For many months now consumers have been hearing that this is a buyer’s market. From television ads produced by the National Association of Realtors (NAR) to blogs coming from all corners of the internet the chorus of voices is growing. If this is indeed a buyer’s market, why are so many people still sitting on the fence? I know that many people will claim that they cannot get financed and in some cases that may be true. The guidelines have become more stringent, the stated income, stated asset loans that helped to usher in the current housing climate are no more. If you are wanting an investment property you are going to have to make an investment of some of your capital to get it! In the following article by Fred Chamberlin he takes a look at fence sitters when it comes to refinancing. Similar to those who are waiting to purchase, there are those who continue to hold out on actual monetary savings they could realize through a refinance. With the record low interest rates he provides concrete evidence to spur people to refinance and save money on their mortgage.

Via Fred Chamberlin of FHA Loans Oregon:

The Federal Reserve has been purchasing Mortgage Backed Securities for some time now and mortgage rates still aren’t at 4.5%. So ,what gives? Well the answer is really not that hard, nor is it that simple. First of all you need to understand what Mortgage Backed Securities are and how coupon rates compare to the actual interest rate. Below is the chart of MBS purchases from the New York Fed, Feb. 12-18. You can look at their site here.

Take a look at the Coupon and the amount of purchases (in the millions) from FHLMC (Freddie Mac), FNMA (Fannie Mae) and GNMA (Ginnie Mae). As you can see, most of the MBS are 30 year and there is very little 15 year being purchased.

Now, if you notice, the majority of these purchases are in the 4.5 and 5% coupons, although other coupons are also being bought. So, what does a 4.5% Coupon really mean? Is that the rate being offered to the consumer? Short answer – No!

The difference between the “coupon rate” and the interest rate offered to the borrower is what the originating firm, the wholesaler, the agencies like Fannie and Freddie, and the Wall Street securitizing firm get to put the product together. At 4.5%, the interest rate the customer pays will probably be 5.5 or 5.75%. So, what does that mean about what the Fed is doing? Well, they are being pretty smart, they are buying the higher coupons that will probably be paid back in fairly short order as rates drop. Like the 5, 5.5 and 6% coupons are being paid right now with rates hovering around 5%.

So, will rates drop to 4.5%? Will they drop to 4%? I can’t tell you. What I can say is that if it makes sense to refinance or purchase at 5%, it might be a good idea to do that now. Trite it might be, but “A Bird in the Hand, is Worth Two in the Bush!” When you are at 6.5%, a 5% interest rate is better than not having a 4.5% interest rate. Give me a call today to discuss your specific issues. Every person and every loan is different. 541-342-7576.

In a post by Sandy Noll she not only poses the question to the current homeowner and prospective home buyer, Is now the time to buy or refinance? She also gives you one of the most important tools in helping you to make that decision. More than a traditional mortgage calculator, the link allows you to input different variables like current vs. future home value and different interest rates. Hint to using the tool, the green box in the right hand quadrant it the control for the Sales Price Comparison and the Payment Difference charts. I hope you find this post useful.

Via Sandy Noll: Your Realtor of Choice for King, Snohmish, and Yakima County Washington:

We’ve all heard that this is a GREAT time to buy real estate because interest rates are at historic low rates, but what does that really mean?  And what about those of you that are waiting until the home prices drop just a little bit more to make your move to buy?  And how about those wondering if they should refinance a loan they got a couple years ago?

To help answer all these questions and quite possibly more click on this link www.loancentral.com/SandyNoll to use a really cool interactive tool that just might shed some light on yours or someone else’s situation and help answer the question, “What should I do”.  Oh, you don’t have to register to use the tool either!!

If you have questions or need help interpreting the results after using the tool, feel free to call me and we’ll walk through it!  Also feel free to forward this email to everyone you know so they too can see what interest rates vs lower home prices actually do to payments!!

BE SURE TO CLICK ON THE LINK ABOVE……YOU’LL BE GLAD YOU DID!!  GO AHEAD AND CLICK….YOU KNOW YOU WANT TO!!

Mortgage interest rates are at historic lows. How many times have you heard that from real estate industry people, friends and family, and the guy who does your dry cleaning? While the rates truly are at historic lows many people are not taking advantage of the opportunity to either buy their new home or refinance their high interest rate to a (sometimes considerably) lower interest rate.

First I would like to take a look at mortgage interest rates for purchases. The chart to the right are the latest reported interest rates with a comparison to the previous week’s rates. As you can see there is some difference between the type of mortgage product selected. Another thing the chart does not show is that the interest rate will also vary based on the type of loan, conventional, FHA, VA, USDA and whether there are hits (increases) to the interest rate based on risk (often determined by the percentage of downpayment) Be sure to discuss what product types you qualify for and what loan type has what advantages and disadvantages. Except for conventional loans, the others are for primary residences only. If you have been qualified to buy a home and are prepared for the responsibility of home ownership, these interest rates coupled with lots of inventory on the market (in most markets) make this the ideal time to buy.

Next I want to examine refinancing from a higher interest rate to a current low interest rate. You see a chart to the right similar to the chart above. This chart shows the current interest rates for a refinance. As with the above, there is a definite difference based on the mortgage product selected and the type of loan. You should also know that you can refinance from one type of loan to another type of loan, for example a conventional loan to a FHA loan. Many people can see substantial monthly savings by reducing their monthly mortgage payment with a lowered interest rate. What represents an interest rate that is reduced enough to see substantial savings? Generally, using a 30 year fixed rate mortgage term, a 1% interest rate reduction on a $100,000 loan will yield approximately $70 a month in savings while the same 1% interest rate reduction on a $250,000 loan will yield approximately $160 a month in savings. This difference is important and a good reason that your savings should definitely be addressed with your mortgage professional.

When you hear that rates are at historic lows, you should definitely ask yourself, what that means for you.