Debt Solutions & Help

Drastic Move of Some Mortgage Rates November 11, 2015

In the previous week’s Freddie Mac Primary Mortgage Market Survey, the short term mortgage rates that had been rising very sharply during the time of last few weeks suddenly fell slightly last week. Whereas the long term rates almost remained unchanged.

The 30-year fixed rate mortgage (FRM) moved up one basis point with 0.5 point from 6.45 percent to 6.46 percent with same 0.5 point. During the year of 2006, at this same time the average rate of 30 year fixed rate mortgage was 6.47 percent.

The 15 year fixed rate mortgage with 0.5 point averaged 6.15 percent. Hardly shifting from 6.12 percent with 0.5 point during the week ending in August 30. Previous year during this time the 15 year fixed rate mortgage was at 6.16 percent.

The 5-year Treasury indexed hybrid adjustable rate mortgage (ARM) had an average contract interest rate of 6.32 percent with 0.6 point, yet again just a very little change from the previous week when it running at a rate of 6.35 percent with 0.6 point. The current rate is 19 basis points higher compared to what it was at this same time of 2006.

The most dramatic change has been shown by the 1-year treasury indexed adjustable rate mortgage. After jumping 24 basis points to 5.84 percent with 0.8 point during the last week, the adjustable rate mortgage settled down and returned back 10 of those basis points, averaging 5.74 percent with 0.6 point.

Frank Nothaft, vice-president and chief economist of Freddie Mac said, “Over the past week, long term mortgage rates were largely unchanged as the most recent economic news showed smaller increases than had been expected.” He explained it with the example of rise in the core personal consumption expenditure price index at an annualized rate of only 1.3 percent in the second quarter where as the July’s consumer spending data has shown a 1.9 percent gain in the core price index for the 12 months ending in July.

In the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ended September 7 demonstrated a remarkable drop in the 30-year fixed rate mortgage, from 6.42 percent with 1.09 point to 6.25 percent with 1 point.

The average contract interest rate for the 15-year fixed rate mortgage also had a strong decrease to 5.9 percent with 1.03 points from 6.10 percent with 1.16 points. The short term 1-year ARM decreased to 6.34 percent from 6.52 percent with points remaining unchanged at 0.93.

The mortgage application volume increased 5.5 percent from the previous week on a seasonally adjusted basis, but was down 16.7 percent from that previous week and was up with a slight 0.1 percent from what it was in the earlier year during the same time.

As a share of total mortgage activity, refinancing is up by 0.7 percent. It is now 42.1 percent from 41.4 percent during the last week. However, the market share of adjustable rate mortgages is dropping down continuously from 13.2 percent the previous week to 12.6 percent this week.

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Debt Consolidation Loans

Debt Consolidation Loans

Wouldn’t it be nice to make just one payment per month instead of several? Most of us not only have a mortgage payment. We have car payments, credit card payments, student loans, etc.

If you have been living in your home for a reasonable amount of time and you have acquired enough equity, you might want to consider a debt consolidation loan.

A debt consolidation loan is using the equity you have acquired in your home from monthly payments and appreciation to pay off all of your outstanding debt, leaving you with one monthly payment instead of several.

Consolidating your debt has the potential to save you a lot of cash on a monthly basis if you have accumulated a lot of debt.

The interest rates on credit cards alone are considerably higher than that which you would receive on a mortgage.

Another benefit is the interest you pay on your debt consolidation loan is tax deductible, unlike your other debt.

Consolidating your debt is a great way to save money, but don’t just dive in. Take the time to educate yourself about the mortgage industry and definitely shop around for the best deal. The mortgage industry is very competitive, so let them compete for your business.

Another benefit to consolidating your debt is that it will help your credit score go up.

The accounts you have outstanding that you owe money to are called open trade lines, by paying these off and than closing a few of them to keep your debt under control, you will be effectively increasing your credit score over time, which is how lenders determine your payment history.

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Should I Save Mad Money For A Rainy Day?

Yes, this is a good idea! I know you want to know what is mad money? Well, a long time ago this term came about when a young lady went out with her friend to a party and her friend left her at the party with no way home. So, the young lady was mad with her friend that left her at the party and luckily for her, she had money stowed away in her shoe to take a cab back home. She thought to herself on her way home in the cab, that it was good that her mother had taught her to always have money set aside for emergency situations such as this!

Thank goodness, this young lady had the forethought to stash her mad money away so she could take a cab back home, since her friend left her in a lurch. Get the point? Having an emergency fund whether it be mad money or saved money is important for you to have. You say, how do I go about doing this? Well, you can read these tips to help you learn what you can do:

1) Set up a savings account specifically for your emergency fund or mad money fund. Whatever you want to call it, just establish one!

2) Deposit a certain amount of money on a weekly, biweekly, or monthly basis in your account. You may want to set up automatic deposits to your account via your payroll department. Or, you may want to have your bank automatically withdraw a certain amount of money from your checking account into your emergency or mad money savings account.

3) Try to save at least 2-3 months of your monthly salary to cover your bills for at least three months if you were to loose your job. This amount of time will hopefully allow you the cushion you need until you secure new employment.

4) The money you save in your emergency or mad money account should be used for household emergencies, personal emergencies or if you’re no longer able to work. Don’t use it for other expenditures such as bills, travel, etc… Get the idea? It’s a savings account that you don’t want to touch unless it’s absolutely necessary!

5) Make sure the bank account you put your emergency or mad money into, is paying you the most interest you can earn for this account! Research as many sources as possible on securing the best interest rate you can get. Check with your bank, the internet, newspaper and other sources for the prevailing interest rate. You want to make sure your money can be accessed easily and quickly if you need it for an emergency!

By establishing an emergency or mad money fund, this will give you a better peace of mind if you need access to money when there is an emergency in your life. So, the sooner you start setting money aside for a rainy day, the better off you will be! Make sure the amount of money you contribute to your emergency or mad money fund, is realistic for your budget. Save as much as you can without upsetting your overall personal or family finances. So go ahead, get started today!

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FHA Home Mortgage Purchase Or Refinance Loan – Why You Might Consider Getting An FHA Loan

Most borrowers have heard of FHA home loans. They are very common. You hear about them mostly as loans for first time borrowers, which is common. However, most people don’t realize that FHA loans can also be does for refinancing. They are not only for purchasing a house.

HUD owns and operates FHA, which is a program designed to help borrowers who might have difficulty buying a house. If the borrower falls within FHA’s requirements FHA insures the loan for the lender, which makes the loan very low risk for the lender, which is very good for the borrower. It could mean a lower interest rate, better terms and just an overall better loan.

FHA’s requirements are; a down payment of 3-5%, the home must be under the FHA’s set loan limit for the county that the borrower lives in and a few other small requirements.

The main advantage to an FHA loan, is if you can fall within their requirements, your credit history or income level, will not hold you back from getting a home loan. If you are getting turned down from other lenders because of a high debt to income ratio or because your credit is bad. You may want to consider applying for an FHA loan, where those requirements are either non-existant or much more flexible.

If the idea of down payment is holding you back, consider also, that FHA loans allow the use of a non-profit organization as a source for the down payment, which opens up the option of using down payment assistance programs like Neighborhood Gold.

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