Latest Mortgage Articles

Long or Short Term Mortgage?

Tue, 14 Jul 2009 15:50:46 -0700

Some people who feel financially secure are considering a mortgage for a shorter duration than the traditional 25-30 years. This can drastically reduce your overall payments, but can also mean that if your situation changes, you will be locked in at a high mortgage payment. Is it worth it to take out a longer mortgage and make extra payments?

One definite advantage of short term mortgages is the interest rates, which can be several points below that of a 25-40 year mortgage. If you are confident that the rates are going down or will stay level, a short term mortgage that repeats may be a smart choice. However, it is difficult for even the most knowledgeable financial analysts to completely predict interest rates, so you should be prepared in case rates take a jump.

If you know you will be moving in the next few years or think you may, a shorter mortgage is going to cost you less in the long run. The disadvantage to this is if you decide to stay in your home for longer than you expected or can't sell by the time the short-term period runs out. For people in a hot home market who are looking at “flipping” a home – selling it relatively quickly after renovation, a shorter mortgage makes sense, as you know you won't be keeping the house around for long.

Life changes affect everybody and it makes sense to be prepared. A death or birth in the family, relatives or friends in need and personal life events can make previous plans for a home suddenly less feasible. While no one wants to dwell on the loss or worsening condition of a loved one, it behooves you to consider how this will affect your home mortgage plans. The loss of your job; how do you plan to pay for the mortgage if you have a drastic reduction in income for several weeks or months? A birth may be a joyful occasion, but it is also an expensive one and one that may make you rethink moving. These things need to be taken into consideration

It seems obvious that shorter-term mortgages are best for people who keep track of interest rates and current events and know what they plan to do with their home. It is also wise to have liquid assets that can be used to cover your living expenses in case of loss of income, unexpected events and the possibility that interest rates will go up when you need to refinance.

What is Mortgage Pre Approval Really Worth?

Wed, 17 Jun 2009 13:18:49 -0700

In 2004, at the height of the home buying boom, a survey came out from Campbell Communications indicating that fully 62% of the failed closings studied were due to home buyers being denied a mortgage – despite having “pre approval”. The company found that 39% of pre approvals issued by Internet-based lenders were invalid. Mortgage brokers were also showing significant signs of unreliability, with 27% of pre approval letters proving invalid. National lenders had their letters fail 19% of the time, while local banks dropped the ball on 14%. Credit unions weren’t far behind at 10% and the mortgage partners of real estate agents came in last with 9% found to be void.

A hot real estate market led many institutions to put through loans that should never have been allowed to get past the initial examination! However it is a cycle that can lead to some injudicious decisions – people want to buy homes, realtors don’t want to show homes to unqualified people, people go to lenders for pre approval… it is a nasty cycle that ends up with a lot of time wasted and sometimes a significant amount of money. It also set up unreasonable expectations on the part of the buyers – “I got pre approved and now I’m not approved at all?” which could very well have led many of them to less scrupulous lenders.

Some people think that the solution is a standardized letter of pre approval that is provided by a national organization such as the National Association of Realtors (NAR) or another recognized national association that can issue out pre approval letters based on a strict examination of the buyer’s proof of income and assets.

Other people think it is incumbent on the lenders to tighten up their pre approval process so that unqualified buyers never get a letter that makes them and the real estate professionals they deal with think that they have a chance at a decent mortgage. It may be cruel, so the thought runs, but so is the time and expense taken to put through a home sale that doesn’t happen. And it prevents financial disasters like today’s recession.

Another key tip for buyers with pre approval is to stop everything. Don’t make a major purchase, don’t change jobs, don’t marry, don’t start trying for a baby – just focus on getting the home purchase finalized. Major changes in one’s financial outlook can be disastrous for the final approval of a loan.

Pre approval does not mean final approval. In fact, if it is from an unreliable source, it means less than the paper it’s printed on. To make sure that a pre approval is genuine, buyers are urged to deal with reputable lenders and brokers, to take critical stock of their financial situation and to avoid making major changes to their lifestyle in the time between pre approval and the closing. To not do so can mean significant amounts of time, effort and money wasted and possibly greater ramifications, like the straits that our economy is presently in.

Crash & Gain: Falling House Prices Means Fantastic Deals for Canny Customers

Sat, 21 Feb 2009 18:24:48 -0800

According to research by Hometrack, house prices will fall a further 10% in 2009. Though this may be grim reading for negative equity sufferers and those hoping to sell, for the lucky few with access to cash and trying to get on the property ladder, it’s all gravy!

According to Richard Donnell, Hometrack's Director of Research, now could be a good time to go shopping for bargains. "You're going to get a really good deal from someone that needs to sell,” he says, “regardless of what type of property it is or where it is in the country."

However, as the market has gone from hot to cold in a matter of months, only those who need to sell, will.

"Seven million people moved home in the ten years up to 2007, but only two million new households were created," Richard continues. "That means we did a huge amount of moving that we didn't need to do. People were trading up on the back of easy credit and confidence in the housing market. Now that's stopped and people are staying put. So if you really want to sell your home today, you’re going to have to take quite a big hit and sell for at least 10% less than what you could get in a more ‘normal’ market."

Cash buyers, first time buyers and those with approved mortgages are in a terrific position to make some genuine savings and investments for the future. “The best deals will come from probate sales, repossessions and auction rooms. There will be semi-distressed sellers in all price bands. But you’re likely to see more bargains in the smaller one to two bed properties.”

How long will it take to get a return?

However, buyers should realise that a new home is unlikely to make you any cash in the short term. “You’ve got to make sure you’re doing it for the long term. I wouldn’t advocate this to anyone who wants to move in two years. If you’re really going to take the opportunity, you’ve got to be thinking about staying for five years plus.”

Richard explains that if this slump is anything like the last recession, it could take four years for prices to bounce back. "In 1992, we were in the middle of a recession and housing started to look affordable, but it wasn’t until 1996 when the economy started to sort itself out, that people began to move home again. So there was a four year delay while the recession worked its way through the system."
Do your homework

If you want a deal, you’ve got to work for it and that includes finding great deals on mortgages. For a bargain new home, “You should keep your eyes peeled, do your research and be on the websites, rummaging around at least two or three times a week.

“If you do your research, you’ll become more and more confident, and when that golden opportunity appears, you’ll know. If you want to find out about auctions, identify the main auctioneering houses in your area and keep checking their websites. Probates tend to go to estate agents, and often estate agents will mark them as such. You just need to keep your eye on what’s on the market.”

Struggling with your Mortgage? 5 Ways to Keep Repossession at BayStruggling with your Mortgage? 5 Ways to Keep Repossession at Bay

Fri, 20 Feb 2009 17:24:50 -0800

Industry body the Council of Mortgage Lenders (CML) estimates that unless action is taken, some 75,000 properties will be repossessed in 2009.

But here’s the good news:

* Help is available in the form of Government schemes
* You can protect your mortgage repayments with MPPI
* You could reduce monthly repayments by remortgaging

So if you are struggling to keep up with your mortgage payments, here are 5 ways that could help keep repossession at bay:
1. Support for Mortgage Interest (SMI)

Those struggling to pay their mortgage after losing their job may qualify for SMI if they are also receiving unemployment benefit. Under this scheme, the Government will pay the interest on the first £200,000.

The Government has also reduced the time people have to wait for it to kick in, from 39 weeks to 13. But exclusions do apply and not everyone will qualify for help from the scheme.
2. Homeowner Mortgage Support Scheme

People who do not qualify for SMI may be able to access the Homeowner Mortgage Support Scheme. People facing a short-term drop in their pay due to losing their job or even just their overtime, can apply to have some of their mortgage interest deferred for up to two years, with the money added to their overall debt.

The scheme is likely to help people where just one member of the household loses their job or where the loss of overtime makes the family budget too tight to manage.
3. Shared Ownership

People facing repossession may be able to sell a stake of their property to a social landlord in a shared equity deal or even sell the whole home and rent it back.

This new mortgage rescue scheme allows struggling homeowners to sell their properties to not-for-profit housing associations, and then remain either as tenants paying an affordable rent or as owners after receiving a loan from the housing association to help cut mortgage costs. But it’s important to note that if you opt for the tenancy option, you will no longer own the home.

Some of these shared ownership schemes currently have only limited coverage and not everyone will be able to benefit. First port of call for advice on the scheme is your local authority.
4. Mortgage Payment Protection Insurance (MPPI)

For those worried about how they would manage if they weren’t working, it may be worth considering taking out mortgage payment protection insurance (MPPI).

MPPI covers mortgage repayments if the holder is unable to work due to an accident, sickness or if they lose their job.

However, policies usually have to be in force for at least 120 days before the holder loses their job/pay and is able makes a claim. This is to avoid people taking out the cover after getting wind their employer is planning job cuts.

Once in force, the policies generally pay out for a maximum of 12 months. Most MPPI policies have fairly standard terms following an initiative by the Council of Mortgage Lenders, so the main area in which providers compete is price.

But, as with all financial products, it’s always important to read the small print, particularly as some policies exclude certain medical conditions and the majority will not cover pre-existing ones.

If you’re interested in an MPPI, Confused.com can quote you on a range of competitive deals.
5. Remortgage

Despite the current credit drought, there are still some great mortgage deals out there. Remortgaging to a better deal could significantly reduce your monthly repayments.

Though take note, even if you remortgage to a cheaper deal, ensure you can keep up the reduced repayments or you still may face the threat of repossession.
Finally...

...it’s worth knowing that lenders are required to treat homeowners with repayment difficulties fairly, and they will often be able to help you find a temporary solution to make repayments more affordable.

So, if facing repayment difficulties, your first step should be to contact your mortgage provider to see what they can do to help.

Repayment or Interest Only Mortgage?

Fri, 20 Feb 2009 07:16:07 -0800

We are so glad this perennial old chestnut has turned up. It allows us to answer the question with the provocative assertion that there is no such thing as an “interest only” mortgage! OK, then, more strictly speaking, there’s no such thing as an interest only loan. The mortgage itself might be interest only. But the capital element doesn’t just disappear. It’s repayable at the end of the mortgage term and you’ll need to be paying into a separate savings plan (an ISA or a pension plan, for example) from which you’ll eventually have to make that repayment.

And that’s the difference between the two types of mortgage, of course? With the straight forward, more “old fashioned” repayment mortgage, your monthly repayments contain an element of both interest and capital repayment (the proportion of interest to capital gradually declining as the amount of the outstanding loan diminishes over time). With it, comes the reassuring knowledge that when it comes to full term, you’ll have paid off the entire debt. Furthermore, if you want to shorten the life of the mortgage and reduce its cost, any increase in monthly repayments will go towards both the interest and capital elements of the loan. So, the repayment mortgage keeps the whole of the loan in one place, under one roof as it were, and tends to offer you greater flexibility in response to changing personal circumstances.

Such security and peace of mind comes at a price, with the monthly repayments tending to be greater than those on an interest only mortgage together with its associated capital savings plan. The repayment mortgage lender may also make it a condition that you take out a mortgage protection policy, which guarantees repayment of the outstanding loan in the event of the mortgagee’s death.

If the monthly commitment demanded by a repayment mortgage is too steep for you, then it’s certainly worth investigating an interest only mortgage and an associated investment or savings plan. Your monthly commitment is likely to be lower.

By paying less, however, you should be clear that you are also assuming a greater part of the longer-term risk. Like most of the risks on the financial markets, you can win or you can lose. In this instance, the investment or savings plan that you open in order to provide the capital repayment on the full term of am interest only mortgage could succeed very well and leave you not only with the wherewithal to repay the capital loan but also with a handsome cash bonus. On the other hand, if your investment scheme fails to deliver as promised, you could be left without enough to repay the capital loan and still owe money on the property even when the mortgage payments have finished.

There is one particular category of buyer, however, for whom the interest only mortgage is going to have a particular attraction. For the buyer who intends to let the property purchased – i.e. a prospective landlord – an interest only mortgage not only offers the benefit of cheaper repayment terms, but also potential tax advantages. An expenditure the landlord can offset against rental income is the interest he needs to pay on his loan. He cannot offset the capital element of his repayment mortgage, on which the interest element will be steadily declining over the years. It will be to his advantage, therefore, that the interest only mortgage offers a constant rate of interest, and a constant source of expenditure against which to offset rental income, throughout the life of the mortgage.

So, just to recap, a repayment mortgage can be great for people who

* Want the peace of mind that at the end of the mortgage term, their debt, including interest, will be paid off in full

While an interest only mortgage may be suited for:

* Landlords
* People who cannot afford to pay off the interest and capital on the borrowing but having a suitable savings vehicle which will clear the capital at the end of the mortgage term

Mortgage Rates Hold Steady

Mon, 02 Feb 2009 19:45:47 -0800

Mortgage rates for the most part held steady this week. The 30 year rate dropped from 5.12 to 5.10. Rates are still at historic lows. The rates for the last month have all been below anything we have seen in the last 40 years since we started tracking weekly mortgage rates. The 15 year rate held steady at 4.8. The 5 year arm rose from 5.24 to 5.27 and the 1 year arm dropped from 4.92 to 4.90. What the numbers below don't reflect is that rates mid week were a little higher midweek. But by the end of the week they had fallen. Below are rates for the last few weeks.

Jan 29, 2008
30-yr 5.10 15-yr 4.80 5-yr ARM 5.27 1-yr ARM 4.90

Jan 22, 2008
30-yr 5.12 15-yr 4.80 5-yr ARM 5.24 1-yr ARM 4.92

Jan 15, 2008
30-yr 4.96 15-yr 4.65 5-yr ARM 5.25 1-yr ARM 4.89

Jan 08, 2008
30-yr 5.01 15-yr 4.62 5-yr ARM 5.49 1-yr ARM 4.95

Dec 31, 2008
30-yr 5.10 15-yr 4.83 5-yr ARM 5.57 1-yr ARM 4.85

If you are planning on putting 20% down the 5 year arm and the 1 year arm are pretty pointless. The 5 year arm is above the 30 year fixed rate. The 1 year arm is below the 30 year fixed but doesn't really offer enough savings to be worth the tradeoff of forgoing locking in at historic lows. We have seen a trend recently where on some properties banks are allowing borrowers to get 10 percent down for a 5 or 1 year arm but are requiring 20 percent for a 30 year loan. I am not sure why banks are favoring arm's since that is what got them into this mess. Ok so in addition to looking at rates lets look at mortgage payments. We looked at a mortgage payment based on today's rates for a 200k loan. We also did the same thing looking at rates from 2 weeks ago (which was all time low point for the 30 year fixed rate mortgage). We also looked at rates from 2 months ago.

Jan 29
30-yr 1085.89
15-yr 1560.82
5-yr ARM 1106.88
1-yr ARM 1061.45

Jan 15
30-yr 1068.75
15-yr 1545.36
5-yr ARM 1104.4
1-yr ARM 1060.23

November 20th
30-yr $1204.24
15-yr $1658.67
5-yr ARM $1182.43
1-yr ARM $1109.36

As we can see although a mortgage payment would have been a little less 2 weeks ago all in all rates and mortgage payments have not changed that much. But we are still seeing substantial savings from 2 months ago.

So what is our advice. It should be pretty obvious but with rates at all time lows the time to refinance is now. In addition, if you are currently thinking of getting a mortgage I would lock in an interest rate sooner rather than later.

In general there is still more of a risk of rates going up over the next month than down. Rates simply don't have that much room to fall. So most likely we should see rates hold even or rise over the next month. In addition, there is a risk that rates could rise rapidly over the next 6 months if the economy improves.

Central Texas Profiles : Marble Falls, Texas

Sat, 31 Jan 2009 23:17:15 -0800

Located just 47 miles northwest of Austin, Marble Falls is in the middle of the Highland Lakes area, the largest chain of lakes in Texas which are Lake Marble Falls, Inks Lake, Lake LBJ, Lake Buchanan and Lake Travis. With a population of 7,200 it is a beautiful little town.

Surrounded by rolling hills and lakes, Marble Falls is the perfect place to work, live and play. Visitors and residents should not have problems with finding something to do in this small community.

Downtown Marble Falls has a six block area that has been restored for shopping. There are antique shops, restaurants and a relaxing walk near Lake Marble Falls.

Visitors can also take a "Vanishing Cruise." It is a cruise on the Colorado River, above Lake Buchanan. On the cruise visitors can see beautiful Bald Eagles in their winter homes. It is an awesome site and something the entire family can enjoy.

For those who enjoy the hill country and Texas wines, take a tour of the several wineries in the area. They include Fall Creek Vineyards, Flat Creek Vineyards, Spicewood Vineyards and many others. On the tours visitors can sample the wine and see the beautiful landscape. The vineyards here easily rival any Napa Valley wine trail.

For the golf lovers, Marble Falls has that covered too! There are several golf courses in the area which include Horseshoe Bay Resorts' Applerock, Caprock and Slickrock. This is just a few.

Marble Falls also hosts the "Lakefest Drag Boat Races." The races take place on the second weekend every August on Lake Marble Falls. It is a National Championship race, and brings in fast boats, drag boat racers and excitement. This event is something to see, and is very exciting.

Marble Falls Economic Development Corporation has worked hard putting the community on the map, starting with the "Sculpture on Main." This is a public art program that exhibits outdoor three-dimensional art work that is placed in highly visible places in the community.

Another place to visit in Marble Falls is the Hill Country Community Theatre. This theatre is nationally recognized and has a year round session for adults and children, which include comedies, drama and musicals. It is a wonderful place to visit and has been a great asset to the community.

Another theatre in Marble Falls is The Uptown Marble Theatre. This theatre is located on Main Street in the downtown historic district. It is a non-profit organization that promotes art and entertainment to the community. They have live music of all genres, comedy and drama. It is a unique experience and is worth visiting.

The natural beauty of Marble Falls is its location. In the middle of beautiful lakes and rolling hills, this community is ideal for visitors, tourists, retirees and second homes and well as vacation homes. There is plenty to do and see in this community.

If you would like more information on Marble Falls, contact the Chamber of Commerce.

Mortgage Rates Move Up For First Time In 3 Months

Sat, 31 Jan 2009 22:08:35 -0800

All good things must come to an end. After 12 weeks of falling rates interest rates went up this week. The 30 year rate went back above 5 jumping from 4.96 to 5.12. Below are rates from the last few weeks and October 30 which was when rates first started to fall.

Jan 22, 2008
30-yr 5.12 15-yr 4.80 5-yr ARM 5.24 1-yr ARM 4.92

Jan 15, 2008
30-yr 4.96 15-yr 4.65 5-yr ARM 5.25 1-yr ARM 4.89

Jan 08, 2008
30-yr 5.01 15-yr 4.62 5-yr ARM 5.49 1-yr ARM 4.95

Dec 31, 2008
30-yr 5.10 15-yr 4.83 5-yr ARM 5.57 1-yr ARM 4.85

Dec 24, 2008
30-yr 5.14 15-yr 4.91 5-yr ARM 5.49 1-yr ARM 4.95

October 30, 2008
30-yr 6.46 15-yr 6.19 5-yr ARM 6.36 1-yr ARM 5.38

Basically 30 year rates dropped back to what we saw at the end of December. Looking at the other major mortgage products, the 5 and 1 year Arms are still pretty much irrelevant. The 5 year Arm is above the 30 year mortgage rate and the 1 year arm is not much lower than the 30 year mortgage rate so both of them are pretty much dead. The 15 year rate on the other hand is still a viable option. This week the 15 year mortgage rose from 4.65 to 4.80. Still the 30 year mortgage rate is by far the most popular mortgage product over the last few months.

Although rates have risen recently we still don't want to lose the fact that rates are still historically low. In fact if we ignore the last 3 weeks today's rates are still at 40 year lows. Moving on lets look at mortgage payments. Taking today's rates we used our mortgage calculator and determined what the mortgage payment would be on a 200k loan. We also determined mortgage payments based on rates from two weeks ago and from one month ago. We also translated rates from October 16th into a mortgage payment.

Jan 22, 2008
30-yr 1088.35
15-yr 1560.82
5-yr ARM 1103.16
1-yr ARM 1063.88

Jan 8th
30-yr $1074.86
15-yr $1542.28
5-yr ARM $1134.32
1-yr ARM $1067.53

Dec 24
30-yr 1090.82
15-yr 1572.22
5-yr ARM 1134.32
1-yr ARM 1067.53

October 16th
30-yr $1258.87
15-yr $1702.87
5-yr ARM $1217.16
1-yr ARM $1093.28

So basically what we see is that we are not seeing too much movement over the last month. But the saving compared to a few months ago is pretty substantial. For a 200k loan, compared to payment one would have from the rates on October 16th the mortgage today would be 16% less or $170.52 less.

So what are we going to see moving forward? It looks like rates are going to move up in the short term but I don't think they will go above 6 for the next month or two. Long term through the general expectation is that rates are going to rise perhaps as high as 15%. This is basically the fallout from the Fed pushing billions into the economy.

Mortgage Rates Fall For The 12th Week In A Row

Mon, 26 Jan 2009 03:24:06 -0800

This is getting just ridiculous. This is now the 12th week in a row where mortgage rates have fallen. Ok one small caveat to that this is the 12th week where the 30 year mortgage rate has fallen. But in the current environment the 30 year mortgage rate is almost the only mortgage product that matters. The 30 year rate fell this week from 5.01 to 4.96. The 5 year arm fell (from 5.49 to 5.25) and the 1 year arm declined slightly (from 4.95 to 4.89). But frankly who cares, as long as these rates stay above the 30 year mortgage (i.e. the 5 year arm) or just slightly below the 30 year mortgage (the 1 year arm) there is no real reason to consider these mortgage products. Rates for a 15 year mortgage rose slightly from 4.62 to 4.65. Below are rates for the last few weeks.

Jan 15, 2008
30-yr 4.96 15-yr 4.65 5-yr ARM 5.25 1-yr ARM 4.89

Jan 08, 2008
30-yr 5.01 15-yr 4.62 5-yr ARM 5.49 1-yr ARM 4.95

Dec 31, 2008
30-yr 5.10 15-yr 4.83 5-yr ARM 5.57 1-yr ARM 4.85

Dec 24, 2008
30-yr 5.14 15-yr 4.91 5-yr ARM 5.49 1-yr ARM 4.95

Dec 18, 2008
30-yr 5.19 15-yr 4.92 5-yr ARM 5.60 1-yr ARM 4.94

So I wanted to look at actual mortgage payments in addition to mortgage rates. When we talk of rates dropping sometimes its interesting to translate those rate drops into real dollars. We translated today's rates into a mortgage payment for a 200k loan. We also looked at rates from two weeks ago and rates from October 30th (this was the date when rates first started to fall).

Jan 15
30-yr $1068.75
15-yr $1545.36
5-yr ARM $1104.4
1-yr ARM $1060.23

Dec 31
30-yr $1085.89
15-yr $1563.93
5-yr ARM $1144.37
1-yr ARM $1055.38

Oct 30th
30-yr $1258.87
15-yr $1708.31
5-yr ARM $1245.77
1-yr ARM $1120.56

So if we look at what mortgage payments would be today compared to October 30th is fairly apparent that rates and correspondingly mortgage payments have plummeted. For a 30 year mortgage on a 200k loan the payment has come down from $1258.87 to $1068.75. That is a drop of $190.12 or 15.1%. That is a pretty huge drop in a few months.

So what is going to happen moving forward. Rates can obviously not continue to go down week after week. At this point I think there is a bigger risk of rates going up than going down. I would be surprised if rates continue to go down for 3 or 4 more weeks. In the next few months I would expect rates to continue to hover around 5 percent plus or minus half a point. Basically the government is going to do whatever possible to keep rates low. In the next two or three years its expected interest rates will rise dramatically. All the money that has been pushed into the economy will at some point increase inflation and this will in turn push up mortgage rates.

Mortgage Rates Continue To Fall

Sun, 18 Jan 2009 18:00:35 -0800

This is now the 11th week in a row where 30 mortgage rates have fallen. It also marks the 4th week where mortgage rates have hit new 40 year record lows. In this market the 30 year mortgage product has become by far the most used mortgage product. This is because the other mortgage rates offer rates similar to the 30 year but with shorter time spans making them somewhat pointless.

The 30 year mortgage fell from 5.10 to 5.01. At this point its hard to see the streak of consecutive drops in the 30 year rate continue much longer. It obviously cant drop forever. I have talked to a few mortgage brokers this week that think 5 is about as low as it will go. A few other think it could get down to 4.5 or so. The 15 year rate dropped from 4.83 to 4.62 making it a little more relevant than it was last week.

The 5 year arm fell to 5.49. As long as the 5 year arm is above the 30 year rate it doesnt really matter what the rate does. The one year arm jumped from 4.85 to 4.95. Although its probably been a pointless mortgage product for a few weeks it would be interesting to see if it rises above the 30 year rate as well. But again there is virtually no reason to get an arm for 4.95 when you can get a 30 year note for 5.01.

Also just in case you were wondering the fact that the 5 year arm is higher than the 30 year mortgage is extremely odd. This is the first time this has every happened. Its simply another sign of the strange mortgage environment we are currently in.

Jan 8, 2008
30-yr 5.01 15-yr 4.62 5-yr ARM 5.49 1-yr ARM 4.95

Dec 31, 2008
30-yr 5.10 15-yr 4.83 5-yr ARM 5.57 1-yr ARM 4.85

Dec 24, 2008
30-yr 5.14 15-yr 4.91 5-yr ARM 5.49 1-yr ARM 4.95

Dec 18, 2008
30-yr 5.19 15-yr 4.92 5-yr ARM 5.60 1-yr ARM 4.94

Dec 11, 2008
30-yr 5.47 15-yr 5.20 5-yr ARM 5.82 1-yr ARM 5.09

Beyond mortgage rates its always interesting to look at actual mortgage payments. Using our mortgage calculator we ran the current mortgage rates on a 200k loan. For good measure we also ran the numbers on the rates from a week ago and rates from October 30th (when rates first started to slide).

Jan 8th
30-yr $1074.86
15-yr $1542.28
5-yr ARM $1134.32
1-yr ARM $1067.53

Dec 31th
30-yr $1085.89
15-yr $1563.93
5-yr ARM $1144.37
1-yr ARM $1055.38

Oct 30th
30-yr $1258.87
15-yr $1708.31
5-yr ARM $1245.77
1-yr ARM $1120.56

The mortgage payment for the 30 year loan dropped $11.03, so not really a huge savings. But if we look back to October 30th we see that the payment dropped $184.01 or 14.62%. This is a pretty huge savings. This means that you would be making the same mortgage payments on a 200k house purchased today as you would have on a 170k purchased on October 30th.

So what is my advice? First of all it certainly makes sense to refinance. For instance, (as in the example above), if you purchased a house on October 30th it certainly makes sense to refinance if you can lower you mortgage payment by almost 15 percent.

If you are planning on buying a house I would probably lock in now rather than later. The chances mortgage rates are going to go up is probably greater than the chances they will come down much more. There is the possibility there will be a 4.5% interest rate from the government. One could risk waiting on that. The only problems if there is no guarantee that will get passed and even if it does we don't know what restrictions might come with a government loan.