8. As such, I would not risk the chance waiting for lower mortgage rates.

If I was closing within the next 5 - 7 days, I would lock in the rate.

If you are closing in more than 7 days, send me an email to get my rate lock advice.

Be sure to check out today's mortgage rates.

Mortgage Rate Forecast for June 14, 2010

Here are some of the events affecting mortgage rates today:

What Mortgage Backed Securities Are Doing Today:

• The price of the FNMA 30-Year 4.5% MBS coupon opened at 102.53 this morning - the same as Friday's close.
  
  
• At 9:30 AM, the 4.5% MBS coupon was trading at 102.28 - down 8/32 from its opening.

Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage rates. I expect that mortgage rates will be up to 0.25 points worse in price this morning as compared to Friday.

Price Trend in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days from 5-15-2010 to 6-14-2010:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

• There are no economic reports scheduled for release today.

Trend in Mortgage Rates:

The chart below shows the trend in mortgage rates over the past year:

Mortgage Rate Lock Advice:

Mortgage rates are again off their lows of the year. On Friday, the price of the FNMA 30-Year 4.5% Coupon closed at 102.53, 50 basis points lower than it's all-time high of 103.03. After the open this morning, the MBS coupon fell in price, and is now down 75 basis points from the all-time high. As a comparison, what that means is this: if a 30 year fixed mortgage rate was 4.75% with a 0.5 point on Friday, and if price of the MBS 4.5% coupon were to go as high as 103.03, then the best the 30 year fixed mortgage rate would be is 4.75% with no points today.

While it's still possible that mortgage rates could go even lower with the ongoing economic crisis in Europe, it won't be by much as fears of debt defaults in Europe are lessening. So, I would not risk the chance waiting for it.

If I was closing within the next 5 - 7 days, I would lock in the rate.

If you are closing in more than 7 days, send me an email to get my rate lock advice.

Be sure to check out today's mortgage rates.

Mortgage Rate Forecast for June 4, 2010

Here are some of the events affecting mortgage rates today:

What Mortgage Backed Securities Are Doing Today:

• The price of the FNMA 30-Year 4.5% MBS coupon opened at 102.06 this morning - the same as yesterday's close.
  
  
• At 9:30 AM, the 4.5% MBS coupon was trading at 102.53 - up 15/32 from its opening

Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and so do mortgage rates. I expect that mortgage rates will be up to 0.50 points better in price this morning as compared to yesterday.

Price Trend in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days from 5-5-2010 to 6-4-2010:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

• Employment Situation Report - according to the Bureau of Labor Statistics, non-farm payroll increased by 430,000 in May, but only 41,000 of those new jobs were in the private industry. This is much less than the 540,000 gain that was expected, and follows a gain of 290,000 jobs in April, and a gain of 208,000 jobs in March. The unemployment rate decreased to 9.7%. The labor market is showing notable improvement, and could help consumers regain optimism which in turn will strengthen the overall recovery. This data had a positive impact on the mortgage market this morning as prices of mortgage backed securities rose on the news. This lead to lower mortgage rates this morning.

Trend in Mortgage Rates:

The chart below shows the trend in mortgage rates over the past year:

Mortgage Rate Lock Advice:

Mortgage rates are no longer at their lows of 2010. Yesterday, the price of the FNMA 30-Year 4.5% Coupon closed within 60 basis points of its all-time high of 102.69 which was on November 30, 2009. This morning, the MBS coupon was within 16 basis points of that all-time high. As a comparison, what that means is this: if a 30 year fixed mortgage rate was 4.750% with no points yesterday, and if price of the MBS 4.5% coupon were to go as high as 102.69, then the best the 30 year fixed mortgage rate would be is 4.625% with 0.875 point today.

Mortgage rates were already at their lows for 2010. While it's still possible that mortgage rates could go lower again with the ongoing economic crisis in Europe as well as the housing market crisis in China, it won't be by much, and I would not risk the chance waiting for it.

If I was closing within the next 5 - 7 days, I would lock in the rate.

If you are closing in more than 7 days, send me an email to get my rate lock advice.

Be sure to check out today's mortgage rates.

Mortgage Rate Forecast for May 28, 2010

Here are some of the events affecting mortgage rates today:

What Mortgage Backed Securities Are Doing Today:

• The price of the FNMA 30-Year 4.5% MBS coupon opened at 101.72 this morning - the same as yesterday's close.
  
  
• At 9:30 AM, the 4.5% MBS coupon was trading at 101.94 - up 7/32 from its opening.

Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and so do mortgage rates. I expect that mortgage rates will be up to 0.250 points better in price this morning as compared to yesterday afternoon.

Price Trend in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days from 4-28-2010 to 5-28-2010:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

• Personal Income and Outlays Report - there was a 0.4% increase in personal income in April. This follows a gain of a gain of 0.3% in March and a 0.1% gain in February. Year-over-year, personal income is up 2.5%. While income is up, consumer spending was flat in April, indicating people are holding onto their money. Year-over-year, consumer spending is down 4.6%. Inflation is still almost nonexistent as the core Personal Consumption Expenditures (PCE) index is up only 0.1%, the same as in March.
  
  This report provides us with a measurement of the consumer's ability to spend and their current spending habits. Because consumer spending makes up two-thirds of the U.S. economy, any related data usually has an impact on the mortgage market and mortgage rates. This report had no impact on mortgage rates this morning.
  
  
• The Revised University of Michigan Index of Consumer Sentiment - came in at 73.6, better than the 73.3 reading analysts were expecting, and better than the 72.2 reading the previous month. An increase in consumer confidence indicates that consumers may be more apt to make large purchases in the near future. However, consumer sentiment report usually does not have much of an impact on the mortgage market or mortgage interest rates.

In other news, prices of bonds and mortgage backed securities fell significantly yesterday which led to higher mortgage rates as the stock market rallied on comments from China that it would continue investing in Europe.

Trend in Mortgage Rates:

The chart below shows the trend in mortgage rates over the past year:

Mortgage Rate Lock Advice:

Prices of mortgage backed securities are no longer at their highs of 2010. Yesterday, the price of the FNMA 30-Year 4.5% Coupon fell 59 basis points and closed within 97 basis points of its all-time high of 102.69 which was on November 30, 2009. This morning, the MBS coupon was within 78 basis points of that all-time high. As a comparison, what that means is this: if a 30 year fixed mortgage rate was 4.875% with no points yesterday, and if price of the MBS 4.5% coupon were to go as high as 102.69, then the best the 30 year fixed mortgage rate would be is 4.75% with 0.25 point today.

If I were applying for a mortgage today, I would lock the rate as mortgage rates were already at their lows for 2010, and they're now rising. While it's still possible that mortgage rates could go lower again with the ongoing economic crisis in Europe, it won't be by much, and I would not risk the chance waiting for it.

Be sure to check out today's mortgage rates.