Altadena Real Estate

Another Reason To Consider Buying A Home: Record Low Interest Rates

one cool thing don't wait to buy

For mortgages, 620 is the new magic number
WASHINGTON - MAY 23, 2006:  (FILE PHOTO) An ex...
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Some interesting news on the home mortgage front from the California Association of Realtors:

Near historic low mortgage rates, favorable home prices, and the federal tax credit for first-time home buyers have contributed to home purchases in the past year. However, the onset of the credit crisis, new regulations for home appraisals, and more stringent guidelines for purchases and refinances have resulted in confusion for some potential home buyers.

While using a mortgage broker to find the best loan may work for some buyers, it may not always be the best route. In the past, mortgage brokers could “shop” a loan to multiple lenders to help find the best deal. However, new practices and procedures under the Home Valuation Code of Conduct (HVCC) have hampered mortgage brokers’ abilities, namely that lenders may no longer accept home appraisals commissioned by brokers. As a result, consumers may have to pay for new appraisals with each lender, which costs time and money. However, consumers who are very busy or need guidance may find that working with a mortgage broker is the easiest solution.

Qualifying for a mortgage under current lender standards is more difficult nowadays than in years past. Beginning Nov. 1 or Dec. 12, depending on the type of loan, Fannie Mae is tightening its lending standards to the 620 credit score benchmark—including loans backed by the Federal Housing Administration and Veterans Affairs. Borrowers with credit scores of less than 620 will find it very difficult to qualify for a mortgage. However, to qualify for the best rates, consumers generally need credit scores of 720 and must have verifiable, steady income. As for loan type, most real estate professionals agree that a fixed-rate mortgage is the best choice for buyers and refinancers.

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Record Low Interest Rates

Here’s some news to make current and potential home owners smile: Long-term mortgage rates fell for the third week in a row, with 15-year fixed-rate loans hitting a new record low and the 30-year fixed-rate hovering at just above 5 %, Freddie Mac said in releasing the results of its weekly Primary Mortgage Market Survey.Record Low Interest Rates

The 30-year fixed-rate mortgage (FRM) averaged 5.04% — with an average 0.7 point — for the week ending Sept. 17, Freddie Mac said, down from 5.07% last week and 5.78% a year ago.

Rates for 30-year fixed-rate loans hit a record low of 4.78% in April, in part due to the Federal Reserve’s commitment to purchase up to $1.25 trillion in mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae.

The 15-year FRM this week averaged 4.47% with an average 0.6 point, down from 4.5% last week and 5.35% a year ago. It’s the lowest the 15-year FRM has been since Freddie Mac started tracking it in 1991.

Five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 4.51% with an average 0.5 point, unchanged from last week and down from 5.67% a year ago.

One-year Treasury-indexed ARMs averaged 4.58%, with an average 0.5 point, down from 4.64% last week and 5.03% a year ago.

Those rates are for borrowers with an 80% or lower loan-to-value ratio on loans eligible for purchase by Freddie Mac. Borrowers making smaller downpayments or seeking loans too large or risky for Freddie Mac can expect to pay more.

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