Refinance Loan Rates - Good Time To Refinance?

Refinance Loan Rates - Good Time To Refinance?

That all depends on the state of rates compared to the average interest rates secured on home purchase loans. At present the 30-year fixed-rate mortgage averaged 6.25%, declining from the previous week, according to Freddie Mac's latest interest rate survey. But the 5-year Treasury-indexed hybrid adjustable-rate mortgage average reportedly stepped down 4 BPS over the week. Meanwhile, mortgage application volume dropped 8 percent, the Mortgage Bankers Association announced.

Rising Interest Rate Debt
Carrying large home loans along with interest rate debt has been a real problem for midle america. In December, 109,652 properties nationwide entered some stage of foreclosure, RealtyTrac recently announced. The month's activity was an improvement over November, the data indicate. The national foreclosure rate was one new foreclosure filing for every 1,055 homes. A roundtable discussion at a real estate conference last week in New York focused on growing foreclosure filings. One panelist predicted foreclosures will jump 25 percent in 2007.

Fixing Fixed Mortgage Rates
Any end in sight. No. But many loans entering foreclosure can be sold or modified before the lender gets them back. Fixed mortgage rates are expected to remain at 6.5 percent as the 2007 closes. Existing-home sales will decline by about 7 percent and new home sales 8 percent relative to 2006. Both categories are projected to rebound in 2008 by about 3 percent and a further 1 percent in 2009.

Home Refinancing Reduces Interest Rate Burdens
Folks seeking to lower the burden of high rates would do good to opt for home refinancing while rates are at present levels. Lenders are still offering home loan rates under 5.50 which could prove a big saving for homeowners and a preventative alternative to foreclosure and bankruptcy. 

Will A Refinance Wave Revival Take Place In 2007?

Will A Refinance Wave Revival Take Place In 2007?

Many are wondering if the current state of the economy is swelling to produce a new refinance wave. Recent news and economic reports reveal a plausible possibility of a significant increasing in refinancing providing mortgage rates take another deep dip as it did in recent weeks.

The Market Composite Index
The Mortgage Bankers Association (MBA) reports that refinance applications hit highest levels in over a year. The Market Composite Index, a measure of mortgage loan application volume, was 721.2, an increase of 11.4 percent on a seasonally adjusted basis from 647.6 one week earlier. On an unadjusted basis, the Index increased 10.2 percent compared with the previous week and was up 22.2 percent compared with the same week one year earlier.

Refinance Index
The seasonally adjusted Refinance Index increased by 15.8 percent to 2304.4 from 1989.7 the previous week and the Purchase Index increased by 8.7 percent to 463.8 from 426.6 one week earlier. The Refinance Index is at its highest level since September 2005 

Refinance Activity VS Mortgage Activity
The Mortgage Bankers Association (MBA) reports:The substantial decline in mortgage rates over the past six months, greater than 80 basis points in total, has led to a significant increase in refinance activity. The reports continues to point out that the refinance share of mortgage activity increased to 52.6 percent of total applications from 50.1 percent the previous week. The refinance share is at its highest level since April 2004.

How will this impact home refinance activity? If competitive refinance rates remain below 6% expect a significant increase in home refinancing following the sensation produced by the next Fed rate cut.

Home Owner Refinancing News

Freddie Mac expects cash-out activity to remain healthy for the remainder of this year. Currently, 30-year fixed-rate mortgages are are down 40 basis points from their high of 6.8% set in July, according to Freddie Mac. From January 2003 to June 2006, home equity growth ranged from 32% to 200% across the country.

Quarterly home appreciation rates have slowed for the first and second quarter of 2006 to 2.20% and 1.17% the slowest appreciation rate since the fourth quarter of 1999. Slowing home appreciation rate in combination with higher interest rates would slow mortgage equity financing activity. So it's no wonder the fed are contemplating leaving rates untouched. still at present home equity refinancing is robust and should continue as such for a time.

The low rate refinancing resource Refinance Home Loan Rates reports that in recent weeks mortgage rates took a nose dive to level not anticipated. From 6.10% to 5.74% according to the Mortgage101 mortgage rate survey. Now rates are slowing creeping up. But with talk that the fed is considering leaving rates untouched for a time this may spell a fair to good market for homeowner refinancing. figures indicate that over 20% of homeowners did not refinance their homes.

What's In A Word? Defining Home Refinancing

Many a homeowner has been completely stumped by exactly what home refinancing perports to be and how interest rates figure into the process. This is especially so when we consider the need to lock in rates while waiting for the loan to fund.

The Fed has gone to great lengths to revise the definition of refinancing in order to produce more accurate reporting of loans.

Let's take the time to define home refinancing using a number of dictionary and see what light is shed by definition.

If the loan/application is to satisfy and replace an existing loanand both the old and new loan/application is secured by a lien on a dwelling it must be reported as a refinancing.

Therefore a refinancing is a new home purchase loan that satisfies and replaces an existing loan by the same borrower, in which the existing loan is a home purchase loan, and both the existing and the new loan are secured by first liens on dwellings.

Tips: Home refinancing can reduce current interest rates on the mortgage and lower monthly payments while providing cash to fund other projects for or apart from the home.

A -B Acceleration (Mortgage) - Blanket Mortgage

Acceleration (Mortgage)
The right of the mortgagee (lender) to demand the immediate repayment of the mortgage loan balance upon the default of the mortgagor (borrower), or by using the right vested in the Due-on-Sale Clause.

Adjustable rate mortgage (ARM)
Is a mortgage in which the interest rate is adjusted periodically based on a pre-selected index. Also sometimes known as the re negotiable rate mortgage or variable rate mortgage.

Adjustment interval
On an adjustable rate mortgage, the time between changes in the interest rate and/or monthly payment, typically one, three or five years, depending on the index.

Amortization
Means loan payment by equal periodic payment calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance.

Annual percentage rate (A.P.R.)
Is a interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher than the stated note rate or advertised rate on the mortgage, because it takes into account point and other credit cost. the APR allows home buyers to compare different types of mortgages based on the annual cost for each loan.

Appraisal
An estimate of the value of property, made by a qualified professional called an "appraiser".

Assessment
A local tax levied against a property for a specific purpose, such as a sewer or street lights.

Assumption
The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Assuming a loan can usually save the buyer money since this is an existing mortgage debt, unlike a new mortgage where closing cost and new, probably higher, market-rate interest charges will apply.

Balloon (payment) mortgage
Usually a short-term fixed-rate loan which involves small payments for a certain period of time and one large payment for the remaining amount of the principal at a time specified in the contract.

Blanket Mortgage
A mortgage covering at least two pieces of real estate as security for the same mortgage.

B - C Borrower (Mortgagor) - Credit Report

Borrower (Mortgagor)
One who applies for and receives a loan in the form of a mortgage with the intention of repaying the loan in full.

Broker
An individual in the business of assisting in arranging funding or negotiating contracts for a client buy who does not loan the money himself. Brokers usually charge a fee or receive a commission for their services.

Buy-down
When the lender and/or the home builder subsidized the mortgage by lowering the interest rate during the first few years of the loan. While the payments are initially low, they will increase when the subsidy expires.

Cash Flow
The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income producing property (mortgage payment, maintenance, utilities, etc.)

Caps (interest)
Consumer safeguards which limit the amount the interest rate on an adjustable rate mortgage may change per year and/or the life of the loan.

Caps (payment)
Consumer safeguards which limit the amount monthly payments on an adjustable rate mortgage may change.

Certificate of Eligibility
The document given to qualified veterans which entitles them to VA guaranteed loans for homes, business, and mobile homes. certificates of eligibility may be obtained by sending DD-214 (Separation Paper) to the local VA office with VA form 1880 (request for Certificate of Eligibility)

Certificate of Reasonable Value (CRV)
An appraisal issued by the Veterans Administration showing the property's current market value.

Certificate of veteran status
The document given to veterans or reservists who have served 90 days of continuous active duty (including training time) It may be obtained by sending DD 214 to the local VA office with form 26-8261a (request for certificate of veteran status. This document enables veterans to obtain lower down payments on certain FHA insured loans).

Closing
The meeting between the buyer, seller and lender or their agents where the property and funds legally change hands. Also called settlement. closing costs usually include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement. The cost of closing usually are about 3 percent to 6 percent of the mortgage amount.

Commitment
A promise by a lender to make a loan on specific terms or conditions to a borrower or builder. A promise by an investor to purchase mortgages from a lender with specific terms or conditions. an agreement, often in writing, between a lender and a borrower to loan money at a future date subject to the completion of paperwork or compliance with stated conditions.

Construction loan
A short term interim loan to pay for the construction of buildings or homes. These are usually designed to provide periodic disbursements to the builder as he progresses.

Contract sale or deed:
A contract between purchaser and a seller of real estate to convey title after certain conditions have been met. It is a form of installment sale.

Conventional loan
A mortgage not insured by FHA or guaranteed by the VA.

Credit Report
A report documenting the credit history and current status of a borrower's credit standing.

D - E Debt-to-Income Ratio - Escrow

Debt-to-Income Ratio
The ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long-term debts is divided by his or her gross monthly income. See housing expenses-to-income ratio.

Deed of trust
In many states, this document is used in place of a mortgage to secure the payment of a note.

Default
Failure to meet legal obligations in a contract, specifically, failure to make the monthly payments on a mortgage.

Deferred interest
When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding it to the loan balance. See negative amortization

Delinquency
Failure to make payments on time. this can lead to foreclosure.

Department of Veterans Affairs (VA)
An independent agency of the federal government which guarantees long-term, low-or no-down payment mortgages to eligible veterans.

Discount Point
see points

Down Payment
Money paid to make up the difference between the purchase price and the mortgage amount.

Due-on-Sale-Clause
A provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home.

Earnest Money
Money given by a buyer to a seller as part of the purchase price to bind a transaction or assure payment.

Entitlement
The VA home loan benefit is called entitlement. Entitlement for a VA guaranteed home loan. This is also known as eligibility.

Equal Credit Opportunity Act (ECOA)
Is a federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs.

Equity
The difference between the fair market value and current indebtedness, also referred to as the owner's interest. The value an owner has in real estate over and above the obligation against the property.

Escrow
An account held by the lender into which the home buyer pays money for tax or insurance payments. Also earnest deposits held pending loan closing.