Meet Mortgage Rates Expert

Mortgage rates overview

2009-02-28T10:58:00.000-08:00

The average rate on a 30-year fixed-rate mortgage remained more than 5.5 % for the third week in a row. Unfortunately rates went up.

According to the Bankrate.com survey 30-year fixedrate mortgage rose 7 basis points up to 5.41 %. A year ago the mortgage index was 6.41 %. A month ago it was 5.48 %.

This week's rate (30-year fixed mortgage): 5.41%

Change from last week (30-year fixed mortgage): +0.07

Monthly payment (30-year fixed mortgage): $927.56

Change from last week (30-year fixed mortgage) : +$7.20

Since in September 1985 there was only one period in which the 30-year fixed remained under 5.5 % for longer than this three weeks. That were May and June 2003 - the height ofa refinance boom..

5 steps to get the best loan

2009-02-26T06:13:00.000-08:00

Shop around for a competitive mortgage rate

Traditional 30 years fixed-rate loans are very cheap. Just look around who's offering the lowest interest rates. Find some information online. Ask around. Discuss it with your friends and family members, even a real estate agent to see if they've had an experience with a bank or mortgage company.

Don't forget credit unions. They often charge less than commercial banks. Remember, you have to be a member of the credit union to get a loan, and membership is restricted to certain communities. Find out if you're eligible to join a credit union - ask your employer.

If you have bad credit, it's very hard to get a mortgage right now. In this case your best option is to qualify for a federally backed loan program.

Pick the best offer

Contact the lender and ask to preapprove the loan you want. You'll fill out an application that asks how much you make, how much you save and how much you owe. The lender will check your credit report and scores and reply with a letter saying youve been preapproved and how much you can borrow.

That's the chance to discover any unexpected problems that might make it difficult to qualify for a loan, borrow as much asyou want and get a good rate. Don't settle for being prequalified. That means the lender took your word for everything and didn't pull your credit history or scores.

Apply for Your loan

As soon as you've found the home of your dream, it's time to apply for real. Most companies charge a nonrefundable application fee that can range between $250 and $500. Most borrowers stick with the bank or mortgage company that preapproved their loan. Don't be surprised if you have to fill out a second application.

A copy of your purchase agreement is needed and you should also verify your income, savings and debts with bank statements, check stubs and many other documents.

Mortgage Rates

Lenders wont guarantee what you'll pay until 30 to 45 days before closing. As that day approaches, you need to check around one last time to make sure your lender is still offering the best deal. If you are suddenly being quoted a significantly higher interest rate - it's time to reapply somewhere else.

Remember, switching lenders could push the closing back a few weeks, don't hesitate to pursue the best possible mortgage. The USA is in the midst of a serious recession. Home sales have been falling since 2007 and no seller is going to kill a deal over a delay like that.

Get the commitment letter

Your sales contract will set a deadline (7 - 10 days before closing) to obtain final approval for your loan. Although your bank knows that date from the sales contract, you should remind everyone you speak with about the deadline. If you miss the deadline, the seller can terminate the sale and try to keep your earnest money. But you can expect the seller to be patient in a market like this. Once you have your contract, you're ready for closing.

Considering Mortgage Refinance Program

2009-02-26T03:53:00.000-08:00

If you are thinking about a mortgage refinance, you should consider a lot of mortgage refinance programs types. For example, you might want to look into a 15-year fixed rate mortgage refinance. In this plan your mortgage payments are a bit higher than a longerterm loan, but you pay substantially less interest over the life of your loan and build equity more quickly. This also means you have less interest to deduct on your income tax return, of course.

You can also consider mortgage refinance if you have an adjustable rate mortgage with high or unlimited interest rate increases. You can switch to a fixed rate mortgage or to an adjustable rate mortgage that limits changes in the rates at each adjustment date aswell as over the life of the loan. If you would like to apply for a mortgage refinance loan with a particular company, and if you do not want to let the interest rate float until closing get a written statement to guarantee the interest rate and the amount of discount points that you will pay when closing. This binding commitment ensures that the mortgage company won't raise these costs even if rates increase. You can also require an agreement where the interest rate can be decreased but not increased before closing. If you can't get the mortgage company to put this agreement in writing you should choose one that will provide this information.

Most companies place a limiton the length of time they will guarantee the interest rate, 60 days mostly. You must sign the loan during that period of time or you can lose the benefit of that rate. Also there may be a delay in processing the papers because of many people refinancing their mortgages when rates decline. That's why you should contact the company periodically to check the progress of your loan approval and to see if additional information is required.

Mortgage Refinance Costs

When refinancing your mortgage you usually pay off your original mortgage and sign a new loan then. With this new mortgage refinance loan you pay most of the same costs you paid again to get your original mortgage. It can include settlement costs on discount points and other mortgage refinance fees. You can also be charged a prepayment penalty for paying off your original loan early, although some states prohibit this. The expense for a mortgage refinance depends on the interest rate amount of points and other mortgage refinance costs nedded to obtain the loan. Most mortgage companies will charge several points and the total cost can run between three and six percent ofthe total amount. Some companies may offer zero points at a higher interest rate which may significantly reduce your initial costs.