Mortgage Update Friday, February 20, 2009

It is becoming increasingly difficult to keep up with the mortgage market these days.  Gone are the days of steady interest rates and new and creative vehicles for financing (thank goodness).  Here our mortgage man – Charles Berg with Coldwell Banker Home Mortgage – puts together his report for this week:

THIS WEEK IN THE MORTGAGE MARKET:  Rates moved down today, but are steady as compared to earlier in the week. One point 30 year fixed rate pricing remains at 4.781%. No point pricing is still at 5.063%. Our Conforming-Plus rates are now extremely low, especially relative to the rest of the market.  One point rates are at 4.875%.  Good jumbo rates are also available with ARM products in the 5s and fixed loans in the 6s. 

This week’s biggest economic news item is the Obama Administration’s new “Homeowner Affordability and Stability Plan.” This initiative has three distinct parts. The first is to improve access to refinances for owners that are currently unable to refinance do to limited equity.  (Only owners that currently have Fannie / Freddie loans will be eligible for this program.)  The second involves helping “at-risk” owners keep their homes by making their existing loans more affordable. In theory, this will be accomplished by providing incentives for lenders and loan servicers to modify loan terms and lower interest rates.  The last part of the plan is to increase government support for Fannie Mae and Freddie Mac. Details on how and when these plans will be implemented are not yet available, but I will be sure to let you know when they are. 

FEATURED STRATEGY I: BUY  Prices are low, rates are extremely low and buyers have the upper hand in negotiation due to large amounts of inventory. When buyers find a home they like, they should make an offer. The opportunity is now.  Homes are not just for sale, they are “on sale.”

FEATURED STRATEGY II: REFINANCE  Most homeowners could think of something to do with $200 or $300 extra dollars a month.  With rates at historic lows, refinancing can save this much money. Here’s a quick example.  A $300,000 loan, fully amortized at 6.25% interest costs $1847 a month.  The same loan at 5.0% interest costs $1610, a savings of $237 a month.

ALSO, AS MORE BUYERS GET GREAT DEALS ON HOMES, VALUES FALL AND REFINANCING GETS HARDER.  VALUE IS THE SINGLE GREATEST CHALLENGE FOR REFINANCES RIGHT NOW. IF YOU WANT TO REFI, YOU SHOULD DO IT NOW, NOT LATER.   

get in touch with Charles at:  charles.berg@mortgagefamily.com