Today's Mortgage Rates 6/3/2011

I would like to introduce seasoned Mortgage Broker Jennifer Buchanan as a guest blogger to update you on the current interest rates and trends. Please feel free to contact Jennifer for any mortgage questions that you may have, and know thatshe and I work closely together as a team to help you reach your goals.

Mortgage Update:

A week of troubling economic data helped push fixed mortgage interest rates to a new low for the year, representing the seventh consecutive weekly decline, according to the latest survey from Freddie Mac.  Surveys of national consumer confidence and manufacturing activity in the past month have suggested the economy may be slowing.  The S&P Case-Shiller National Home Price Index, meanwhile, showed first-quarter home prices fell by the steepest annual rate since the third quarter of 2009.The 30-year fixed-rate mortgage averaged 4.55% in the week ended Thursday, down from 4.60% the prior week and 4.79% a year earlier. Rates on 15-year fixed-rate mortgages fell to 3.74% from 3.78% the previous week and 4.20% a year earlier. Five-year Treasury-indexed hybrid adjustable-rate mortgages held steady from last week at 3.41%, but are down from 3.94% a year earlier. One-year Treasury-indexed ARM rates rose to 3.13% from 3.11% the prior week but are down from 3.95% a year earlier.

30 year fixed - 4.50% - 0 points for rate
20 year fixed - 4.250% - 0 points for rate
15 year fixed - 3.625% 0 points for rate
10 year fixed - 3.250% with 1.00 point credit to borrower for rate
5/1 ARM - 2.75% - 0 points for rate
7/1 ARM - 3.250% - 0 -points for rate
Jumbo - over 729,000
30 year fixed - 4.99% 0 points  for rate
15 year fixed - 4.50% - 0 points for rate
5/1 ARM - 3.50% - 0 points for rate
7/1 ARM - 4.00% - 0 points for rate

About Jennifer Buchanan:

Jennifer Buchanan,  Certified Mortgage Planning Specialist at MetLife Loans is a seasoned veteran of the Mortgage, Banking and Broker Industry and specializes in mortgage loans throughout Fairfield County, Connecticut.

Her attention to detail is unsurpassed, and her understanding of the marketplace makes it easy to find the right loan to fit her clients specific needs .  Jennifer's local processing and closing team are also known for their exemplary service.

Understanding that the vast majority of mortgage brokers never discuss the long or short term  financial needs or goals with their clients, she set herself apart from the rest by obtaining the coveted CMPS  designation. (Certified Mortgage Planning Specialist)
 
She is a member of the National Association of Responsible Loan Officers, and her commitment to ethics, understanding of the marketplace, and business acumen have earned her the respect of her peers and clients alike.

Jennifer Buchanan
Metlife Loans
203-341-6949

What is PMI, why is it necessary, and how is it calculated?

PMI is the acronym  for "Private Mortgage Insurance", and is sometimes also referred to as "Primary Mortgage Insurance". It is insurance required by a lender for your home loan when you do not have a  twenty percent downpayment, which is considered a conventional loan. Buyers with less than 20% downpayment who require an 80% or more LTV loan (loan to value ratio) are almost always required to purchase this insurance for the lenders protection against a possible default on your primary mortgage.
 
Lenders typically look at a loan with over 80%  LTV as a riskier investment and  will require a PMI payment from the borrower. It is a special insurance that lenders force higher risk borrowers to pay to protect the interests of a bank in case of default.

A benefit of PMI is that it with this type of insurance, it is possible for you to buy a home with as little as a 3 percent to 5 percent down payment, when otherwise it would not have been possible. This means that you can buy a home sooner without accumulating a larger down payment.

Use the handy chart to the left  to estimate what your monthly PMI payment will be  for your thirty year mortgage loan. Your mortgage broker or banker will give you the actual monthly payment, and this chart is meant to be used as a rough guide.

Do you need a Mortgage Modification? READ THIS FIRST!

This article is so important and informative about Loan Modifications and Scamming practices to watch out for,  that I just want to share it with you, or anyone else that you know that might need a little information on modifying their loan.

SOURCE ( National Fair Housing Alliance) – Four fair housing organizations released their findings of a year-long undercover investigation of 80 loan modification companies, which reveal an industry rife with corrupt practices.  The National Fair Housing Alliance, the Connecticut Fair Housing Center, Housing Opportunities Made Equal of Virginia, Inc., and the Miami Valley Fair Housing Center issued a report entitled, “Have I Got a Deal for You!  An Undercover Investigation of Mortgage Loan Modification Scams,” which documents the tactics mortgage modification scammers use to take money from vulnerable homeowners.  An analysis of the 80 loan modification companies uncovered common tactics used by scammers to entice homeowners to use their services:

• 55% required an upfront fee to start work or required a low initial fee to conduct minimal work on behalf of distressed homeowners, such as reviewing loan documents;
• 43% guaranteed or promised they could secure a loan modification even before learning about the homeowners’ financial limitations;
• 24% advised or encouraged homeowners to stop making their mortgage payments or to stop contacting their lenders;
• 16% guaranteed a new, much lower interest rate ranging between two and 6 percent on modified loans;
•  12% discouraged homeowners from seeking free help from government-approved housing counseling agencies;
• 8% encouraged homeowners to provide fraudulent information to their lenders.

“This is shameful abuse by loan modification scammers to take advantage of desperate homeowners,” said Shanna L. Smith, NFHA President and CEO.  “We and our partner organizations will work to see to it that these companies are prosecuted by the Federal Trade Commission and other federal and state enforcement agencies.”

With one in nine homeowners nationwide more than 90 days behind on their mortgage payments, a lucrative industry of mortgage modification and foreclosure prevention scams has emerged.

Investigators working on behalf of the fair housing organizations captured scammers saying things like:

    “I’d be breaking the law if I told you to stop paying your mortgage, but friend-to-friend, you won’t get a loan modification until you are behind on your mortgage.”
    “If you don’t qualify, we modify expenses for you. They [the lenders] don’t check it.  No one knows what you spend on groceries.  We make you qualify by playing with the numbers.”

Among other recommendations, the fair housing organizations call upon the financial services industry to recommit itself to providing sustainable loan modifications so consumers do not have to turn to scammers; they call upon the Federal Trade Commission to strengthen its new MARS regulation to prohibit upfront fees for all loan modification companies, including law firms; and they call for strengthened enforcement and education efforts by the federal government.

To read the full report, go to www.nationalfairhousing.org.

About the National Fair Housing Alliance (www.nationalfairhousing.org)

Founded in 1988, the National Fair Housing Alliance is a consortium of more than 220 private, non-profit fair housing organizations, state and local civil rights agencies, and individuals from throughout the United States.  Headquartered in Washington, D.C., the National Fair Housing Alliance, through comprehensive education, advocacy and enforcement programs, provides equal access to apartments, houses, mortgage loans and insurance policies for all residents of the nation.

SOURCE National Fair Housing Alliance

What exactly is APR, and how does it affect you?

APR is the acronym for Annual Percentage Rate, which will be different,
and higher, than the interest rate that you were initially quoted for a loan. APR is essentially the annualized cost of credit, and takes into account the  upfront costs such  as points, closing costs, and prepaid interest. Once you lump those additional  costs together and deduct that from the amount you are borrowing, the interest  rate is recalculated with your same monthly payment less those additional costs, thereby increasing the actual interest rate you are paying.

Let's say for the sake of argument that you were quoted an interest rate of 5% for a $500,000 loan that is to be amortized over a 30 year period.

Your monthly principal and interest payments would be approximately $2,684.11 You would actually pay back almost the full loan mount over the life of the loan.  (the total is $966,278.27 for those inquiring minds) If you paid two points to  obtain the loan and an application fee of $400, plus pre-paid interest in the amount of $1500, then technically you have paid $11,900 for the opportunity to do business with the bank. If that is the case, the monthly payment is actually calculated on the $500,000 less the $11,900 that you have already paid. Your principal balance  remains unchanged, and your payment also remains unchanged, so the interest rate is then calculated on $488,100. If you are paying $2,684.11 on a loan amount of $488,100,  then the interest rate under those circumstances works out to be 5.014%

he Truth-in-Lending Act requires that all creditors, including banks  and other financial institutions  provide a borrower with a loan's total finance  charges and annual percentage rate. These two pieces of information will give you the information and knowledge you'll need to compare the  offerings of various lenders. Remember, interest rates are only  comparable when they've been calculated in the same manner.

Should you go a mortgage broker or a bank for your home loan?

You may have been doing business with a particular bank for many years, you know the people at your branch, so it's only natural that  you would think that  your bank would give you a great deal on your home loan, right? NOT NECESSARILY SO.

There is a belief out there that mortgage brokers charge you more  for a loan than banks do. NOT NECESSARILY SO.

There is a big difference between getting a loan from a mortgage broker as opposed to a bank, and I will put it in simple terms. A bank may have 4 or 5 products (loans) to choose from. The Mortgage Officer at the bank will do his best to place you in one his bank's loans. The problem is, the bank only has 4 or 5 options. A Mortgage Broker typically works with 25 or more banks, and probably has over a hundred different  types of loans. This  increases your odds exponentially of getting a loan that's perfectly tailored for you. So when it comes time to get a loan, get a referral for a good mortgage broker- they can be worth their weight in gold.

I have a network of mortgage professionals that specialize in different types of loans, one that is certainly just right for you. I get no referral fees or special perks from any mortgage brokers- just great service for my clients, so when you are ready, I will be happy to refer you, if you need it.