Lone Star Financing Blog - A Texas Home Mortgage Loan Blog (RSS 2.0 Feed)

Low rates make 15 year mortgages attractive

Historically low mortgage rates are allowing homeowners to pay down their mortgages at a faster rate — even if it means a substantial jump in their monthly payments.

Texas home owners are doing the math and realizing that rates have fallen enough so the increase in payment between a new 15-year mortgage and their current loan is no longer unbearable for their budgets.

The average rate on a 15-year fixed-rate mortgage is below 4% right now, and having a mortgage rate that starts with a “3″ is attractive for people who can afford it.

Savvy home owners are seeing that a 15 year mortgage is essentially a forced savings account for homeowners, given that the higher payments help pay down the principal at a much quiker rate. Many Texans have reverted to the goal of paying off their house and getting rid of their mortgage.

Doing the Math - Refinancing into a shorter-term mortgage isn’t a strategy for everyone, however.

Choosing a shorter term usually means you’ll get a better rate — and you’ll pay much less interest over the life of the loan — but a shorter timeframe ramps up monthly mortgage payments significantly.

For example, with a 4.5% interest rate on a 30-year fixed-rate mortgage of $200,000, you would have a monthly payment of $1,015, including principal and interest. That same monthly payment jumps to about $1,480 with a 4% interest rate on a 15-year fixed-rate loan.

Of course, if the refinancing borrower’s current 30-year loan has a higher rate, the difference between the monthly payments could be less. Still, you should count on some increase in monthly payments.

Is a 15 year mortgage right for you? Homeowners shouldn’t take on a 15-year fixed-rate mortgage unless they have substantial savings, including at least a year’s worth of living expenses in liquid accounts. Also, it is recommended he recommends having a debt-to-income ratio below 35%. So if you have a gross salary of $5,700 per month, for instance, your monthly debt — including any mortgage payments, taxes, insurance, homeowners-association dues as well as auto and student loans and credit-card debt — would have to be a max of $1,995 to get a 35% ratio.

Option to 15 year mortgage - Make That Extra Payment

Borrowers who don’t meet those standards, or are worried about future loss of income, might be better served taking a longer-term mortgage but making extra payments to the principal to pay off the loan faster.

For instance, if you refinance a $200,000 mortgage into a 30-year loan with a 4.5% rate, and then apply $100 of the savings to the principal payment each month, you’d save $31,700 in interest over the life of the loan. And you would pay off the mortgage in 25 years, instead of 30 years.

Mortgage rates at lowest in 50 years

National average for a 30-year fixed loan dips to 4.58%. Mortgage rates have sunk to the lowest level in more than five decades- Mortgage company Freddie Mac said Thursday the average rate for 30-year fixed loans sank to 4.58 percent this week.

That’s down from the previous record of 4.69 percent set last week and the lowest since the mortgage company began keeping records in 1971. The last time they were cheaper was the 1950s, when most long-term home loans lasted just 20 or 25 years.

Rates have fallen over the past two months. Investors wary of the European debt crisis and the stock market have shifted money into the safety of Treasury bonds, driving down yields. Mortgage rates tend to track the yields on long-term Treasurys.

On Wednesday, the yield on the benchmark 10-year Treasury note dropped to 2.95 percent. That was the first time it has fallen below 3 percent since April 2009, when the markets were beginning to recover from the financial crisis.

But tighter lending standards and declining home equity have made it difficult for many borrowers to refinance. Many who do qualify have already done so over the past 18 months.  Current Texas mortgage rates

Take advantage of this historic time and refinance your home today! 

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No Better Time to Buy or Refinance than Right Now!

Mortgage rates are at historic lows -there is no better time to buy a home or refinance than right now!

As of Thursday May 27th 2010, mortgage rates have hit historic lows and fallen to the lowest level of the year. Current European turmoil has caused investors to pour money into the safe haven of U.S. government securities. The average rate on a 30-year fixed rate mortgage dipped to 4.75% this week from 4.875% a week earlier. This is the lowest mortgage rates since early December when rates fell to a record 4.71%.

Concerns over the European debt crisis have sent yields for 10-year and 30-year Treasury bonds to their lowest levels of 2010. Rates on 30-year home loans often rise and fall in line with the 10-year note.

A campaign by the Federal Reserve to reduce borrowing costs for consumers pushed rates down to extraordinarily low levels last year. Rates were expected to rise after the program ended this spring. Instead, they have dipped. Fears that Greece’s government would default on its debt shook world markets and boosted demand for U.S. Treasury’s.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

REFINANCE NOW!  If your interest rate is currently higher than 6% and you have lived in your home for more than 3 years then please contact us today.   Home homeowners that do refinance typically get to skip one months mortgage payment. Start saving and lock in a low rate today!

Contact Lone Star Financing today to speak to a friendly mortgage consultant 1-800-585-6886

Rates Slip to Six Week Low

Rates for 30-year fixed mortgages have fallen to their lowest level in six weeks. The average rate for 30-year fixed-rate mortgages was 4.875% this week, down from last week when it averaged 5.06 percent. A year ago, 30-year fixed rate mortgages averaged 4.84 percent,and many mortgage analysts expected rates to trickle up this Summer, but with real estate still shaky the Fed continues to hold down rates.

Rates dropped to a record low of 4.71 percent in December, pushed down by a campaign by the Federal Reserve to reduce borrowing costs for consumers. The program ended at the end of March, but the Fed left the door open to reviving the program if the economy weakens.

The last time rates for 30-year fixed mortgages averaged less than 5 percent was the week of March 25, when they were 4.99 percent.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often tracking the interest rate paid on long-term Treasury bonds.

This week, the average rate on a 15-year fixed-rate mortgage was 4.36 percent, down from last week when it averaged 4.39 percent.

Rates on five-year, adjustable-rate mortgages averaged 3.97 percent, down from 4 percent a week earlier. Rates on one-year, adjustable-rate mortgages dipped to 4.07 percent from 4.25 percent.The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.

The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 of a point for 30-year, 15-year, and 5-year loans, and 0.6 of a point for 1-year loans.

With rates at 30 year lows and bargain house prices, it’s still a buyer’s market. Current Texas mortgage rates

Changes Coming to FHA!

Before the conventional mortgage loan market collapsed, approximately 10% of home buyers utilized FHA financing.   Conventional loans were king.  Borrowers who had less than perfect credit and little money down could utilize the FHA programs to purchase a home.  FHA required 3 percent down and the seller could contribute up to 6 percent in seller paid closing costs. A buyer who purchased a $200,000 home with the seller paying 6% in seller paid closing costs needed only $6,000 in down payment and about $1,000 in additional cash to cover buyer paid closing costs.

Today approximately 41% of all loans originated by mortgage banks are issued and insured by FHA. The reason for the sudden use of FHA insured loans is due to the stringent conventional mortgage guidelines and lack of insurability of conventional loans where the buyer does not have 20% for down payment.   Today a buyer who wants to use a conventional loan to purchase a home needs a  680 credit score and the combined housing and credit debt ratio cannot exceed 41 percent of the buyers gross income.

FHA will in some instances allow a higher debt ratio if the borrower has good quality risk factors such as great credit, cash reserves in the bank and job stability. FHA now requires borrowers to be on their current job at least 6 months.
Due to the number of defaults on loans in the past year FHA loans are changing. Today FHA requires only 3.5% down however this will be changing. FHA will require 5% to 10% down when utilizing an FHA loan.  They are taking away the ability for a seller to contribute 6% to assist the buyer to pay closing costs. The seller will be able to contribute up to 3.5%, the same as a conventional loan. Also the upfront mortgage premium is going to be increased from 1.75% to 2.25%.

If you are a home buyer and utilizing FHA now is the time to purchase that home before these changes go into effect! Remember you must be under contract by April 30, 2010 and settle by June 30th, 2010 to also take advantage of the tax credit!

Ryan Collins
Lone Star Financing
13812 N Hwy 183, Ste B4
Austin, TX 78750
Phone - 800-585-6886

Senate Passes New Tax Credit For Home Buyers

Buying a home is about to get cheaper for a whole new crop of homebuyers ? $6,500 cheaper.

The Senate voted Wednesday to extend and expand the tax credit to include many buyers who already own homes. The House is scheduled to vote on the bill Thursday.

Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers ? or anyone who hasn’t owned a home in the last three years ? would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30.

“This is probably the last extension,” said Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits.

The real estate industry has been pushing to extend and expand the housing tax credit. About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.

Extending and expanding the tax credit for homebuyers is projected to cost the government about $10.8 billion in lost taxes. While the measure passed the Senate by a 98-0 vote, Sen. Kit Bond, R-Mo., questioned its efficiency in stimulating home sales.

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.

The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.

This is a great time to buy for first time home buyers and home owners that have owned their homes for more than five (5) years.  Couple this with historic interest rates and this equates to a fertile opportunity for many buyers.

Jason McGuire
Lone Star Financing
13812 N Highway 183 Ste B4
Austin, TX 78750-1238

Main: 800.585.6886

Daily Rates on Twitter.com/LoneStarRates
Apply Online Matt.LoneStarFinancing.com

Is it a Good Idea to Purchase a New Home in this Economy?

Historically, owning a home has always been a good, sound investment and even though our economy is going through some rough times and home values have fluctuated the past year or two, owning a home continues to be a smart investment. A few reasons to support home purchasing as a good investment is due to low rates, decrease in home pricing, and government backed incentive programs. 

You may be thinking, ?yeah, right?. We all watch the news, read the papers, and the housing market is down, defaults and foreclosures are up and banks are making it more and more difficult to get loans without ?A Paper? credit.  
While good credit is a must, it doesn?t have to be perfect. Most of the time, having a 620 will open several doors for you. In addition to that, if you have a job and a regular paycheck, you?ll find that there are plenty of options for you to consider with a new mortgage and rates, while not at the same low point from maybe a year ago, are still great!
If you consider that on average, home values go up 5-8% every year, the return investment of a home can be much higher than buying stock. Let?s say you purchase a $100,000 home and put 10% or $10,000 down. At a 5% annual growth rate, that $100,000 home would be valued at $105,000 its first year.  Earning 50% of your initial down payment back in the first year is a great return! If you?ve ever played with money in the stock market, you know that?s not only a rare find but one you definitely want to jump on. It?s difficult finding investments with that sort of return.

Here?s another way to look at it over a longer time span:  If you had put $10,000 into the stock market in 1996, the average annual S&P return would make that investment worth a little over $21,000. That?s an increase of only a little more than $11,000. The median home price in 1996 was $140,000. Today, that home would have gained almost $100,000 in value.

Now is definitely a good time to take advantage of the market and reap all the benefits of home ownership.  This market is providing a unique opportunity for people to get the biggest bang for their buck and you don?t want this ship to pass you by! Please feel free to contact me directly for more information or to get pre-qualified for your new home purchase. Tiffany (@) lonestarfinancing.com

How new HERA laws can affect you!

On July 30, 2009 legislation went into effect that is impacting the timeliness in which Texas Mortgage Companies can close a mortgage loan.  This new law is called HERA which stands for new Housing and Economic Recovery Act. This piece of legislation is intended to protect the borrower from deceptive lending practices.  If your broker/lender is not educated on this new law, it can cause numerous delays.  As a Texas Mortgage Banker, Lone Star Financing and our mortgage team has embraced the new laws and changes that shape our industry. 

Below is a summary of what the HERA law entails.

1.       Other than a credit report fee, no upfront fees can be collected until 4 days after the initial disclosures have been signed by the borrower.  This change prevents Texas mortgage lenders from collecting any sort of upfront fee just to look at your file.

2.       Along with the collecting of upfront fees, the appraisal cannot be ordered until the fourth day after the initial disclosures have been signed by the borrower.

3.       The borrower is to receive a copy of the appraisal three days prior to closing.  This prevents the borrower from having to send a letter requesting a copy of the appraisal that they paid for.

4.       A final good faith estimate and truth in lending must also be signed three days prior to closing.  If the APR changes by more than .125%, the borrower must resign and date the good faith estimate and truth in lending.  This creates a new three day wait period.  This is in place to prevent initial undisclosed fee changes at closing.  There is nothing worse than going to closing and seeing added fees to your settlement statement.

Now that you understand the new potential delays let me tell you how it can affect your potential client.  The first issue comes up when there is an inspection contingency period in the contract that states you have 10 days to inspect the property once you are in escrow.  With close to 10 day delays on the mortgage side of the transaction with the new HERA law, canceling a transaction due to waiting periods can ultimately cause problems or a loss of your option money.

The second potential problem for you client falls with the lock period.  It is difficult for most Texas Mortgage Companies to lock in the client?s rate for 30 days with no signed documents from the borrower.  Again there are too many delay periods.

Here is the solution to the problem, get PRE-APPROVED first.  This will prevent future delays to your client?s loan process.  With pre-approved clients, Lone Star Financing can close your client?s loan in 30 days or less.

In my opinion the government did need to step in and try to undo the problems facing the mortgage industry today.  HERA may sound like a big problem but in all actuality if you know how to work with the law, everyone ends up pleased.  As I mentioned before, this is nothing new to our group.  If you are a borrower or realtor and have any concerns or questions regarding the new HERA laws, please feel free to email, call or leave a comment below and I look forward to responding to your questions.  
 

Rachel McGuire
Mortgage Banker # 80385
512-750-9197

Rachel (@) lonstarfinancing.com