The Mortgage Interest Rate Game

The Mortgage Interest Rate Game…
As many of you know, interest rates have started to creep upward, well, they jumped upward, within the last 30-45 days. As they have started to settle back to around 4.3%, this range has been a lot higher than it was in the mid 3% range. Most economists believe the 3% interest range is gone for the foreseeable future, maybe our lifetimes. So what does this mean for you? 
This is what we know. If you are a buyer, your buying power has eroded to the tune of a few hundred dollars per month on a $250,000 home. Put simply, you will pay $200 more per month for the same home you could have purchase in May of 2013. Or, if your monthly budget was say $1,000 per month for a mortgage, your purchasing power just went down by about $25,000. See the attached chart for a payment table based on purchase price vs interest rates. If you are a seller, at some point, rising interest rates will eat into your equity. We are not seeing this yet, but it will happen as rate continue their upward march.
Where are they headed? 
"Doug Duncan,the Chief Economist at Fannie Mae said “I don’t think the Fed ultimately would be troubled with a 6.5 percent mortgage rate".
Frank Nothaft, Freddie Mac’s Vice President and Chief Economist,said this. “As the economy continues
to improve we expect to see continued upward movement in long term interest rates.” “At today’s house prices and income levels mortgage rates would have to be nearly seven percent before the U.S. median priced home would be unaffordable to a family making the median income in most parts of the country.” 
Most experts don't think rates will reach these levels until late 2014, but based on 2 chief economists at the companies that purchase mortgages from your bank, these numbers are not unexpected.
What will happen if I wait to purchase? See the attached payment schedule based on purchase price and interest rates.
Historically, interest rates have averageg about 8.69% since 1972, so 4.3% is still quite good, and if the economists say that 6.5%-7% isn't unlikely, this is still better that the averaqe of the last 40 years. But, why wait if you can lock in your interest rate in the mid 4% range for the next 30 years? As you can see from the chart below, it can add up to tremendous savings over the life of the loan to start sooner rather than later, if your situation permits.
If you think you may be affected by these events… call me to discuss your particular situation, I'm sure we can figure out the best approach for you.
Posted on July 29, 2013 at 8:11 pm
Marvin Jensen | Category: Financing, Interest Rates, Mortgage | Tagged , ,

New Rules in Utah for Loan Modifications

Home owners who fall behind on their mortgages will most likely be approached by people offering to help them save there homes from foreclosure by a loan modification program. In the past, these people didn’t have to be licensed by the state of Utah, they could just get a Notice of Default list from the recorders office and start contacting homeowners. a lot of home owners would get swindled out of their money and some got swindled out of their homes!

This year the Utah State Legislature requires anyone offering to help with a Loan Modification or Foreclosure Rescue Service be a Mortgage Licensee or hold a Utah Real Estate license. You can find the names of licensed Mortgage and Real Estate people at the Department of Commerce website.

The following are NOT allowed:

  • Request or require a person to pay a fee before executing a written agreement defining the services you will provide.
  • Require a person to forfeit the fee if the lender forecloses on the property within one year from the date on which you and your client execute the written agreement for services.
  • Suggest to a person that you have a spe­cial relationship with his or her lender or loan servicer.
  • Falsely represent or advertise that you are acting on behalf of a government agency, a lender or loan servicer, or a nonprofit or charitable institution.
  • Recommend or participate in a foreclosure rescue that requires a person to transfer title to you or to a third party with whom you have a business relationship or finan­cial interest.
  • Advise a person to make a mortgage pay­ment to anyone other than his or her loan servicer.
  • Tell a person to refrain from contacting his or her lender, loan servicer, attorney, credit counselor, or housing counselor.
  • Effective May 11, 2010, engage in fore­closure rescue or loan modification without offering in writing to the client a right to cancel the agreement within three business days after the day on which he or she enters the agreement.
Source: Utah Division of Real Estate First Quarter, 2010
Posted on March 30, 2010 at 1:54 pm
Marvin Jensen | Category: Foreclosure, Loan Modification, Mortgage | Tagged , , , , , ,

How Mortgage Interest Rates Change

A great video from Mortgage Success Source about how mortgage interest rates change. This complex issue is broken down to understandable bite size pieces.

Posted on February 22, 2010 at 11:38 am
Marvin Jensen | Category: Interest Rates, Mortgage | Tagged

New "Mortgage Disclosure Improvement Act" Will Your Home Close on Time?

6a01156faa369f970c01157224a36f970b-320wiIf you are thinking about purchasing a new home and haven’t filled out your mortgage application prior to July 31st, 2009, you need to understand the new rules in the “Mortgage Disclosure Improvement Act” (MDIA), which is part of the “Truth in Lending Act” (TILA). There are mandatory waiting periods on disclosures for borrowers that must be met prior to collecting fees, setting closing dates and appraisal review periods. It is critical to meet these requirements so you won’t pass your settlement deadline and be in default!

Some good sources I found on this topic were Taylor Bean & Whitaker website, and Rain City Guide.

Read the MDIA in full here.

Posted on August 7, 2009 at 1:46 pm
Marvin Jensen | Category: Mortgage | Tagged ,