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.

Bad Advise Regarding Shopping Mortgage Rates.

Bad Advise regarding Shopping Mortgage rates.



I recently read an article that started off saying that encourage a person contemplating home financing to shop rates is bad advise. Say What? When you consider that recently overnight rates dipped and that 30 year fixed-rate mortgage averaged 5.67 percent in the week ended Jan. 20, down from last week when it averaged 5.74 percent, I say keeping an eye on rates is a big deal. Shopping rates means becoming aware of what the current rates actually are.



True bad advice is easy to give. But When a very popular MSNBC financial expert wrote an article, published in Yahoo's financial section, which implied if your FICO score is lower than 600, you can expect to pay an extremely high rate of interest on your mortgage, well the truth is the truth. Just don't settle for it.



I do appreciate the writers point saying if you have challenged credit, don't let any "professional advise giver" imply, that you can expect to pay a 9% interest rate on your mortgage. But rate watching is essential to finding a good deal.



The writer goes on to say that little pre application work, you can in fact have a 500 to 600 FICO score and get just as nice an interest rate as someone with a 680 to 750 FICO score on a standard 30-year conventional fixed loan.



But here is the contradiction. He adds that 50% of higher interest rate home buyers could have qualified for a lower interest rate conventional loan product. What? Now we're back to shopping rates? Yes we are.


Your wrap up tells it all. You say to credit challenged home buyers, you can use the FHA loan program to buy your home for far less than any alternative loan program available. Your closing costs typically will be higher, however, your rate will be equal to the prevailing conventional mortgage rate. Here you imply that one should by all means compare rates to what is on the market.



You even go so far as to say opt to pay higer closing costs to get you hands on lower rates. Good advice but what a contradiction. You say shopping rates is a bad idea yet your whole focus is on buying a lower rate.



Folks, focus on your rates and do whatever it takes to get a good one.