Are Rates Dipping Or Rising?

"Mortgage Rates Dip Deep"
"Adjusting to rising mortgage rates now reality"
"30-year mortgages fall for 6th week"
"Treasury bill auction sees three-year high on interest rates"
"Mortgage Rates Steady And Low"
"Home Refinance Rates Dip"

Looking at these headlines can make the mind reel for consumers trying to get a fix on where rates are and where there going. The articles themselves identify the rates being discussed. These could be short term rates or long term rates. Adjustable or fixed.

When hearing that rates are rising homeowners who failed to refinance their mortgages in the last year or two probably figure they missed the boat. Reports of rates rising have slowed refinancing compared to the wave seen in 2003 and parts of 2004. What many homeowners don't know is that the boat has apparently come back to the dock. How so?

Months ago economists projected that the interest rates which mortgage rates are tied to, would increase to more than 7 percent once Lender tack on the spread. To the contrary we're seeing rate levels at 5.35 to 5.6 percent on 30-year mortgages and around 5 percent, or even a little lower, on 15-year mortgages.This may be a surprise to some consumers who assume that rates have been rising in tandem with short-term loan rates, which the Federal Reserve Board has been pushing higher since last fall.

While rates are going up on short-term loans and home equity lines - long term mortgage rates are as low as ever.

Tip: Low rates may not last much longer. Real estate market is in its seasonal lull and stronger demand in the spring usually helps push rates higher. If you must get financing for spring and summer projects do it now.

Should I Pay Down My Mortgage Or Refinance?

Giving careful thought to paying down your mortgage is crucial to retaining your home, seeing a return on investments and financial survival. Whether you should or shouldn't is another story. There are some key factors to consider.

It goes with out saying that not paying down your mortgage would leave you with a larger debt burden over time. The issue is whether to take retain this debt or not. Still when refinancing aren't you taking on more debt?

it's not a matter of taking on more debt. Once the mortgage exists, the question then becomes whether we can pay it off early and save or reduce the overall amount of the loan by refinancing and save.

Would paying off the mortgage at a more rapid rate reduce your debt burden? Perhaps, but can you afford to make extra payments to accomplish this? If money is scarce than the alternative might be lowering the rate by refinancing first and then paying down the mortgage debt.

Once the mortgage rate is reduced commense paying down at a more rapid rate. Use the extra funds saved to improve your investment portfolio.

Rising Rates Seen Cutting Home Sales Record

While home purchasing, home refinancing and equity loans were at modest levels, home sales across the nation reached record setting levels in 2004. But rising interest rates will result in fewer new mortgages and fewer homes sold in 2005.



How will this impact loan application figures? According to Interest.com a national mortgage group predicted that loan originations and sales will still remain near record highs. That said home owners will still be rushing into the market for low rate refinancing products in an effort to lower mortgage interest rates, reduce monthly mortgage payments and save if possible thousands of dollars over the life of the loan.



The tempting factor is the offer to take on a cash out refinancing loan. Cashing in can put the borrower in a better financial position so long as some of the funds are invested in a program that results in a good stead return.

Large Percentage Not Shopping Refinance Rates

I am completed floored to find in my research that so many are not bothering to shop interest rates.



Obviosuly there is a common thread when comparing the reasons for this oversight.

I came up with three basics

1. Low credit score jidders

2. Poor negotiation skills

3. Credit card mentality


So what does it all mean?

1. Low credit score jidders: Many loan applications don't bother to consider their credit score as they were not taught to put emphasis on credit standing as a means to get the stuff they want. Perhaps inexperience and the ability to into the family treasury left them ignorant of the need to build up good personal credit standing. Now out on ones own your asked to face yourself in the mirror. Not seeing what you like you fail to negotiate other factors.


2. Poor negotiation skills: Ones credit score should be a cause of concern. But all too often when one is self-conscious about his or her credit standing the option to negotiate rates seems out of reach. Add to this fact that many never learned how to negotiate or put themselves in postion for a more successful loan agreement.


3. Credit card mentality: Another factor is that many who have opted for rather high credit card rates may do the same when seeking a loan. Some don't realize that there is a such thing as a 5.7% fixed rate loan for life.

If You're Going To Cash Out Invest Something

I read an article this week that attributed the borrowing frenzy of the early 2000's to low interent rates. But the key condition that drove this borrowing frenzy was that Fed policy had pushed the rates for new mortgages substantially below the rates of existing mortgages, making refinancing highly attractive.

That said refinancing accounted for over 50% of mortgage applications from 2001 to 2003.

Freddie Mac, said that "cash out" transactions accounted for about 50% of refinancing activity in 2001. That's a lot of cash!

Interestingly many homeowners seeking cash were refinancing with little rate incentive. These characteriscally took out much larger loans. Their main incentive seemed to be tapping into their equity for the purpose of debt consolidation. That's all fine and good. Or was it?

Sure should have to watch there debt appreciates faster than their home. Slay the dragon before it completely consumes you only seems to make sense. But when borrowing for the purpose of getting cash out one should also think in terms of creating a vehicle that brings in a steady return on the very dollar borrowed.

If you must borrow against your house which is a risk in itself, by all means make some of that cash work for you. Here are some ideas.


1. Invest in real estate property (get the grants - tax advantages and all the perks to go)

2. Start a simple but lucrative small business (low overhead essential)

3. Invest in your education - get another degree or some form of certification

4. Invest in stocks - (buy low sell high)

5. Remember that many forms of investment and self improvement come with tax deduction advantages.

That said when the chips are down and you need to draw from a second income to pay a bill or save your house... Boom! Your ready and able.

Rate Hike Leaves Refinancing Rates Low And Steady

The Federal Reserve on Wednesday raised interest rates for the sixth time since last June, as policy-makers continued their efforts to make sure a strengthening economy does not trigger unwanted inflation.

Short-term interest rates to 2.5 percent -- an increase of 25 basis points

Applications Rise
The Market Composite Index, an overall measure of mortgage applications, rose from 658.1 to 706.4 on a seasonally adjusted basis during the week ended Jan. 28, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.

Wednesday's Fed move allowed Treasury yields to remain steady and mortgage rates followed their lead.Home refinancing gains full sway as homeowners prepare for home maintenance projects, remodeling, landscaping vacation season. Interest rates for home refinancing are at a significant low.

Borrowers are cautioned to think twice regarding using the equity in the home to payoff unsecured debt. If you truly cannot afford the it or their is significant risk you could be heading in the direction of foreclosure. That said consider another route. Invest 50% of the funds in something that will bring in a return of income. Opt for a less risky loan deal. Reduce the risk and save your home.

Refinancing and Todays Foreclosure Issues

15-year, fixed-rate mortgages, a popular option for refinancing, dipped. Refinancing averaged 46 percent of all mortgage applications. Fixed 30-year mortgage rates averaged 5.58 percent last week, excluding fees, down 6 basis points from 5.64 percent the previous week.



Consumers opted for mortgage refinancing to lower monthly payments while reducing current interest rates. Many opted to get cash back. This option can add a significant financial burden if the borrower becomes strapped with more debt. Borrowers are encouraged to reduce the risks associated with increased debt such as losing their homes.



Foreclosures have increased 43% largely due to taking on too much credit card and mortgage-related debt. For those seeking to avoid or stop foreclosure The Mortgage Loan Search Financial Network provides detailed information and access to resources than can help. Read the 6 Steps to Stopping Foreclosure at http://www.bcpl.net/~ibcnet/

Rates Dip - Money Saved

The Mortgage Loan Search Financial Network reports an increase in mortgage refinancing over the past three business days.


Applicants are seeking to lower monthly payments, reduce current interest rates with a view to saving money over the life of the loan and get cash back .


15-year, fixed-rate mortgages, a popular option for refinancing, dipped. Refinancing made up 46% of all mortgage applications.


Despite a decline in mortgage rates to the lowest level in several months. Fixed 30-year mortgage rates averaged 5.58 percent last week, excluding fees, down 6 basis points from 5.64 percent the previous week.


Consumers are cautioned to watch out for heavy fees and avoid more debt than the budget can handle when opting for cash out refinancing loans. Home foreclosures are on the increase due to borrowers taking on too much cash.


Still ones interest rate and monthly mortgage payments can be a good way to save money for a rainy day.

Rates Drop Approvals Jump

Mortgage rates drop today while mortgage application approval rises. While new homes sales for December came in far below expectations the year ends with record sales for new homes.


Federal Reserve policy-makers are likely to keep bumping up short-term interest rates this year, a defense against an inflation flare-up now that the economic expansion is on firm footing. Experts predict a quarter-point, short-term interest rate hike tomorrow by the Federal Reserve.