Media reports have been declaring record lows when it comes to mortgage rates. Newspapers, websites and television have been broadcasting how much the rates for home mortgages have gone down over the past twelve months. So it begs the question, are mortgage rates really much cheaper now?

If we dig deeper in to the facts, we will find that rates indeed have gone down. The details of these are in a report that Freddie Mac releases regularly called the Primary Mortgage Market Survey which details the average mortgage rate as well as fee structure. It is the data in this report that the news media dishes out to the public.

However, what we don’t see is that the fees for these home mortgages has actually increased. While mortgage rates according to the survey are now .38% cheaper at year end versus the previous all-time low in January 2008, average fees went up by .40% in that same period.

In this case, mortgage rates are cheaper but not entirely so.

NEW YORK (Reuters) — U.S. mortgage applications fell last week,
reflecting a plunge in demand for home refinancing loans as interest
rates surged to their highest levels since late January, data from an
industry group showed on Wednesday.

The Mortgage Bankers
Association said its seasonally adjusted index of mortgage
applications, which includes both purchase and refinance loans, for the
week ended May 29 decreased 16.2% to 658.7.

Tom Marano, chief
executive of mortgage operations at GMAC, said in an exclusive
interview with Reuters on Tuesday that home loan volume at GMAC is
about 75% lower now than when mortgage rates hit record lows several
months ago.

Home mortgages right now are so crazy. What should we do about them? All of a sudden, the Rich Dad Poor Dad thinking doesn’t seem so smart.

Continue reading Home Mortgage Rant

Okay we’ve talked a lot about Refinancing your loan. But how to do it? What are your options? In this first part, we’re going to show you what options you have when it comes to a refinance move. Your home mortgage will go a long way yet.

Continue reading Refinance Your Loan! Here are Some Ways – Part I

I want to make another case for home refinancing because with the uncertainty of the times, it is a good idea to always know what kind of options you may have when it comes to financing. One of these options may be to take advantage of your home equity through refinancing.

Refinancing?

Home mortgage refinancing means taking out a new loan with a new set of conditions, terms and interest rate and uses it to pay off an existing mortgage. This service is usually offered by a lot of financial institutions, and your current mortgagor may also offer this. A best way to go is to research aggressively for offerings that will give you the best possible interest rate.

Advantages of a Home Mortgage Refinance

Why should you consider refinancing? Could there be any benefit? Yes there are several! Here are some:

(1) Lower monthly payments – you achieve this by extending the terms of your loan. By taking your existing 10 year loan and refinancing this into a 30 year term, you can lower your monthly payments considerably, thereby increasing the cash that you have at the end of each month which you can use for more important causes.

(2) Lower interest rates – with the current credit crunch, loans may be harder to come by, but if you can do it, you can take advantage of such historically low home mortgage interest rates now available in the market.

(3) Instant Cash – Yes, you can get a nice lump of cash by refinancing and applying for a loan larger than what your current mortgage owes. Of course, this is still money you owe, so it would be smart to put this to good use, like renovating your property.

(4) Shorter mortgage – If you have some extra money to spend and you’re not comfortable with having such a long-term, you can use refinancing to take out a shorter-term loan and at the same time take advantage of the lower interest rates that these loans offer.

Of course, refinancing your existing mortgage is not without its disadvantages or cost. We will tackle this more in a later feature.