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Glen Said:

How do I check daily FHA mortgage rates?

We Answered:

I disagree with the previous two answers. MOST rates on the internet are very misleading. Unless you understand the difference in rate and APR this will not be helpful to the average person. Also, many rates on the internet include points but the real question is how many. I recommend you shop several banks on the same day and get an estimate of the rates. This will help you determine who is comparable and who is out of the game. Just to give you an idea the average rate today on a FHA loan is 4.50-4.75%. 4.50% would be something most lenders charge additional points for. The 4.75% would traditionally be no points except for the traditional FHA charges. Under the new FHA program FHA charges 1.00% origination charge for the program. This is not a mortgage broker fee, it is a fee to FHA. I do agree with your current lender, he should not lock a rate until he has loan papers in hand. The reason is simple. Rates are quoted and locked based on the estimated time to close. Until your lender has loan papers he can not estimate how much time he needs for the rate lock. This is a KEY part of locking rates. I strongly recommend that you do NOT play the market for a better rate. Rates are showing strong signs of increasing. Most people in the industry are expecting a steady increase into the third quarter. Pick a lender you are comfortable with. trust there judgment and get your rate locked before they go up even further. I am not a mortgage lender, so the rates i quoted are based on my own research that i did today, however, I have a pretty good insight on this stuff. I hope this helps...

Jessica Said:

How will putting 10% down on a home purchase affect my mortgage rate and total costs (as opposed to 20%)?

We Answered:

When you buy a home using conventional financing with 20% down payment, the LTV [Loan to Value] ratio is 5:1. Generally, the lender considers you a good credit rrisk.

When you buy that same home in that very same area using conventional financing with less than 20% down payment, the LTV [Loan to Value] ratio is increases. Generally, the lender considers you a higher credit rrisk.

With your lower percentage down payment - in your particular situation, 10% - how does the lender compensate themselves and convince themselves ["themselves" being the folks who meet on a regular basis and consider home mortgage applications for acceptance or rejection] to lend you, the borrower, the money you need to complete the purchase?

The lender uses a scale known as "P.M.I." [Private Mortgage Insurance]. It works similar to this example:
The purchase price of your new home is One Hundred Ten [$110,000.00] Thousand Dollars. You put down Ten Thousand [$10,000.00] and apply for the One Hundred Thousand [$100,000.00] Dollars mortgage.

The lender says something similar to this,
"M. ___, we usually require a 20% down payment, but your Agreement shows you're only putting down 10%. Your credit report is OK. We want to lend you the money. BUT, due to the fact you aren't putting down the necessary 20%, we HAVE TO CHARGE YOU A HIGHER INTEREST RATE AND insure your mortgage through a 3rd party.

At the present time, to insure your mortgage, that 3rd party requires 3 "points". One point is equal to 1% of the mortgage, or in your situation,, One Thousand ($1,000.00). We have to put an additional Three Thousand ($3,000.00) on top of the $100,000.00 you need. This totals $103,000.00.

This One Hundred Three Thousand ($103,000.00) Dollars will be amortized [reducing your debt by installments] over thirty [30] years at the interest rate of X% with monthly payments of $Y. When you pay your mortgage down to where the LTV is 5:1, the extra amount of $E, will be dropped from your monthly payment and your mortgage will be treated like every other conventional mortgage we finance."

To further protect our interest in your home, we will escrow for all your real estate taxes and your fire insurance. The yearly taxes and fire insurance premium will be totaled and will be divided by the number of payments we - you and us - decide will be the best and most practical way for you to make your mortgage payments. Would you prefer to pay your mortgage two times each month or every two weeks, OR would you prefer to pay your mortgage once a month?"

If your taxes and fire insurance total Six Thousand [$6,000.00] Dollars per year and you decide to pay your mortgage on a monthly basis, the additional amount will be $500 extra per month - in addition to your mortgage payment.

"When those bills are mailed to you by your municipality, county and schoold distract, as well as your fire insurance premium notice, you'll send them to us with your mortgage payment and we will pay the taxes and fire insurance from the escrow account which will be set up at the time of your settlement settlement."

Because you are paying your taxes and fire insurance premium to the lender each month with your mortgage payment, the lender is taking on the responsibility of paying your taxes and fire insurance.

The possibility and/or probability of your home being liened and eventually sold for taxes is greatly reduced.

The possibility and/or probability of your home being denied fire insurance coverage, becaue you failed to pay the fire insurance premium, is also greatly reduced.

Your responsibility comes down to making your complete mortgage payments on-time or ahead of time each and every time the mortgage payment is due.

SUGGESTION #1: When you make application for your mortgage, make absolutely certain it is an "open end mortgage". Having this type of mortgage assures you can pay off the mortgage at any time without penalty.

SUGGESTION #2: Make sure you ask for - and get at the time of settlement/closing/escrow - an Amortization Schedule. This breaks down your mortgage payment to principal paid and interest paid. Those two numbers must add up to the amount of money you pay to the lender. This is stated in your mortgage document.

When you first get the Amortization Schedule, it is very important for you to understand how it works and how the money you pay is applied. Ask the lender to have someone go over your first amortization schedule with you - so you can easily understand it.

When you follow your Amortization Schedule, and pay the extra principal with every mortgage payment, you should save tens of thousand of dollars in additional interest.

That total monthly payment does not include your taxes or your fire insurance premium.

SUGGESTION #3: If you apply for and get an "A.R.M." [Adjustable Rate Mortgage], each time the interest rate changes - up or down - make sure the lender gives you a new amortization schedule. with your remaining mortgage balance.

When you first get the Amortization Schedule for you A.R.M., it is very important for you to understand how it works and how the money you paid is applied. Ask the lender to have someone go over your first A.R.M. amortization schedule with you - so you can easily understand it.

When you follow your A.R.M. Amortization Schedule, and pay the extra principal with every mortgage payment, you should save tens of thousand of dollars in additional interest.

That total monthly payment does not include your taxes or your fire insurance premium.

The answer to your second question is Yes.

Of course, interest rates and points vary from area to area and lender to lender. Shop the mortgage for the best rate, costs and fees.

I wish you well!

VTY,
Ron B.

Nora Said:

Any thoughts about whether mortgage rates will come back down?

We Answered:

No, they will go up. I would call another bank, however, and see if they can beat the rate. Check for points, too, they also drive up the cost

Melanie Said:

will mortgage rates be going up or down over the next 12 months?

We Answered:

No one here is psychic, but it'd be almost impossible for them to get any lower.

Tracey Said:

How long do you suppose the mortgage interest rates will be as low as they currently are?

We Answered:

No one can say what will happen with rates with any degree of certainty. We have witnessed an unprecedented period of volatility; both ways, in recent months.

You don't need a huge down payment to qualify for financing as a first time home buyer in most areas. What you need is a lender who specializes in first time home buyers to figure out whether or not you are in a position to buy now if you want certainty about your rate.

Some people will say they are going up, some will say they will go down, but one thing is certain; they will change. If you can find a rate today that works for you, you should take it because it could be gone tomorrow.

In Ohio, we have a bond money program with a rate at 5.875%. They have grants that can be used for dowm payment assistance and affordable 2nd mortgages, too, for down payment and closing costs. Your state housing agency might have similar programs.

The FHA programs allow the seller to assist you with down payment and closing costs. The key is finding a motivated seller of a home you like. If you are qualified, there is no reason to wait.

If you have any other questions, you can contact me through the link in my profile and I would be happy to help you further.

Good luck with your home search.

Glen Said:

If the Fed initiates more intervention at their November meeting, how much will mortgage rates drop?

We Answered:

If you look at the history of mortgage rates you will see that a drop in rates from one month to the next in excess of 1/8% is very rare, but when rates go up it is not unusual for them to increase in larger increments. The Fed influences rates, but it does not control them and there are other factors that can more than offset what The Fed is trying to do.

Rates may not change at all or they could even go up. There may also be repercussions for delaying your closing. To delay your closing in hopes of a 1/8% rate drop is not worth the risk.

Kelly Said:

What charts can I look at online to predict changes in mortgage interest rates?

We Answered:

You may have missed the boat if you were hoping rates would go lower. These rates represent what freddie macs investors require and are darn near what a "PAR" rate would be. That is, nobody is going to make money at these rates unless you are paying points/fees for the rate in addition to the regular closing costs:

http://ww3.freddiemac.com/ds1/sell/sffrn…

This link updates daily with advice on the mortgage market.

http://www.moving.com/mortgage/mortgage-…

All indications are to lock as of Friday the 6th.

We have a convertible 1/1 ARM special that runs through the 23rd @ 3.99 with caps of 2/2/6. That means the worst case average rate over 3 years would be 5.99. APR is 5.293 (this is based on the fully indexed rate). All this with about $300 in closing costs.

The point of mentioning this is that the convertible ARMS are a favorite of people who expect that rates may head lower by the end of the year. You can convert the ARM to a fixed rate any time after the 1st payment and within the 1st 36 months for $200 plus some other fees for the modification (e.g. recording, etc.). These programs require better credit and full income verification and a 680 middle score at the time of conversion.

Ask your lender to see if he has any such options for you.

Good luck and congratulations on your new home.