Fixed Rate Mortgages
So is it true 30 year fixed rate mortgages are at 3.25%? Well that depends on how you look at. The answer is yes if you willing to invest discount points to purchase your interest rate down, so long as your financial profile is completely flawless. Otherwise for the 99.9% us, 30 year mortgages are trailing between 3.5% to 4.25%. That’s been the reality of the mortgage bond market over the last few weeks since the 30 year fixed rate mortgage hit an all-time record of 3.53% on July 19, 2012.
30 year mortgage rates you see on television and the internet are not the best barometer of where rates truly are…
Here’s why: the bond market is moving all day long in multiple different directions based on how trades are being executed on Wall Street. Once the news hits the media, the information is immediately outdated and new information is regurgitated through the system, making such commodities as a 30 year mortgage rates, yesterday’s information. Yesterday’s information does not help you lock in an interest rate. That said, 30 year fixed-rate mortgages are still quite low and it’s a matter of locking a rate based on a favorable lock day.
For example a good time to lock in on a 30 year fixed rate mortgage is any day when the bond market is improving or just before rates begin to rise based on any economic event. A good loan officer will have access to the trading mortgage bonds so they can pinpoint the best time to lock in the interest rate. Usually, the stock market has to be in liquidation mode in order for it to be a favorable lock day. Another good time to lock in a mortgage rate, is when the appraisal on your mortgage loan comes back so you know what loan-to-value you’re dealing with and you don’t risk the integrity of the loan-to-value which impacts the interest rate. Independent of these mortgage tips, is the constant reinforcement by the media of the possibility to always get a lower mortgage rate. Confused by Mortgage Jargon? See Jargon Buster.
So let’s get real about a couple of things:
- the media provides yesterday’s information
- the media does not have any influence on your ability to qualify for, let alone select what you’re mortgage rate will ultimately receive
- because the media operates on outdated information, you would be better served getting the real snapshot on mortgage rates from a mortgage professional who actually has access to the trading of mortgage bonds which control rates
All these mortgage tips make sense, but…
I still keep hearing that I can get a 30 year fixed rate mortgage without points, even a no cost 30 year fixed rate mortgage at 3.25%, what gives?
*Know This: 30 year fixed rate mortgages that are advertised usually reference a loan scenario depicting a primary residence, 780 middle credit score, 60% loan to value, high cash assets, loan under $417,000, a conventional loan and an impeccable credit report. This automatically eliminates almost all potential borrowers but, nonetheless, the loan program is a huge characteristic of the interest rate you will qualify for.
*Know This: your credit score, debt to income ratio, and the occupancy of the property and the property type will also influence your mortgage rate.
So let’s look at the loan programs!
Following is a list of programs and the common interest rates associated with them, remember the rate ranges when comparing to “advertised mortgage rates.”
Standard conventional 30 year fixed rate mortgage loan: even for the best credit situation like depicted above, the interest rate is going to be at least somewhere between 3.5% and 3.75%. If you’re looking interest rates at 3.25% advertised in a media outlet, you can assume that real rates can be upwards of .5% off in rate due to the ebb and flow of money in the mortgage bond market.
HARP 2 Refinance 30 year fixed rate mortgage loan: if the loan to value is anything up to 120% loan to value you can assume an interest rate of at least 3.875% or more. If your loan to value is above 120%, you can expect interest rate between 4.0-4.125%. Real rates on this program can be upwards of .75% off in rate
Government Loans such as FHA loans, VA loans and USDA Loans: These programs all contain some form of mortgage insurance which inherently makes these loans costlier anyway when compared to a standard conventional 30 year fixed rate mortgage without mortgage insurance. So government loans, while the interest rates are quite low, the loans are actually a bit higher in terms of long-term investment. Real rates on these programs can be upwards of 3.625%-3.75% off from an advertised interest rate.
Consider interest rates relative to the mortgage loan program you qualify for. Generally, real rates are typically .5% different than rates you’ll see or hear about in the media. We hear borrowers say after after locking in an interest rate, “I heard rates went down again can we do any better?” This depends on your mortgage lender’s ability to do what’s called an interest rate renegotiation for the lower rate of interest. Some mortgage companies offer them, some mortgage companies do not. Check with your mortgage lender when you’re talking about loan programs and interest rates in deciding whether or not to move forward with that particular mortgage company.
- Using the MIP to Decide- When to Refinance
- When is it Right to Refinance?
- Low Mortgage Rates – Reduce Your Payment or the Length of the Loan?
- How to find a Good Mortgage
- Differences Between Pre-Qualified and Pre-Approved For a Home Loan
- 3 Tips for Saving Money on Your First Mortgage
- Mortgage Protection Insurance vs Private Mortgage Insurance?
- Should I Roll My Mortgage Insurance Premiums Into the Loan?
- Is it a Good Time to Buy REITS?
About Scott Sheldon
Scott was born and raised in Sonoma County, in fact he and his family still call it home. Scott’s career began in the 2000 where he enjoyed a stint in the health and fitness industry. He recognized his passion for helping folks solve problems and soon found his calling in home mortgage lending in 2005. Scott married his sweetheart Tina in March of 2009 and they welcomed their first son Emmett in August of 2010.Family pic 196x295 Scott Sheldon Scott provides quality mortgage origination services throughout Sonoma County and state of California. He holds a solid mortgage practice and is well versed in all areas of mortgage finance including FHA Loans and conventional mortgage financing. What separates Scott from other loan officers is that he treats his clients like friends. Because of this, he has built a strong client base of repeat customers and referrals. Scott believes in making sure his clients and realtor partners are communicated with throughout the loan process and beyond. Scott’s integrity and professionalism can be seen in every facet of his mortgage practice. Additionally, Scott has been featured as a mortgage expert on CNN Money, The Wall Street Journal, and Market Watch among others. Represented by a direct mortgage lender, Scott has the privilege of working with some of the best minds in the industry, which is critical to helping his clients and partners thrive in this competitive market. Scott’s knowledge of mortgage loans, tenacity in making sure you are not just satisfied, but impressed with his service and dedication to keeping up with ever-changing lending guidelines allows him to repeatedly earn the trust of clients and partners alike. Whether you are first-time home buyer, move-up buyer or considering refinancing a mortgage, Scott can help you save money and accomplish your long term financial objectives. When Scott is not in the office originating loans, you’ll find him working out in the gym or spending quality time with his family. Scott enjoys rock music, lifting weights, wine tasting and is quite the movie buff. Scott always likes to share in his clients’ joy when they learn their loan has funded. Scott looks forward to serving you. Get a Sonoma County Mortgage Loan with the best interest rate. Find the lowest mortgage rates Sonoma County Loans. Get preapproval Sonoma County. Scott is Licensed by the CA Department of Corporations NMLS #287389 and is a Senior Loan Officer with W.J. Bradley Mortgage Capital, LLC. Read more: http://www.sonomacountymortgages.com/scott-sheldon/#ixzz23e1FLQlj
Leave a Reply