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7.4 Million Owners Could Benefit from Refinancing

by Tim Hart

As the interest rate has dropped for a 30 year fixed rate mortgage in the last few months, a large amount of homeowners have missed opportunities to refinance, losing them big savings on their purchased real estate. According to Black Knight Financial Services, approximately 6 million borrowers met broad-based refinancibility criteria. Black Knight chose their criteria based on the good loan to value ratio, good credit, non-delinquent loan status, and the current interest rates being given to current mortgage payers. However, as rates have continued to drop, the number of people who would benefit from refinancing increased to 7.4 million. Black Knight believes that even this estimate is conservative and the true figure could even be 1.7 million borrowers higher.

In another study done by the National Buereau of Economic Research, up to 20 percent of Americans failed to refinance loans that would have saved them $45,000 over their entire loan’s lifetime. Now interest rates have fallen since that study took place, possibly raising the potential savings even higher.

Homeowner equity has continued to improve across the states. For 28 months in a row, the value of residential real estate has increased, helping lower borrowers with negative equity to below 8 percent. That number has not been that low since 2007. Black Knight had that number at 33% in 2011.

With these conditions in mind, now may be a great opportunity to refinance a loan and take advantage of these low interest rates.

Source: http://realtormag.realtor.org/daily-news/2014/11/04/74m-owners-lose-out-not-refinancing?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DailyRealEstateNews+%28Daily+Real+Estate+News%29

New 15 year Mortgage with No Down Payment Unveiled

by Tim Hart

A non-profit company is testing a new mortgage idea that could impact mortgages from here on out. The company is offering low to moderate income home buyers a 15 year mortgage with little to no money down. The loan, called the Wealth Building Home Loan, differs from a traditional 30 year fixed rate loan because income is weighed much more heavily than in a traditional loan. The WHBL gives a generous credit requirement and allows buyers to build their equity much faster than a standard mortgage.

But the loan truly differs from a standard loan because it focuses on paying off the principal first, not the interest. According to its creators, in the first three years 77% of each monthly mortgage payment pays off the principal, creating huge amounts of equity for home owners looking to sell in a short period of time. For a standard 30 year loan, in those years 68% of the payment goes towards paying the interest, leaving buyers with little equity comparatively.

Now obviously, there has to be some take to the give in this loan. Due to its short term and focus on principal, a WBHL will always have higher monthly payments than a standard mortgage. But the return on equity and 15 years less of monthly payments may be a worthy trade off for higher payments initially. The WBHL will have its first test run in Charlotte, North Carolina, which was chosen as the initial test market.

More recent articles on mortgages:

Mortgage Rates Below 4%

Wealthy Paying Lower Mortgage Rates

Americans Overpaying for Mortgages?

Source: http://www.realtor.com/news/new-15-year-mortgage-with-zero-down-payment-debuts/

 

Mortgage Rates Drop Below 4 Percent

by Tim Hart

The interest rate on a 30 year fixed mortgage loan dropped below 4% for the first time since June of 2013. The rate hit 3.97% this last week and now has become a more opportune time to consider purchasing real estate. The drop has been a much larger drop than other adjustments taken this year.

According to CNN real estate, the drop in rates have come because investors have been buying US treasury bonds in droves over the last week. In general, mortgage rates usually move in sync with the 10 year bond note, so when the yield fell to 1.86%, it seemed natural that fixed-mortgage rates would drop as well. Investors have moved to purchasing bonds because of the economic unrest in Europe. Rates have actually lowered because of investors actions, where most experts expected mortgage rates to rise after the Fed pulled back on its economic stimulus.

If you are considering purchasing real estate in Bozeman, Belgrade, Big Sky or the greater Gallatin Valley, lower rates may have made you far more eligible to buy than you may have been even a week ago. Over 30 years, even the smallest adjustments in mortgage rates can save you a lot of money in the long run.

Source: http://money.cnn.com/2014/10/16/real_estate/mortgages-rates-drop/index.html

Mortgage Rates Hit Lowest for 2014

by Tim Hart

After mortgage rates dropped in the U.S. for the second week in a row, borrowing costs hit their lowest rate yet for 2014. This week, the average rate shifted from 4.12% to 4.1% for a 30 year fixed mortgage. Although the percentage shift may be small, when added up over 30 years, even the smallest changes can greatly impact the cost of home ownership. A 30 year rate has not been this low since the end of October last year. 15 year mortgages also saw price reductions, slipping from 3.24% to 3.23% this month. The 30 year rate has been consistently declining since it had hit a two year high of 4.58% last August. Experts foresee the lower rates supporting and fostering home demand. July trends support these expert’s claims, as previously owned homes sold at an annualized rate of 5.15 million this July, up 2.4% from June. The longer the rates stay low, the more activity can be expected in the future of the US housing market.

Source: http://realestate.msn.com/blogs/post--mortgage-rates-hit-new-2014-low

Displaying blog entries 1-4 of 4

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