Mortgage rates match low of 4.32 percent

Mortgage Rate Trend Index

Expect no mortgage rate changes over the short term, say 63% of the experts polled by Bankrate.com this week. While 21% predict an increase, 16% think rates could go even lower.

WASHINGTON – Oct. 1, 2010 – Rates on 30-year mortgages matched the lowest level in decades and rates on 15-year loans dropped to their lowest point in nearly 20 years.

Mortgage buyer Freddie Mac said Thursday the average rate for 30-year fixed loans fell to 4.32 percent, the lowest on records dating back to 1971. That’s down from 4.37 percent the previous week and equal to the average rate reached four weeks ago.

The average rate on 15-year fixed loans fell to 3.75 percent, the lowest on records dating back to 1991.

Rates have been at or near the lowest levels in decades since spring as investors poured money into the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.

In recent weeks, Treasury yields have dipped as bond traders bet that the Federal Reserve will soon boost its Treasury purchases in the hope of giving the economy a lift. That has pushed down rates.

Still, historically low rates have done little to boost the struggling housing market, which had its worst summer in more than a decade.

Fall sales are not expected to be much better. High unemployment and weak job growth have kept people from buying homes. And many of the hardest-hit markets are bracing for a big wave of homes sold at foreclosure or short sales. A short sale is when a lender lets a homeowner sell for less than the mortgage is worth.

To calculate average mortgage rates, Freddie Mac collects rates from lenders around the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a given day.

Rates on five-year adjustable-rate mortgages averaged 3.52 percent, down from 3.54 percent a week earlier. Rates on one-year adjustable-rate mortgages rose to an average of 3.48 percent from 3.46 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac’s survey averaged 0.8 a point for 30-year mortgages. It averaged 0.7 of a point for 15-year and 1-year mortgages and 0.6 of a point for 5-year mortgages.
 Copyright © 2010 The Associated Press

Florida’s existing home, condo sales up in August

Existing-home sales move up in August, says NAR

ORLANDO, Fla. – Sept. 23, 2010 – Sales of existing homes in Florida rose 1 percent in August, with a total of 13,997 homes sold statewide compared to 13,908 homes sold in August 2009, according to the latest housing data released by Florida Realtors®. Statewide existing home sales in August increased 3 percent over statewide sales activity in July.

Ten of Florida’s metropolitan statistical areas (MSAs) reported higher existing home sales last month, while 13 MSAs posted increased existing condo sales. Florida’s median sales price for existing homes last month was $134,000; a year ago, it was $146,500 for a decrease of 9 percent. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in July 2010 was $183,400, up 0.9 percent from a year earlier, according to the National Association of Realtors® (NAR). In Massachusetts, the statewide median resales price was $333,000 in May; in California, it was $314,850; in Maryland, it was $267,489; and in New York, it was $227,000.

In Florida’s year-to-year comparison for condos, 5,706 units sold statewide last month compared to 4,662 units in August 2009 for an increase of 22 percent. Statewide existing condo sales last month increased almost 2.7 percent over July’s condo sales. The statewide existing condo median sales price in August was $81,600; in August 2009 it was $107,200 for a 24 percent decrease. The national median existing condo price was $176,800 in July, according to NAR.

The housing sector faces a long recovery process, due in part to slow job growth and the still-fragile economy, according to NAR’s latest industry outlook. “Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” said NAR Chief Economist Lawrence Yun. The pace of sales has slowed since May, following the expiration of the federal homebuyer tax credit, Yun said, who predicted this “pause period” likely will last through September.

“However, given rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs,” he said.

The interest rate for a 30-year fixed-rate mortgage averaged 4.43 percent in August, down from the 5.19 percent averaged in August 2009, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

© 2010 Florida Realtors®

Tips to help owners spot foreclosure scams

WASHINGTON – Sept. 15, 2010 – Last year, the U.S. Federal Trade Commission identified 71 companies running suspicious foreclosure rescue ads. This year, the Better Business Bureau named foreclosure rescue rip-offs among its top 10 scams.

Here are just two common scams identified in the September “Foreclosure Resource Guide” now available at the National Association of Realtors® (NAR) Realtor Content Resource:

• A representative of a so-called foreclosure rescue company promises to negotiate a deal with your lender, instructing you not to contact your lender, lawyer or credit counselor during the supposed negotiations. After you pay an up-front fee or a few months of mortgage payments, the scam artist disappears.

• A scam artist promises to fend off foreclosure in exchange for an up-front fee. Instead of getting you legitimate relief, the fraudster pockets the fee and secretly files a bankruptcy case in your name.

Also covered in the “Foreclosure Resource Guide” are free tips on what to do immediately if you’re facing foreclosure, five foreclosure pros you need on your team, what foreclosure counselors can and can’t do, and website resources for foreclosure help.

NAR’s Realtor Content Resource is an exclusive member benefit that entitles Realtors to download free homeownership content from HouseLogic to your consumer website, blog, or e-newsletter. HouseLogic is NAR’s consumer website geared to helping homeowners make smart decisions to enhance, maintain and protect the value of their home.

For more information, go to the Realtor® Content Resource at: http://www.houselogic.com/members/?nicmp=RCRIM&nichn=editorial&niseg=RMONews1_20100905

© 2010 Florida Realtors®

Refinancing mortgage might have its drawbacks

MINNEAPOLIS – Sept. 13, 2010 – Mark your calendars. The Van Ripers have moved up the date of their mortgage-burning party. When the couple purchased their St. Paul, Minn., home in 2005, they locked in a 6 percent interest rate for 30 years. But with mortgage rates at jaw-dropping lows, they were able to refinance into a 4.125 percent, 15-year mortgage that will save them more than $100,000 in interest and allow them to pay off the mortgage by the time their 3-year-old son is in college. All this for a $100 increase in their monthly mortgage payment.

Shorter-term mortgages are deliciously low. Last week, the average rate for a 15-year fixed-rate mortgage was 3.83 percent with an average 0.6 point (a point equals 1 percent of the loan value), according to Freddie Mac. The rate on a 30-year, fixed-rate mortgage wasn’t much higher, weighing in at an average 4.35 percent with an average 0.7 points paid.

Refinancing to a shorter-term mortgage if you can afford the payment seems like an obvious smart-money move. You’ll pay far less in interest, get rid of the monthly fixed expense earlier, and have freer cash flow in retirement. Plus there’s the high that homeowners feel when they imagine making their last mortgage payment.

“It’s just nice to think it’s going to be done,” said 33-year-old David Van Riper.

But there’s a camp out there that believes locking into a shorter-term mortgage is unwise, especially when rates are so low on 30-year mortgages and economic uncertainty so high.

When Kevin McKinley, a Wisconsin financial planner and co-host of Wisconsin Public Radio’s “On Your Money,” learned I refinanced into a 15-year loan, he e-mailed me a list of reasons why I shouldn’t have. His primary concern? That I’ve locked myself into higher payments at a time when the job market is shaky and home equity is tougher to access. “It’s about having the cash right now and being able to do what you wish instead of being at the mercy of the bank, or the real estate market if you have to sell, or your own job,” he said.

McKinley would have refinanced into a 30-year loan and stashed any money freed up by the lower payment in a savings account or CD.

I could also have taken the excess and put that money to work in the stock market or even in bonds. Considering my mortgage interest rate after the tax deduction is in the 3 percent territory, it wouldn’t be hard to beat that in the market. But that’s not a sure thing.

“Given the recent variations in the stock market and whatnot and the low interest rate in savings, it just seemed to make sense to put it into the house,” Van Riper said.

Alex Stenback, a mortgage banker with Residential Mortgage Group in Minnetonka, Minn., said this difficult economic stretch has brought out the conservative side in most of us.

“When savings rates go up, when people start talking about 15-year mortgages or paying their mortgages off ahead of schedule, that’s really just a form of self-insurance. They’re no longer as comfortable with the fact that the sky’s the limit and the ladder goes up for them economically,” he said.

Anticipating your financial future is hard, but that’s exactly what Bill Schwietz, president of the Minnesota Mortgage Association, tries to get clients to do when choosing between loans. He’s seen several friends who started with 30-year mortgages, then refinanced to 15-year loans with a big promotion and then refinanced into a 30-year loan again when their children’s hockey fees and private school tuition became too much.

Problem is, if you lengthen your loan and roll in closing costs with each refinancing, you’ll never pay down the principal.

Kate Wilson, branch manager for Fairway Independent Mortgage in Bloomington, Minn., said 15-year loans can certainly make sense. But she always reminds her clients that there’s no law against paying off a 30-year mortgage on a 15-year schedule. You’ll still save a boatload, even if your rate on a 30-year mortgage is half a percentage point higher than a 15-year would have been.

Here’s the example she calculated: On a $200,000, 30-year mortgage at 4.5 percent, you’ll pay $164,813 in interest with a monthly payment of $1,013.37. Pay down that loan in 15 years (by making prepayments of about $517 per month on the mortgage balance) and your monthly payment would be $1,529.98 and you’d pay $75,396 in interest. If you went with a 15-year mortgage at 4 percent instead, you’d pay $66,286 in interest and have a payment of $1,479.37.

So ask yourself if you’d be willing to pay a few thousand dollars more in interest for the flexibility of having an extra $500 a month to cover life’s expenses without tapping home equity. Also assess whether you’re disciplined enough to actually prepay the loan. If the answer is no, then a shorter-term mortgage is a good fit, provided you can truly afford it.

Most mortgage bankers, including Wilson, have calculators on their websites. The financial calculator site dinkytown.net has several calculators to choose from, including a 15-year vs. 30-year mortgage calculator.

Of course, there’s that little problem of declining home values that’s making it hard for people who put little money down or bought at the peak to refinance. But having little equity doesn’t slam the door. Borrowers with an FHA loan can reduce their rate without an appraisal using the FHA streamline refinance option if they meet the requirements, which include paying the mortgage on time, having income and meeting the minimum credit score requirements set by their lender (generally around 640 these days, Stenback said).

There’s also the government’s Home Affordable Refinance Program as well as the recently launched short refinance program for non-FHA borrowers who are underwater. Learn more about both options at http://www.hud.gov/.

Even if your current circumstances lock you out of a refi, there’s nothing stopping you from prepaying a longer-term mortgage. Make an extra payment on your 30-year loan each year and you’ll retire it approximately seven years earlier.

“That’s a huge pile of money,” Wilson said.

Copyright © 2010, Star Tribune

4 things to consider before remodeling

CHICAGO – Sept. 9, 2010 – Home remodeling is on the rise. And no wonder. Owners having trouble selling their homes in this sluggish real estate market want to give them as much buyer appeal as they can afford.

Others are deciding that if they can’t move, they might as well make the most of the house they may be calling home for a long time.

After a year of decline in home remodeling, the number of homeowners saying they plan to remodel in the next 12 months increased from last year, according to RemodelOrMove.com, a website that provides homeowners remodeling options and has conducted semiannual surveys of owners since 2005.

Carol and Mark Durgin have owned a Cape Cod home in Marshfield, Mass., for about 15 years. Even though their son is grown and no longer lives with them, they thought the home was too small. Rather than try to sell it and buy a larger home, they decided to add a full basement.

They didn’t do much research before they launched into the project in June 2009.

“My husband just said he wanted to do it, and I said that I was on board,” says Carol, who owns a beauty salon in Quincy.

The new basement, which is nearly finished, has a second bathroom, a laundry room and a family room with a pool table. Mark, who works for the local laborers’ union, did much of the interior work.

It took longer and cost more than they expected. They had to fix up their yard after the construction turned it into a mud pit. But they are happy with the results. “It’s wonderful,” Carol says.

In tough economic times, it’s important to make smart decisions. Here’s what to consider before you pick up a hammer:

1 – The biggest bang for your buck

Before you even come up with a plan, consider how long you will live in the home. If you only plan to stay for several years, you may not be able to earn back the cost of a major renovation. Short-term owners should consider simple cosmetics, such as refinishing floors, painting and updating fixtures and lighting. “They are little things that don’t cost much but can really update a room,” says David Lupberger, home-improvement expert with ServiceMagic.com, a website that connects homeowners to prescreened contractors.

If you plan to stay in the home for five years or longer, then a kitchen or bathroom renovation provides the best return on your investment.

“Owners can enjoy a nice modern kitchen and bathroom,” says Elizabeth Blakeslee, associate broker at Coldwell Banker Residential Brokerage in Washington, D.C. “Down the road if they want to sell the home, they’re in good shape, because it’s kitchens and bathrooms that sell homes.”

One of the biggest mistakes that people make is to install a new pool in parts of the country where the weather is colder, she says. In general, renovating should bring a property up to the value of the comparable houses nearby.

“But you don’t want to over-improve it and have the most expensive home on the block,” says Ben Woolsey, director of marketing and consumer research at CreditCards.com. “A good rule of thumb is that you shouldn’t try to improve the value of your home more than 25 percent of its current value.”

2 – Financing the project

Before you start renovating, estimate the cost and decide how you will pay for it.

The Durgins are happy with their lender’s advice. When they applied for a home-equity line of credit, he suggested a higher limit than they asked for. They wouldn’t have to use all of it, but they’d have a cushion if they’d underestimated their cost.

They originally thought they would need about $40,000. But they decided to ask for a $75,000 line of credit, and they ended up using $62,000.

Borrowing is not the only way to finance a remodeling job.

If your project is inexpensive and you have adequate savings, tapping them is the easiest way to go. Many use their credit cards for projects under a few thousand dollars.

Owners can finance a kitchen or bath renovation or add a deck that way. If you hire a contractor for a bigger project, the costs can balloon. Then you may be better off with a personal loan, a home-equity loan or line of credit.

Sharp declines in home values mean many owners have no equity to tap. For those who do, financing home improvements with a home-equity loan makes sense because the interest is tax-deductible, Woolsey says.

3 – Are you covered?

Before you start a project, make sure the contractor and subcontractors have adequate insurance coverage. Ask if the contractor has workers’ compensation, which covers lost wages and pays for medical and rehabilitation expenses if workers are injured. If not, an injured worker can sue you, says the Insurance Information Institute.

If you are adding an extra room, you will need to increase your home insurance coverage. Don’t wait until the renovation is completed to contact your insurance agent. If the addition is damaged or destroyed before insurance coverage has been increased, you may be responsible for the cost of repairing or rebuilding it, says Loretta Worters, vice president of the Insurance Information Institute.

Homeowners also should visit DisasterSafety.org, where the Institute for Business & Home Safety provides info about each state’s building codes and standards. It’s where homeowners can find out how to be sure contractors make their homes hurricane- or wildfire-resistant.

And during the renovation keep all of the receipts for items purchased, such as furniture and electronics, because you will want to make sure you have the right amount of coverage for personal possessions.

4 – Ways to save money

Kitchens and bathrooms are the most popular renovation projects. But don’t overlook less-visible improvements that may cut the costs of owning a house.

Updating old plumbing and electrical wiring and disaster proofing your roof may lower your insurance premiums.

Owners of older homes can reduce their energy bills by adding insulation and installing new windows. Federal and state tax credits for certain improvements – such as energy-efficient central air conditioning, heating or water heaters – can lower your costs even more.

In the end, a renovation project’s payoff may be measured best by how much satisfaction it gives the homeowners.

Newlyweds Keith and Julianne Knapp encountered many difficulties buying their house, a fixer-upper in the Cincinnati area that they eventually landed when it was sold in foreclosure for $168,000. Keith moved in before the wedding in July and started replacing ceilings and painting rooms. They have since added new fixtures and appliances, new carpeting and landscaping.

“Our neighbors tell us that they can’t believe that it’s the same house,” Keith says.

Their cost: about $10,000, paid out of savings, wedding-gift cash and a personal line of credit.

Now it’s the home where they plan to start a family. Says Keith, “We had a house-hunting nightmare with a storybook ending.”

© Copyright 2010 USA TODAY