Nashville Real Estate » Mortgage Rates

Is Walking Away from your Mortgage Smart?

admin — Sat, 29 May 2010 00:09:05 +0000

According to CNN Money, “Some homeowners, no doubt, believe that the credit score hit is worth getting out from a deeply underwater mortgage. They may owe, say, $500,000 when their house value is only valued at $350,000. And, they figure, there’s no way it will ever be worth what they owe so it’s better to get out from underneath the burden.

After default, they reason, they can raise their FICO scores by paying all their bills on time and eventually finance another home purchase.

Don’t count on it. While homeowners who default due to economic hardship, such as a job loss or divorce, normally must wait two to five years before buying a home again, walkaways may face double that time.

“It could be well over seven or eight years before [walkaways] are able to obtain a mortgage to buy a home again,” said Jay Brinkmann, chief economist for the Mortgage Bankers Association.

Strategic defaulters might also be charged higher interest rates, even above the levels other borrowers with similar credit scores would receive.”

Strategic Default Affects More than You Think

Clearly, there are cases where this strategic default scenario makes sense. I am not the type of real estate broker who is going to argue that homeownership is for everyone. Nor am I going to make a righteous or impassioned speech about your financial obligations or modern American contract law (admittedly, that dissertation would be fun to compose). I also understand the argument of those who choose strategic default can rent a replacement property for the next decade until they decide to reenter the real estate ownership arena. Honestly, those who argue for strategic default can make the whole scenario sound fiscally responsible and, sometimes, even a tad sexy. Like a renegade cowboy in Deadwood who frequents the ‘Storyville’ areas of town…until Wyatt Earp shoots me, er, him.

The truth is that your FICO score and creditworthiness are driving factors behind more than just real estate purchases. Unless you are flush with the green, this score will not only drive your ability to purchase automobiles, receive student loans and establish trade lines, but it will also aid in determining the interest rate. Obviously, the worse your credit scores are, the higher risk you present to a potential creditor, the higher your effective interest rates will be. This can make digging out of a hole infinitely more difficult should you ever need to lean on credit during any future time in your life.

Most people don’t even understand how their FICO score is calculated or even what it is. Learn about both, straight from the source: What’s in your FICO score

This is a post from Grant Hammond's Nashville Real Estate Blog.

30 Year Mortgage Rates Under 5 Percent, Trouble

admin — Thu, 18 Mar 2010 20:12:58 +0000

At the end of last week, Freddie Mac reported that mortgage rates remained under the 5 percent mark for the second consecutive week, with the average interest on a 30-year fixed loan coming in at 4.95 percent from 4.97 percent a week earlier. Meanwhile, interest on 15-year fixed loans averaged 4.32 percent versus 4.33 percent the previous week. Rates on five-year, adjustable-rate mortgages settled at 4.05 percent, a decline from 4.11 percent the previous week.

Rates dropped to a record low of 4.71 percent in December and have hovered around 5 percent ever since the Federal Reserve began a program to stabilize the housing market by lowering mortgage rates. The theory is that the reduced borrowing rate increases home affordability and thus, home sales. However, you must take into account that the vast majority of lenders have tightened their qualification standards as well as internally restricting total lending limits leading to a much slower housing recovery than initially expected.

30 Year Mortgage Rates Going Up in April?

The Federal Reserve has confirmed their position that it will most likely stop purchasing mortgage backed securities at the end of March. The FED has been collectively buying the securities since January 2009 which kept the housing market from sinking to lower levels. Because the FED has pumped nearly $1.25 trillion into the MBS market, interest rates have held at historic lows during a very critical time for the housing industry. With the FED backing out of securities business there is no question that rates will begin to rise. But how far?

Most experts are undecided on how much rates will increase. Using the 30 year conforming rate as the guide we’re hearing the 30 year rate could land anywhere from 5.75% – 6.0% and fairly quickly. Most experts expect the rates to fluctuate in this range through the fall and then experience another potential increase during the winter months. Regardless of exactly when, mortgage rates will begin to go higher and soon. I am not an alarmist, but I do play the trends. It appears that unless the FED decides to extend their current MBS purchase program, your chance to secure record low interest rates may be drawing to an end.

This is a post from Grant Hammond's Nashville Real Estate Blog.

Mortgage Rates Lower, Stable in Q1 2010

admin — Tue, 12 Jan 2010 01:40:34 +0000

The average interest on long-term mortgage rates fell this past week, after rising for four consecutive weeks. Freddie Mac reports that 30-year fixed mortgage rates averaged 5.09 percent, down from 5.14 percent a week ago and compared with 5.01 percent in 2009. Also, 15-year, fixed loans fell 0.4 percent to 4.5 percent; five-year adjustable-rate mortgages were unchanged; and one-year ARMs declined 0.03 percent to 4.31 percent.

Forecasting Nashville Mortgage Rates

It appears that mortgage rates will remain quite stable in the first quarter of 2010, hovering just above 5 percent. The second quarter of 2010 also looks quite stable with mortgage rates predicted to only rise 0.15 points to around 5.17 percent.

However, the second half of the year appears to be a time when either inflation begins to affect the rate or the Treasury Department purposefully raises the lending rates. Nashville Mortgage rates are predicted to rise another 0.20 percent in Q3 and another 0.20 percent in Q4 leaving the mortgage rate close to 5.57 by the end of 2010.

This is a post from Grant Hammond's Nashville Real Estate Blog.

2010 Mortgage Rate Predictions

admin — Tue, 05 Jan 2010 15:41:25 +0000

Nashville mortgage rates ended 2009 above 5 percent, with Freddie Mac reporting 30-year fixed rates at an average 5.14 percent, still very affordable by historical standards. Although higher long-term borrowing costs late in the year could signal further increases for 2010, new data from Wells Fargo, JPMorgan Chase, and the Mortgage Bankers Association indicates more borrowers are refinancing into 15-year loans in hopes of paying off home debt faster. According to the Mortgage Bankers Association, 15-year fixed loans accounted for nearly 20 percent of refinance applications in October 2009 – up from 9.1 percent in October 2008 and 7.5 percent in October 2007.

The jumbo mortgage market in Nashville will probably see some programs re-introduced, but underwritten more conservatively with larger down payment requirements. No income verification programs may return at premium rates, but from sources other than conventional lenders. No asset verification programs are unlikely in 2010.

Here are a couple mortgage predictions that I agree with from Boston.com’s Sam Schneiderman:

Mortgage guidelines will tighten then relax. Some may become specific to certain types of markets.
Mortgage workouts will be practiced by attorneys that master them. Most lenders will modify only as a last ditch effort to save money.
Interest rates will go up, but probably not as high as many are predicting, possibly due to government intervention.
Financing will be available to those that meet traditional “pre-boom” underwriting guidelines and have the credit score, down payment and job security lenders want to see.
Some seller financing is likely to become more prevalent, especially toward the higher end of the market and in the small multi-family and investment property market.
Residential buyers will buy because they need a long-term place to live and want to control their own environment and costs. Investors will buy for the long term to lock in today’s rates.

This is a post from Grant Hammond's Nashville Real Estate Blog.

Nashville Mortgage Rates Begin to Rise

admin — Thu, 24 Dec 2009 20:03:59 +0000

Nashville long-term mortgages moved closer to 5 percent this week, with interest on 30-year, fixed loans averaging 4.94 percent compared to 4.81 percent last week and 5.19 percent a year ago. Freddie Mac also reports hikes for 15-year, fixed mortgages, five-year adjustable-rate mortgages, and one-year adjustable rate mortgages. The 15-year, fixed rate rose to 4.38 percent from 4.32 percent; the five-year adjustable rate mortgage climbed to 4.37 percent from 4.26 percent; and the one-year ARM jumped to 4.34 percent from 4.24 percent.

Most professionals in the mortgage industry agree that Nashville mortgage rates will begin a slow, but steady rise to the 6 percent range within the next 18 months as the Treasury begins to hedge against inflation. Mortgage professionals also predict a loosening in mortgage qualification over the same period.

For questions about mortgage rates or your current mortgage, email mortgages@RemarkableHomes.com to get expert advice from Wells Fargo Nashville.

This is a post from Grant Hammond's Nashville Real Estate Blog.

Mortgage Interest Rates Move Higher

admin — Tue, 15 Dec 2009 01:39:52 +0000

Mortgage interest rates on 30-year fixed mortgages rose to 4.81 percent last week, after the prior week’s fall to a record low of 4.71 percent, reports Freddie Mac.

While the Federal Reserve’s effort to purchase $1.25 trillion in mortgage-backed securities issued by Fannie, Freddie, and Ginnie Mae has helped keep rates attractive, Freddie Mac chief economist Frank Nothaft says interest rates rose because a favorable unemployment report pushed long-term bond yields up slightly.

With the Fed program projected to end in March, the Mortgage Bankers Association forecast in October that 30-year fixed mortgages will rise to 5.4 percent next year, increase to 6 percent in 2011, and hit 6.3 percent in 2012. Clearly, this would be a great time to refinance your mortgage, if your lender will let you.

This is a post from Grant Hammond's Nashville Real Estate Blog.

Mortgage Rates Set Another Record Low

admin — Mon, 07 Dec 2009 23:42:38 +0000

Mortgage interest has fallen to the lowest level since Freddie Mac began compiling its weekly survey in 1971, as the average 30-year fixed rate declined to 4.71 percent last week from 4.78 percent a week earlier.

Mortgage rates were also more attractive for 15-year fixed loans, which fell from 4.29 percent to 4.27 percent, but consumers may have difficulties qualifying for these loans as lenders now demand higher credit standards.

The Mortgage Bankers Association’s index of application demand, which rose 2.1% on a seasonally adjusted basis during Thanksgiving week from the previous week, shows that consumers were looking to take advantage of mortgage rates at a historic low. I am actually surprised that more homeowners did not take advantage of the opportunity to refinance their existing mortgages.

Honestly, once China decides to stop funding our coffers, these rates will be a far distant memory.

This is a post from Grant Hammond's Nashville Real Estate Blog.

Fixed Mortgage Rates Fall to Record Lows

admin — Tue, 01 Dec 2009 19:23:48 +0000

Freddie Mac released the results of its Primary Mortgage Market Survey last week in which the 30-year fixed-rate mortgage (FRM) averaged 4.78 percent with an average 0.7 points for the week ending November 25, 2009, down from the prior week when it averaged 4.83 percent. Last year at this time, the 30-year fixed rate mortgage averaged 5.97 percent. The 30-year has not been this low since the week ending April 30, 2009, when mortgage rates also averaged 4.78 percent.

The 15-year fixed rate mortgage last week averaged 4.29 percent with an average 0.6 points, down from the previous week when it averaged 4.32 percent. A year ago at this time, the 15-year fixed rate mortgage averaged 5.74 percent. The 15-year fixed rate mortgage has never been this low since Freddie Mac started tracking it in 1991.

“Long-term mortgage rates eased for the fourth consecutive week to record levels,” said Frank Nothaft, Freddie Mac’s chief economist.” Interest rates for 30-year fixed mortgage loans tied an all-time record low while both 15-year fixed mortgages and 5-year ARMs broke their corresponding records. Interest rates for 30-year fixed-rate loans are currently 0.8 percentage points below this year’s peak set in mid-June, which shaves roughly $100 off the monthly payments on a $200,000 mortgage.

“Nashville house prices are slowly beginning to firm now. For instance, annual house price declines slowed for the sixth consecutive month in September, down only 3 percent, and represented the smallest decline since February 2008, according the Federal Housing Finance Agency’s purchase-only house price index.”

This is a post from Grant Hammond's Nashville Real Estate Blog.

30 Year Home Mortgage Rates Update

admin — Tue, 24 Nov 2009 03:03:17 +0000

Rates for 30-year home mortgages approached the all-time low of 4.78 percent again last week, falling to 4.83 percent from an average of 4.91 percent a week ago. The 15-year rate did reach a new bottom, dipping from 4.40 percent to 4.32 percent – the lowest level since Freddie Mac began tracking rates in 1991. Wellesley College economist Karl Case says the Federal Reserve’s efforts to purchase mortgage-backed securities from Fannie Mae and Freddie Mac is lowering rates on Nashville home loans.

An obvious tide of home refinance applications came as a result of these lower rates and for the first time in 4 weeks, new home purchase applications increased by more than 5 percent. Nashville mortgage rates appear to have reached an uncommon low point due to the artifical downward pressure resulting from the Fed’s efforts to purchase MBS paper.

If I have said it once, I have said it 100 times, these rates cannot stay at these levels for very much longer. The Fed is doing everything in its power to help stimulate the US housing market, but at some point, we’re going to have to start paying down the national deficit. I am not telling you to go out there and buy a house or condo right this moment, but this is the time to begin a meaningful discussion.

This is a post from Grant Hammond's Nashville Real Estate Blog.

Nashville Mortgage Rates at Lowest Level in Five Weeks

admin — Tue, 17 Nov 2009 15:28:36 +0000

The 30-year fixed mortgage rate fell to 4.91 percent for the week ended Nov. 12, , down from an average of 4.98 percent a week earlier, and has now been below 5 percent for five of the last seven weeks, reports Freddie Mac. Also, 15-year fixed loans fell to 4.36 percent from 4.40 percent; five-year hybrid adjustable-rate mortgages declined to 4.29 percent from 4.35 percent; and one-year ARMs slipped to 4.46 percent from 4.47 percent.

As was discussed in greater detail last week, these low mortgage rates will not last forever. It may seem counter-intuitive, but this may be the best possible time to secure low financing rates and a below market price on real estate in Nashville.

The National Association of Realtors does predict that as home sales increase in 2010 (5% increase is forecasted), so will interest rates. The thought is that as consumer confidence returns to the marketplace, the Fed will slowly respond by inching up the borrowing rates.

Commercial real estate update

According to NAR’s Chief Economist Lawrence Yun, “Who is buying? The answer is no one,” he explained. “The level of transactions is way down. We’re looking at an almost 90 percent decline from peak to current levels.” Simply stated, the commercial real estate market has fallen off a cliff.

One particularly hard-hit area of commercial is the office sector: National vacancy rates are getting precariously close to 20 percent and sales volume has fallen as far as 93 percent from its peak just a few years ago. If your company is concerned about your commercial real estate holdings, you should call or email the guys at Cumberland Commercial in Nashville. Once you read their bios, you’ll understand why.

This is a post from Grant Hammond's Nashville Real Estate Blog.