Mortgage Rates are Extremely Low

[Bill Lundberg]

If you missed the boat on low rates during the last refinance boom now would be a great time to capitalize on low fixed rates. The latest Fed cut seemed to flow over into mortgage rates. Currently 30 year fixed rates are below 5.5% for the first time in more than 5 years.

[Mr. Kotter]

What's the 15 year rate?

[Donger]

Yeah recession!

[Bill Lundberg]

What's the 15 year rate?

As low as 4.75%.

[tomahawk kid]

I thought the Feds cut the overnight, bank to bank interest rate and that typically doesn't affect mortgage rates - at least not for some time.

What's the difference this time?

[Hydrae]

This seems like a very fast response. If it dropped this quickly, wait a few more months, it will get even lower I am sure.

[Bill Lundberg]

I thought the Feds cut the overnight, bank to bank interest rate and that typically doesn't affect mortgage rates - at least not for some time.

What's the difference this time?

The consumer banks followed suit and lowered the Prime rate by .75%. So prime is now at 6.5%. That mixed with the fact that the markets suck, and the 10 year treasury bond is dropping like an anvil, is causing mortgage rates to dip as well.

[StcChief]

plus the choices of forclosed property will go up.

yeah recession.

[Bill Lundberg]

http://finance.yahoo.com/loans/article/104266/Fed-Rate-Cut-Winners-and-Losers;_ylt=AloCGvwNhuCVr2iPTVvCUfO7YWsA

When the Federal Reserve meets and changes rates we all have questions: What does it mean to me? Will my mortgage rate go up or down? Is this a good time to refinance? Bankrate is here to help. We've looked at five categories -- mortgages, home equity loans, auto loans, credit cards and certificates of deposit -- to determine if the Fed's moves made you a winner or a loser. Here's a look at mortgages:

Winner: Borrowers with good credit

The surprise decision by the Federal Open Market Committee to cut the federal funds target by 75 basis points likely reflects growing fears that the U.S. economy is weakening. Ironically, such worries may be good for people hoping to see lower mortgage rates.


Mortgage rates often dip when investors fearing an economic slowdown grow more conservative and buy up Treasuries and bonds. This causes long-term rates -- and by extension, mortgage rates -- to fall, creating an opportunity to get better terms on a loan.

However, the nation's recent credit woes mean you probably need a sound credit history to take advantage of these better terms.

"If you are a high-quality credit household and you're looking to buy a house, prices have fallen in many markets," says Doug Duncan, chief economist for the Mortgage Bankers Association. "In addition to that, interest rates have come down.

"Those two things indicate that you're likely to get a more affordable mortgage and homes will be more affordable."

People with adjustable-rate mortgages can also refinance to a fixed-rate mortgage. This will lock in their payment for years to come, regardless of the future direction of mortgage rates.

Loser: Borrowers with bad credit

Falling mortgage rates are great for homebuyers and homeowners looking to refinance. But if you've had credit problems in the past, tightening lending standards means you're less likely to be approved for a loan, Duncan says.

Take action

Now is a good time to start shopping for a home. It's also a good time to refinance from an adjustable-rate mortgage to a fixed-rate.

"The takeaway for the average Joe is that it's one heck of a time to refinance," says Bob Walters, chief economist for Quicken Loans.

Meanwhile, if your credit is bad or your home is losing value, you likely will have more difficulty getting a loan. Still, it's worth calling around to find a lender who may be willing to work with you, Walters says.

Here's a look at home equity loans:

Winner: HELOC borrowers

People with home equity lines of credit should cheer the surprise decision by the Federal Open Market Committee to cut the federal funds target rate by 75 basis points today. Most HELOCs are pegged to the prime rate, which rises and falls in tandem with the federal funds rate.

If you have a HELOC, borrowing costs are likely to get cheaper for the fourth time in the past five months.

Loser: Home equity loan borrowers

Home equity loan rates have remained frustratingly static throughout the Fed's most recent series of rate cuts. Sometimes they move up a bit, other times they tick down a hair. But overall, rates have hovered around 8 percent for more than six months.

Bob Walters, chief economist at Quicken Loans, says growing lender reluctance to offer these loans has stifled the type of competition necessary to drive rates down.

Take action

Now is a great time to open a home equity line of credit -- if you can get approval. For people with bad credit or little home equity, that's a very big "if."

Meanwhile, people shopping for home equity loans should not necessarily expect rates to fall. Borrowing costs on these loans have changed very little since the Federal Reserve began its latest rate-cutting campaign last fall.

"I'm not saying that everyone's going to get approved," he says. "I'm saying that everybody should try."

Here's a look at auto loans:

Winner: Auto-loan borrower

Since the Federal Open Market Committee began cutting short-term interest rates in September 2007, not much has happened to auto loan interest rates. The standard five-year new-car loan rate fell 12 basis points over the intervening four months, which saw short-term interest rates slashed 100 basis points altogether, or a full percentage point.

The standard three-year used-car loan has moved even less, coming in 2 basis points less than the rate in September.

This 75 basis point cut to the federal funds target will lower rates overall, but the impact to auto loan rates will continue to be slight, says Jesse Toprak, executive director of industry analysis at Edmunds.com.

"I think the reason we aren't seeing a big impact in auto loans rates is because the correlation between auto loan rates and federal funds target rates isn't one to one as it used to be," he says. "They used to be short-term loans, but now we're getting to almost five and a half years, which stretches into mid-term length for loans, so short-term rates will have less of an impact."

Auto-loan shoppers should look for auto-loan interest rates to continue drifting gradually lower. In addition, predictions for soft auto sales mean manufacturers will continue to buy down interest rates to lure in buyers.

"Its going to be a tough marketplace in 2008. We predict that sales will be even lower in '08 than '07 so we're going to see even more zero percent APR offers," says Toprak.

"Third party rates are not going down as much, but there will always be good deals out there on some models."

Take action

With banks circling the wagons to protect liquidity and a constriction in credit markets, keeping a great credit score is even more important now than it was in the recent past. Check your credit report before shopping for a car and work to improve your credit score.

Here's a look at CD and money market accounts:

Loser: Certificate of deposit buyer

A 75-basis-point cut will be a bit painful for CD buyers, but we can't say it was unexpected. The stock markets have been screaming for this and more. It seems likely more cuts will come.

Nevertheless, at least until now, CD yields have held remarkably well despite the chipping away by the Federal Open Market Committee at short-term interest rates since last September. According to Bankrate surveys, a run-of-the-mill six-month CD yielded an average of 3.54 percent when the Fed began cutting the federal funds target rate. Today, that annual yield is down to about 3.36 percent.

A high-yield six-month CD during the same time frame has gone from 5.17 percent to 4.72 percent. Not bad considering the Fed lopped a full 1 percent off the federal funds rate before today's cut.

Fierce competition among banks for customers and deposits has helped keep CD rates propped up. So, why do we say CD buyers are losers? That may be a bit harsh, but CDs are a declining investment -- you're reinvesting at lower rates.

The truth is no one invests in CDs to get rich; they're looking to preserve their money and hoping to come out a bit ahead of inflation. So, in a market like this maybe CD buyers are winners.

Take action

No one has a crystal ball to tell us when the economy will begin to recover. The Fed could be in for a long cycle of cutting rates. Consider buying the longest maturities you can handle to lock in the best rates for the longest period of time.

Here's a look at credit cards:

Winner: Credit card debtor

In a surprise move, the Federal Open Market Committee reduced the federal funds target rate. It cut the target rate by 75 basis points, which brings the federal funds rate down from 4.25 percent to 3.5 percent. This reduction will trigger the prime, which is usually 3 percentage points higher, to drop from 7.25 percent to 6.5 percent.

Because most variable-rate credit cards are based on the prime rate, consumers with variable-rate cards may see their APRs decline. Cardholders may see some rate relief in their February payments, says Tony Plath, associate professor of finance at the University of North Carolina.

Plath says fixed-rate cardholders are not likely to see their APRs dip as a result of the FOMC's actions.

Another professor argues that credit cardholders may not see their rates decline because the banks have tightened their credit standards.

"The banks have suffered large increases in defaults, there have been large increases in foreclosures in the mortgage market and bank lending is more carefully scrutinized now by both the regulators and the banks themselves," says Harold A. Black, the James F. Smith Jr. Professor of Financial Institutions at the University of Tennessee, Knoxville.

"I actually think that even though under typical times the Fed lowering those short-term rates would eventually start to bring down credit card rates, it may not be as pronounced in this market simply because of what's going on as far as credit standards are concerned."

Take action

Regardless of whether this rate cut translates to a lower monthly payment for you, a credit card issuer can change your interest rate at any time, with 15 days advance written notice. Reduce your balances as much as possible or pay them off and you'll save more money than you would with a rate cut.
Copyrighted, Bankrate.com. All rights reserved.

[Chiefmanwillcatch]

All the talking heads on Cnbc don't like the new the new Fed guy Bernanke(spelling). They said he raised rates too soon and is too worried about inflation.

What do you all think of him?

[Mr. Kotter]

As low as 4.75%.

Thanks.

[oldandslow]

Winner - Inflation...you ain't seen nothing yet.

Loser - the dollar...same sentiment as above.

Winner - Bad individual budgeting, use of credit.

Loser - Folks playing the game as they should - by saving their money, planning for the future.


My dislike for Mr. Bernake grows exponentially with each passing crisis.

Got a problem - hell, just print more money.

[Hoover]

I'm looking to buy a new home in a month or so, so I'm hoping the rates will be even lower. The sad thing is however I might have to give my current home away.

[wutamess]

I'm looking to buy a new home in a month or so, so I'm hoping the rates will be even lower. The sad thing is however I might have to give my current home away.

You and me both.
Been here for 7 years almost and hopefully I can make out with a couple of grand.

[tomahawk kid]

I'm looking to buy a new home in a month or so, so I'm hoping the rates will be even lower. The sad thing is however I might have to give my current home away.

Provided your credit is reasonably good, you should be able to get a smokin rate.

I'm betting rates get cut 3-4 more times before election month rolls around.

[Eleazar]

I'm gonna buy in the next year sometime, more than likely. Maybe it will become even more of a buyer's market by then, who knows.

[Nightfyre]

Just in case one housing bubble isn't enough!

[trndobrd]

All the talking heads on Cnbc don't like the new the new Fed guy Bernanke(spelling). They said he raised rates too soon and is too worried about inflation.

What do you all think of him?


Inflation? Hell Yeah! I can't wait to pay off my mortgage out of one paycheck. Damn student loans too.

[Hog's Gone Fishin]

I thought the Feds cut the overnight, bank to bank interest rate and that typically doesn't affect mortgage rates - at least not for some time.

What's the difference this time?

Italked to my banker yesterday as I am purchasing a rental property and that is what he told me. That it would take a little time for it to trickle through the system.

[Bill Lundberg]

This seems like a very fast response. If it dropped this quickly, wait a few more months, it will get even lower I am sure.


Good luck with that. We've had 2 rate increases today since I posted the original thread.

[Donger]

Good luck with that. We've had 2 rate increases today since I posted the original thread.

I hate Big Bank.

What is the justification of raising rates in the face of the fund rate dropping? Sounds like gouging to me.

[Phobia]

Uh - Bill Lundberg isn't saying it because he's an absolutely incredible person but if you're in the market please do yourself a favor and contact him. I'd stake my paycheck that he's not going to screw you. I've known him personally and professionally for over a year (not that it's a long time) and my experiences with him have been incredible.

The people to whom he has referred me have been very pleased with their experiences as well. You can hardly go wrong with a good 'ole Iowa boy.

[CrazyPhuD]

I hate Big Bank.

What is the justification of raising rates in the face of the fund rate dropping? Sounds like gouging to me.

Or we're about to get ****ed by inflation. Therefor to make the same amount of actual money they need to raise rates.

Wow the fed is taking pages out of the 70s-80s playbook. Thank god it worked so well that time around.

Fagflation here we come.... :doh!:

[Donger]

Or we're about to get ****ed by inflation. Therefor to make the same amount of actual money they need to raise rates.

Wow the fed is taking pages out of the 70s-80s playbook. Thank god it worked so well that time around.

Fagflation here we come.... :doh!:

Just wait approximately 2.5 months. People are going to freak out when they see how much gasoline is going to cost.

Mad Max type stuff. It's going to be great.

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[Bill Lundberg]

I hate Big Bank.

What is the justification of raising rates in the face of the fund rate dropping? Sounds like gouging to me.

It's more of an over reaction to early market conditions than gouging. If you follow the market you will see that it started out rather shitty today and rebounded quite nicely. The Dow finished up almost 300 points. Maybe the Fed knows what they are doing after all.

[Stewie]

Or we're about to get ****ed by inflation. Therefor to make the same amount of actual money they need to raise rates.

Wow the fed is taking pages out of the 70s-80s playbook. Thank god it worked so well that time around.

Fagflation here we come.... :doh!:

Except they can now **** with the inflation numbers, so printing money is painless. If you don't buy groceries, drive a car, or heat and cool your house you're fine. Those expenses are ignored in the inflation figures.

[Coach]

Any chance that the 30 year rate will be on the 5.5 mark in Feburary 2009?

[Bill Lundberg]

Any chance that the 30 year rate will be on the 5.5 mark in Feburary 2009?

Why wait?

[CrazyPhuD]

Now here's a question...which would be the worse scenario. Carl as the GM of the Chiefs or Carl as head of the Federal reserve??? :cuss:

[Donger]

We have a family friend couple who have the option of a fixed rate conversion on their ARM for $200, apparently not a re-fi. Their mortgage outfit is offering 6.1% on the remainder of their loan (~25 years).

What would you advise?

[Bill Lundberg]

We have a family friend couple who have the option of a fixed rate conversion on their ARM for $200, apparently not a re-fi. Their mortgage outfit is offering 6.1% on the remainder of their loan (~25 years).

What would you advise?

If they can just pay $200 and get it fixed then it's a no brainer

[Donger]

If they can just pay $200 and get it fixed then it's a no brainer

They want to see if it goes below what the rate was with their ARM. Mid-5% I told them that they should take it, too. I'll just feel like a turd if it keeps dropping.

[Bill Lundberg]

They want to see if it goes below what the rate was with their ARM. Mid-5% I told them that they should take it, too. I'll just feel like a turd if it keeps dropping.

There's likely a margin built in there so it will still go up

[Coach]

Why wait?

Too much funds tied up as of the moment (Both of us have car payments, along with other expenses) and most of the other expenses will be paid off a year from now.

We both want a home ASAP, but we both also realize that we need to make sure we don't get over our heads, and just "barely" getting by with little or no change for food and other stuff.

[DeezNutz]

If you missed the boat on low rates during the last refinance boom now would be a great time to capitalize on low fixed rates. The latest Fed cut seemed to flow over into mortgage rates. Currently 30 year fixed rates are below 5.5% for the first time in more than 5 years.

I thought that someone I know said he locked a 30-year fixed today at 4.875. Does that seem possible, given the numbers you've stated?

[KevB]

I thought that someone I know said he locked a 30-year fixed today at 4.875. Does that seem possible, given the numbers you've stated?

That would be shocking. Lowest I heard today was 5.125%, and it didn't stay at that rate for long.

[DeezNutz]

That would be shocking. Lowest I heard today was 5.125%, and it didn't stay at that rate for long.

Thanks for the info. The figure I stated seemed implausible to me, too.

[ClevelandBronco]

That would be shocking. Lowest I heard today was 5.125%, and it didn't stay at that rate for long.

I spoke to one mortgage broker today and he said that some of the rates he was seeing were actually higher than they had been before the Fed cut.

He wasn't looking forward to trying to explain that when he has to call some of the folks he already has in his pipeline.

[Bill Lundberg]

I spoke to one mortgage broker today and he said that some of the rates he was seeing were actually higher than they had been before the Fed cut.

He wasn't looking forward to trying to explain that when he has to call some of the folks he already has in his pipeline.

Rates started out the day really low. We had 5 increases throughout the day and they ended higher than before the increase. I've been in the business for 8 years and it was the most volatile day I've ever seen.

[Coach]

So much for extremely low now. 5.94 is the national average.

Cockblockers. :shake:

[jiveturkey]

I have a contract out on a new pad and we close on April 28th.

I'm currently at 6.125 but Wells Fargo will allow me to float down between now and the closing if the rate drops.

I'm really hoping that there's some sort of dip in the next 2 months.

[The Bad Guy]

I'm going to be looking to build a house in roughly a year and a few months once I get my masters degree and can move back to PA.

Hopefully the rates stay low.

[Donger]

And what about today (or more accurately, tomorrow)?

[Bill Lundberg]

Rates are still good. Not as great as when I started the thread.

Roughly 5.75% on a 30 year and 5.0% on a 15 year. I broke my crystal ball so I can't tell you what tomorrow's rates will be :)

[ChiefsFan4Life]

I thought that someone I know said he locked a 30-year fixed today at 4.875. Does that seem possible, given the numbers you've stated?

It is possible ... my wife and I got our house at 4.75 fixed for a 30 year loan when we got our house in '05

[DTLB58]

The Feds are cutting rates tomorrow.

[Donger]

Rates are still good. Not as great as when I started the thread.

Roughly 5.75% on a 30 year and 5.0% on a 15 year. I broke my crystal ball so I can't tell you what tomorrow's rates will be :)

Are you watching the 10-year T Note?

[Iowanian]

If they drop again....I'll probably look into a refi.

[Bill Lundberg]

Are you watching the 10-year T Note?

It's down 3.62% right now, which bodes well for rates to stay lower but that could change in an instant once the fed drops the rate tomorrow. If the fed rate decrease stimulates the markets, mortgage rates could go up instead of down.

[Bowser]

Christ, we refi'd to a 15 year, 6.5 last year. We might have to do it again.

[Donger]

It's down 3.62% right now, which bodes well for rates to stay lower but that could change in an instant once the fed drops the rate tomorrow. If the fed rate decrease stimulates the markets, mortgage rates could go up instead of down.

I hate Big Fed.

[Bill Lundberg]

Christ, we refi'd to a 15 year, 6.5 last year. We might have to do it again.


If you owe more than $100K you should definitely do it again.

[kepp]

If you owe more than $100K you should definitely do it again.

I have a 30 year fixed @ 6.0 - should I refi?

[Bill Lundberg]

I have a 30 year fixed @ 6.0 - should I refi?


Probably not, there's no way to say just by knowing someone's interest rate. So much more goes into it. That being said 6% is a good rate, I doubt it would benefit you to refinance unless you went to a 15 year term, in which case your payments would naturally be higher.

[beavis]

Probably not, there's no way to say just by knowing someone's interest rate. So much more goes into it. That being said 6% is a good rate, I doubt it would benefit you to refinance unless you went to a 15 year term, in which case your payments would naturally be higher.

Is there a general rule of thumb on that? I've currently got 30 years at 6.5%, but was thinking about maybe going with a 15 year if it would benefit me at all.

[Amnorix]

Is there a general rule of thumb on that? I've currently got 30 years at 6.5%, but was thinking about maybe going with a 15 year if it would benefit me at all.


1. how long do you plan to live in this house.

2. can you afford a higher monthly (which is the usual result of going from 30-15 years, unless you are paying down principal by quite a bit).

3. can you get a better rate of return on the money than it's costing you in interest.

4. how's your job security.

5. how many years are you into the 30 for?

6. do you plan to pull any money out (equity) and thereby have a higher amount of debt? Do you plan to put money in, and cut down your debt when you refi.

These are a few of the primary items to consider hwen you think about refi'ing from a 30 down to a 15. Keep in mind, if you're 7 years into your 30, it's not a 30 anymore, it's a 23. So you're saving 8 years of payments.

[vailpass]

1. how long do you plan to live in this house.

2. can you afford a higher monthly (which is the usual result of going from 30-15 years, unless you are paying down principal by quite a bit).

3. can you get a better rate of return on the money than it's costing you in interest.

4. how's your job security.

5. how many years are you into the 30 for?

6. do you plan to pull any money out (equity) and thereby have a higher amount of debt? Do you plan to put money in, and cut down your debt when you refi.

These are a few of the primary items to consider hwen you think about refi'ing from a 30 down to a 15. Keep in mind, if you're 7 years into your 30, it's not a 30 anymore, it's a 23. So you're saving 8 years of payments.

You also need a credit rating of 750 or better to qualify for the best rates, no?

[Bill Lundberg]

1. how long do you plan to live in this house.

2. can you afford a higher monthly (which is the usual result of going from 30-15 years, unless you are paying down principal by quite a bit).

3. can you get a better rate of return on the money than it's costing you in interest.

4. how's your job security.

5. how many years are you into the 30 for?

6. do you plan to pull any money out (equity) and thereby have a higher amount of debt? Do you plan to put money in, and cut down your debt when you refi.

These are a few of the primary items to consider hwen you think about refi'ing from a 30 down to a 15. Keep in mind, if you're 7 years into your 30, it's not a 30 anymore, it's a 23. So you're saving 8 years of payments.

What he said

[Bill Lundberg]

You also need a credit rating of 750 or better to qualify for the best rates, no?

No, this is a common myth. Don't get me wrong it helps, but with FHA loans you can have a 580 credit score and still get a rate in the high 5's low 6's.

[Coach]

I'm hoping it'll drop down to the 5 range for the 30 year.....

[vailpass]

No, this is a common myth. Don't get me wrong it helps, but with FHA loans you can have a 580 credit score and still get a rate in the high 5's low 6's.

Just goes to show you can't believe everything you read. Sounds like you know what you are talking about.

[beavis]

1. how long do you plan to live in this house.

2. can you afford a higher monthly (which is the usual result of going from 30-15 years, unless you are paying down principal by quite a bit).

3. can you get a better rate of return on the money than it's costing you in interest.

4. how's your job security.

5. how many years are you into the 30 for?

6. do you plan to pull any money out (equity) and thereby have a higher amount of debt? Do you plan to put money in, and cut down your debt when you refi.

These are a few of the primary items to consider hwen you think about refi'ing from a 30 down to a 15. Keep in mind, if you're 7 years into your 30, it's not a 30 anymore, it's a 23. So you're saving 8 years of payments.

Yeah, I know this. But I was speaking more from a "math" perspective. At what point do rates get low enough that my 6.5% is high enough to justify a refinance.

[Donger]

And today?

[Bill Lundberg]

Yeah, I know this. But I was speaking more from a "math" perspective. At what point do rates get low enough that my 6.5% is high enough to justify a refinance.


When your payment would go down enough as a result of the refinance to make it worth the cost.

[Bill Lundberg]

And today?

30 Year around 5.625%
15 Year around 5.0%

Keep in mind these rates assume you are not borrowing 100% of your homes value or pulling out cash from your equity. They are strictly rate and term refinance rates and purchase rates with a minimum of 5% down payment.

[DTLB58]

No, this is a common myth. Don't get me wrong it helps, but with FHA loans you can have a 580 credit score and still get a rate in the high 5's low 6's.

They also told me (we close tonight on our re-fi, 15 years @ 5.5) that since we have more then 50% of the appraised value in equity that the credit score dosen't matter. I think ours was 680.

[Donger]

30 Year around 5.625%
15 Year around 5.0%

Keep in mind these rates assume you are not borrowing 100% of your homes value or pulling out cash from your equity. They are strictly rate and term refinance rates and purchase rates with a minimum of 5% down payment.

Good lord. These people just called their lender and were offered a fixed rate conversion at 5.9% for $200.00, and they "want to wait until tomorrow to see what the Fed rate cut does"

A 1% cut is going to stimulate the market, right?

[Bill Lundberg]

Good lord. These people just called their lender and were offered a fixed rate conversion at 5.9% for $200.00, and they "want to wait until tomorrow to see what the Fed rate cut does"

A 1% cut is going to stimulate the market, right?

Heh. It already has and it hasn't even happened yet. The 10 year bond is up 3.05% right now.

DTLB58 - you're exactly right.

[Bill Lundberg]

Just got this email:

Due to an un-favorable market, effective 10:40 AM, there will be an
immediate re-price, for the worse, of approximately 0.250 to 0.375. Keep
in mind, the change is approximate and may vary based on product and
note rate.
The newly revised rate sheets will be available shortly. Any new locks will
receive revised pricing.
If you have any questions, please contact your Regional office.

[xbarretx]

Yeah recession!

yeah recession...once the oil bubble bursts ;)

[phisherman]

man, i did a refi a month or so ago and got a 30 year fixed for 5.25 and no points, looks like my timing was perfect.

[Bill Lundberg]

Good article here:
http://biz.yahoo.com/cnbc/080318/23689759.html

<big class="pr">CNBC</big>
Fed Rate Cuts Are Helping Economy, Not Credit Crisis
Tuesday March 18, 11:46 am ET
It’s not the economy, stupid. It’s the credit crunch.
The size of the Federal Reserve’s expected interest rate cut this afternoon may help stimulate a sluggish economy. But like the several cuts before, it is unlikely to unfreeze the credit markets, especially the mortgage one.
<table align="left" border="0" cellpadding="4" cellspacing="4"><tbody><tr><td><table class="ad_slug_table" border="0" cellpadding="0" cellspacing="0"><tbody><tr><td align="center">ADVERTISEMENT
<iframe bordercolor="#000000" vspace="0" hspace="0" marginheight="0" marginwidth="0" src="http://ad.doubleclick.net/adi/N4538.Yahoo/B2304017;sz=300x250;dcopt=rcl;click=http://us.ard.yahoo.com/SIG=14vkrf7ft/M=629012.11786608.12483834.1435155/D=fin/S=2022504877:LREC/Y=YAHOO/EXP=1205864211/L=rCXrkdhtfJBLDPPDR9gjcQGZQzTl5kff6vIADiUT/B=A3sbFkwNBkM-/J=1205857011058378/A=4743079/R=0/*;ord=1205857011058378?" style="display: none;" frameborder="0" height="250" scrolling="no" width="300">&amp;lt;SCRIPT language='JavaScript1.1' SRC=&quot;http://ad.doubleclick.net/adj/N4538.Yahoo/B2304017;abr=!ie;sz=300x250;dcopt=rcl;click=http://us.ard.yahoo.com/SIG=14vkrf7ft/M=629012.11786608.12483834.1435155/D=fin/S=2022504877:LREC/Y=YAHOO/EXP=1205864211/L=rCXrkdhtfJBLDPPDR9gjcQGZQzTl5kff6vIADiUT/B=A3sbFkwNBkM-/J=1205857011058378/A=4743079/R=1/*;ord=1205857011058378?&quot;&amp;gt;&amp;lt;/SCRIPT&amp;gt;&amp;lt;NOSCRIPT&amp;gt;&amp;lt;A HREF=&quot;http://us.ard.yahoo.com/SIG=14vkrf7ft/M=629012.11786608.12483834.1435155/D=fin/S=2022504877:LREC/Y=YAHOO/EXP=1205864211/L=rCXrkdhtfJBLDPPDR9gjcQGZQzTl5kff6vIADiUT/B=A3sbFkwNBkM-/J=1205857011058378/A=4743079/R=2/SIG=1385g7hm9/*http://ad.doubleclick.net/jump/N4538.Yahoo/B2304017;abr=!ie4;abr=!ie5;sz=300x250;ord=1205857011058378?&quot;&amp;gt;&amp;lt;IMG SRC=&quot;http://ad.doubleclick.net/ad/N4538.Yahoo/B2304017;abr=!ie4;abr=!ie5;sz=300x250;ord=1205857011058378?&quot; BORDER=0 WIDTH=300 HEIGHT=250 ALT=&quot;Click Here&quot;&amp;gt;&amp;lt;/A&amp;gt;&amp;lt;/NOSCRIPT&amp;gt;</iframe></td></tr></tbody></table><script language="javascript"> if(window.yzq_d==null)window.yzq_d=new Object(); window.yzq_d['A3sbFkwNBkM-']='&U=13bhtpr55%2fN%3dA3sbFkwNBkM-%2fC%3d629012.11786608.12483834.1435155%2fD%3dLREC%2fB%3d4743079'; </script><noscript><img width=1 height=1 alt=&quot;&quot; src=&quot;http://us.bc.yahoo.com/b?P=rCXrkdhtfJBLDPPDR9gjcQGZQzTl5kff6vIADiUT&T=1feeveijd%2fX%3d1205857011%2fE%3d2022504877%2fR%3dfin%2fK%3d5%2fV%3d2.1%2fW%3dH%2fY%3dYAHOO%2fF%3d 3904042573%2fH%3dY29icmFuZD0iPGEgaHJlZj1odHRwOi8vdXMucmQueWFob28uY29tL2ZpbmFuY2UvbmV3cy9jbmJjL1NJRz0 xMjVuaDNiM3IvKmh0dHA6Ly93d3cuY25iYy5jb20vP19fc291cmNlPXlhaG9vfHJlbGF0ZWR8c3Rvcnl8dGV4dHwmcGFyPXlhaG9 vPjxpbWcgYm9yZGVyPTAgc3JjPWh0dHA6Ly91cy5uZXdzMi55aW1nLmNvbS91cy55aW1nLmNvbS9wL2ZpLzEzLzk0LzA1LmdpZiB hbHQ9Q05CQz48L2E.IiBjYWNoZWhpbnQ9IjIwMjI1MDQ4NzciIGNhY2hlaGludD0iMjAyMjUwNDg3NyI-%2fQ%3d-1%2fS%3d1%2fJ%3d8F7C6DD8&U=13bhtpr55%2fN%3dA3sbFkwNBkM-%2fC%3d629012.11786608.12483834.1435155%2fD%3dLREC%2fB%3d4743079&quot;></noscript></td></tr></tbody></table>And as the Fed continues to use its conventional fire-fighting equipment,there’s a growing sense that extraordinary--and somewhat controversial--measures may be needed.
“The Fed by itself will not get us out of it," says John Irons, research director at the Economic Policy Institute. “We need to combine fiscal stimulus with monetary stimulus.”
Among the ideas now emerging are a new fiscal stimulus measures, specifically targeting the mortgage market, and the possibility that a bailout of both business and consumers may be inevitable.
“The bulls eye of this crisis is the mortgage market,” Sen. Charles Schumer, chairman of the Economic Policy Subcommittee, told CNBC Tuesday. “Everyone knows we need to do more to stabilize housing.”
“It doesn't matter how low rates go, if you are a financial institution, if you think the home is worth the less than the mortgage or if you're worried the homeowner is going to pay back the mortgage,” says Dan Mitchell, a senior fellow at the Cato Institute.
Look at Bear Stearns. It may be no coincidence that the biggest casualty on Wall Street thus far was suffocating under a blanket of mortgage-backed securities.
It may also be no coincidence that the Fed last week took the unusual step of creating its so-called Term Securities Lending Facility, allowing it to take up to $200 billion of non-Treasury securities, including federal agency backed mortgage securities and mortgages, as collateral for up to 28 days.
“It’s probably an admission that federal funds will not be enough," David Resler, chief economist at Nomura International, said at the time. Reseler considers the lending facility, the “most significant policy initiative since the credit crisis began last August.”
But it may be as far as the Fed can go. Federal law prevents the central bank from buying mortgages outright. Congress, of course, could change that, or otherwise, empower another arm of the federal government to do that.
“The most effective way is to create some way so the federal government can force a markdown in some of these mortgages and take them on itself -- say through some sort of bank -- such that the government becomes the holder of mortgages," says Irons.
The 1990-1991 recession was short and shallow. On top of the Fed’s action -- which included a stunning one percent cut in the discount rate -- regulators and legislators hatched a strikingly successful rescue plan for the savings and loan industry, which was suffering its own lending meltdown.
A newly created federal corporation in essence took responsibility of billions of dollars of bad loans and devalued real estate assets, which were then auctioned off to private buyers.
This time, the government’s efforts are arguably ill-conceived and misplaced, say economists. The $172 billion stimulus package is likely to provide little of a boost. It contains one-off tax cuts, which typically lead to consumers saving the money, and lacks traditional measures such as an extension of jobless benefits and infrastructure spending. Most importantly, it does not address the slumping mortgage market.
Bernanke himself has suggested some kind of markdown in mortgage principal--a signal, much like his hearty endorsement of a stimulus package--somewhat unusual for a Fed Chairman -- that he thinks the central bank needs help.
Last Friday, hours after moving to provide emergency funding to Bear Stearns, Bernanke was talking up tougher mortgage lending regulations and explaining how the Fed was “addressing the foreclosure crisis in capacities other than that of a regulator” in a speech to the National Community Reinvestment Coalition, which happens to be urging the government to buy mortgages at a discount through an auction.
On Capitol Hill, House Financial Services Committee Chairman Barney Frank is the latest to push the idea of federal intervention and support, through some sort of loan guarantees.
Other proposals include temporary foreclosure relief and the refinancing of subprime loans. Sen. Schumer Tuesday called for an easing of capital requirements for Freddie Mac and Fannie Mae and floated the idea of tax credits for homebuyers, while repeatedly referring to a “crisis of confidence.”
He is has plenty of comapny in saying that. Lending is all about confidence and trust.
“I think it is an issue of the financial system overwhelming the rest of our U.S. economy,” Vanguard founder John Bogle told CNBC.
Bogle, for one, seems to be worried about the Fed's own balance sheet and sees taxpayer money at stake. “They can't do everything,” he said.
Or as Resler puts it, the Fed “may have enough ammunition, but it’s arsenal may not be big enough.”|
In a presidential election year, however, it may be more politically desirable -- as well as easier -- for the Fed than for the Congress to throw good money after bad.
And though bailout may be an usually dirty word at the moment, there were few howls Monday decrying the Fed’s intervention in the Bear Stearns case.
Much like the debate over the Fed’s role and the idea of moral hazard, an argument whose intensity has waned as fear of the credit crunch has heightened, hand wringing over an outright government bailout may turn into an open-hands expression of helpless inevitability.
At this point, the moral hazard issue may be solely “theoretical,” as Irons puts it, because we are “stuck” with the credit crunch and a bailout. “This is a once in a generation thing,”

[Donger]

WASHINGTON - The Federal Reserve on Tuesday cut a key interest rate by three-fourths of a percentage point.

[Rain Man]

What's the rate now for a 15 year fixed?

[Bill Lundberg]

around 5.375%

[Rain Man]

around 5.375%

Dang. Not worth it. 5.0 might cut it for me.

[Cntrygal]

Damn.

I didn't get the message until this evening and I missed out on locking in yesterday. Damn.

[Bill Lundberg]

bump. Today is a good day

[kepp]

bump. Today is a good day

Oh yeah? How so?

[Bill Lundberg]

Oh yeah? How so?

A person with excellent credit could get a 30 year fixed rate mortgage for as low as 5.375% right now.

[Goapics1]

A person with excellent credit could get a 30 year fixed rate mortgage for as low as 5.375% right now.

what about a person with poor credit?

[Donger]

Fannie Mae 60 at 5.07%?

Wow.

[kepp]

A person with excellent credit could get a 30 year fixed rate mortgage for as low as 5.375% right now.

What would be a safe bank to go with?

[Bill Lundberg]

what about a person with poor credit?

With at least a 580 score you should be able to get around 5.75%-6.0% on FHA

[Bill Lundberg]

What would be a safe bank to go with?

Define safe?

[Rain Man]

I have a second mortgage for my remodeling last year, and it's a variable rate. It's currently at 4.39 percent. I didn't even think such a thing was possible.

[Saulbadguy]

I've owned my home for a year and a half now at 6.5%, would it be worth it?

[kepp]

Define safe?

Not going to fold.

[Bill Lundberg]

Not going to fold.

Who can predict that? It doesn't matter if the bank folds anyway, your loan belongs to Fannie Mae or Freddie Mac. The only thing that would change is who you write the check out to.

[kepp]

Who can predict that? It doesn't matter if the bank folds anyway, your loan belongs to Fannie Mae or Freddie Mac. The only thing that would change is who you write the check out to.

So if my current 30 year fixed is at 6% and my credit score is somewhere between 700 - 725, would it be worth my while? Could I improve my rate enough to justify the hassle?

[Stewie]

Who can predict that? It doesn't matter if the bank folds anyway, your loan belongs to Fannie Mae or Freddie Mac. The only thing that would change is who you write the check out to.

Yeah, ride on the dollar printing press that has become our economy. Fannie, Freddie? Are you kidding me?

I think this is what you do for a living and I can't fault you for pimping this stuff, but this very reason we have the ginormous problem we have.

[Bill Lundberg]

I've owned my home for a year and a half now at 6.5%, would it be worth it?

There's a good possibility. A lot more information would be needed to know for sure.

[Scaga]

Who can predict that? It doesn't matter if the bank folds anyway, your loan belongs to Fannie Mae or Freddie Mac. The only thing that would change is who you write the check out to.

Got a legit question for you. I'm building a house right now, don't have a rate locked in. My banker just called saying 5.5% on FHA. Problem I face is my house is right on the boarder of being complete within the 60 days. What happens if I lock in the rate, and the builder doesn't make it? What kind of penalty is involved? What are my options?

[Bill Lundberg]

Yeah, ride on the dollar printing press that has become our economy. Fannie, Freddie? Are you kidding me?

I think this is what you do for a living and I can't fault you for pimping this stuff, but this very reason we have the ginormous problem we have.

You're correct this is what I do for a living.

How is notifying you that you could refinance and LOWER your monthly payments or pay off your home in a shorter time frame, thus building equity at a faster rate contributing to the problem?

The problem comes when people refinance to pull cash out of their homes. Something that is very difficult to do right now.

[Bill Lundberg]

Got a legit question for you. I'm building a house right now, don't have a rate locked in. My banker just called saying 5.5% on FHA. Problem I face is my house is right on the boarder of being complete within the 60 days. What happens if I lock in the rate, and the builder doesn't make it? What kind of penalty is involved? What are my options?

Your lender can extend the rate lock for a fee. A fee that your builder should be on the hook for if they don't meet the terms of the contract agreement.

[Hog's Gone Fishin]

Are there any banks that will take boar jizz for collateral ?

[Scaga]

Your lender can extend the rate lock for a fee. A fee that your builder should be on the hook for if they don't meet the terms of the contract agreement.

And what is that "fee" generally?

[Bill Lundberg]

And what is that "fee" generally?

It varies from lender to lender. Usually around .25% of the loan amount for 15 extra days.

[Scaga]

It varies from lender to lender. Usually around .25% of the loan amount for 15 extra days.

Thanks for the info....I think for the $$$$$, I'm going to go ahead and do it.

[Bill Lundberg]

Thanks for the info....I think for the $$$$$, I'm going to go ahead and do it.

I would.

[kepp]

So if my current 30 year fixed is at 6% and my credit score is somewhere between 700 - 725, would it be worth my while? Could I improve my rate enough to justify the hassle?

[Calcountry]

Yeah, ride on the dollar printing press that has become our economy. Fannie, Freddie? Are you kidding me?

I think this is what you do for a living and I can't fault you for pimping this stuff, but this very reason we have the ginormous problem we have.What are you talking about? Mortgages are bought and sold all the time.

If you sign a contract, the fact that the entity that loaned you the money folds is irrelevent to your obligation to pay whoever buys the "asset". Yes, performing loans are "ASSETS" to a bank or lending institution.

[Bill Lundberg]

So if my current 30 year fixed is at 6% and my credit score is somewhere between 700 - 725, would it be worth my while? Could I improve my rate enough to justify the hassle?

Doubtful. 6.0% is a strong rate

[Calcountry]

Are there any banks that will take boar jizz for collateral ?It depends on whether or not the Banker had a daughter in 4H and your Boar threw any grand champions.

[Calcountry]

Doubtful. 6.0% is a strong rateThat is what I have, I scored it 5 years ago.

Locked and loaded for bear.

[KevB]

I assume rates dropped precipitously today? Looking on my credit union's website, their rates were updated today and are at 6%. I have a 5 year arm that is still 2 years away, but I'm looking to flip to a 30 year fixed at the right rate for peace of mind.

[KingPriest2]

OUr mortgage rates came in around 5 to 5.25 on a 30 year today

[macdawg]

I met with a loan officer last month, my credit score was about 750, my fiances was about 650, at the time the rate she said was 6.5%.

I will email her today or tommorrow to make sure she can give me a lower rate as I see on many websites around 5.5 to 6.2% right now.

[Manila-Chief]

Bill,

There was mortgage office in the building where I was this afternoon. I dropped in cold and asked for rates. He told me that it dropped this week. Is it likely to go lower or should we act as quickly as we can?

Our current 30 year fixed rate is 6.25%. Off the top of his head he quoted 5.25% for excellent credit rating.

You got my attention earlier this year but we missed out on that opportunity.

[Rain Man]

My second mortgage is now at 3.89 percent. Amazing.

[munkey]

These are a few of the primary items to consider hwen you think about refi'ing from a 30 down to a 15. Keep in mind, if you're 7 years into your 30, it's not a 30 anymore, it's a 23. So you're saving 8 years of payments.


Explain this to me...for first 7 to 10 years of a 30 year amortization are interest heavy. How are you saving 8 years of payments if you go from a 7.0 to 6.0 and go to a 15? Your payments increase and your starting all over again at a 1-1.5 differencial? Does that make sense to you?

[Bill Lundberg]

You got my attention earlier this year but we missed out on that opportunity.

I think you just answered your own question

[Bill Lundberg]

Explain this to me...for first 7 to 10 years of a 30 year amortization are interest heavy. How are you saving 8 years of payments if you go from a 7.0 to 6.0 and go to a 15? Your payments increase and your starting all over again at a 1-1.5 differencial? Does that make sense to you?

Example Time:

Original Loan - $150,000 @ 7.0% for 30 Years
Principle and Interest Payment - $997.95
Loan Balance after 8 Years - $134,237.48
Payments Left - 264
Amount Left To Payback (264 * $997.95) - $263,458.80

New Loan - $137,300 (original loan balance plus cost of refi and set up of new escrow account)@ 6.0% for 15 years
Principle and Interest Payment - $1,158.62
Payments To Make on Loan - 180
Total Payback - $208,551.60

TOTAL SAVED BY REFINANCING - $54,907.20

I'm attaching a very useful tool for homeowner's. Play with it, enjoy it, it's free.

[munkey]

Example Time:

Original Loan - $150,000 @ 7.0% for 30 Years
Principle and Interest Payment - $997.95
Loan Balance after 8 Years - $134,237.48
Payments Left - 264
Amount Left To Payback (264 * $997.95) - $263,458.80

New Loan - $137,300 (original loan balance plus cost of refi and set up of new escrow account)@ 6.0% for 15 years
Principle and Interest Payment - $1,158.62
Payments To Make on Loan - 180
Total Payback - $208,551.60

TOTAL SAVED BY REFINANCING - $54,907.20

I'm attaching a very useful tool for homeowner's. Play with it, enjoy it, it's free.

Ok...I understand the difference with the P&I...what about the T&I...that can amount to an increase of around 500-600...not just 200.00...wouldn't you agree?

Most loans are based on debt to income...not just your credit. I've worked in the title and escrow business for over 15 years and have some horror stories of people confused with a "brokers" explanation regarding the "overall" payment when they came in to sign...

It's just not that simple...but then again I live in the sticks and people are stupid round here ;-)

[Bill Lundberg]

Ok...I understand the difference with the P&I...what about the T&I...that can amount to an increase of around 500-600...not just 200.00...wouldn't you agree?

Most loans are based on debt to income...not just your credit. I've worked in the title and escrow business for over 15 years and have some horror stories of people confused with a "brokers" explanation regarding the "overall" payment when they came in to sign...

It's just not that simple...but then again I live in the sticks and people are stupid round here ;-)

The taxes and insurance will be the same on both loans. For example if your insurance is $50 per month and your taxes are $150 per month that won't change just because your refinance. You still have to pay taxes and insurance once your loan is paid off.

[theultimatekcchiefsfan]

I locked @5.5% on Tuesday for 30 year mortgage. Down from 6.75 I signed at 5 years ago. Could have 5% monday but waited too late.

[Fat Elvis]

My second mortgage is now at 3.89 percent. Amazing.


If you can find me that rate, I'll tell the wife to mortgage the house.

[Donger]

How are the rates looking today, Bill?

[beach tribe]

Just wait approximately 2.5 months. People are going to freak out when they see how much gasoline is going to cost.

Mad Max type stuff. It's going to be great.

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Do tell.
I don't know anything about it. Do you expect it to shoot through the roof?

[Manila-Chief]

Thanks Bill for starting this thread. You helped me.

We signed a "Uniform Residential Loan Application" on Tuesday for 5.125% on a 30 year fixed. Last week, he told us he had locked it in for 5.0. We didn’t know the implications of FHA vs. conventional loans. When we got there we discovered we would have to pay $74 mortgage insurance monthly (no would not end after 2 years) on the FHA loan ... which would have raised out monthly payment (or prevented us from getting the savings we expected), thus in affect (for us … in a way) raised the rate back up. I was sitting there thinking we had been hoodwinked and were wasting our time ... but, he is a professional and calmly worked the phones and got us a conventional loan for 5.125% with another bank. A 5.0 would have saved us about $13 more a month. But, we feel blessed. Will save us about $190 a month.

Another benefit of the process ... we discovered we could save about $300 a year on hazard insurance. So, just a reminder for people like us (we are just learning all this stuff) … you may lower your monthly payments by checking around for better insurance rates.

[cookster50]

Getting lower.

[Rain Man]

Ha! I just refinanced my first mortgage at 15 years, 4.375 percent fixed rate. (I paid two points to get it down that low.) My second mortgage (variable) is sliding under the door at 3.39 percent. In another year, they'll be paying me.

[Coach]

Bill, what are the odds that the housing industry trying to push Congress to pass the package about the rates being 2.99% until June 30, 2009, and 3.99% after?

[DaFace]

Bill, what are the odds that the housing industry trying to push Congress to pass the package about the rates being 2.99% until June 30, 2009, and 3.99% after?

That'd be cool. We're house hunting with a goal of buying in April or so.

[Coach]

That'd be cool. We're house hunting with a goal of buying in April or so.

Same here. Wife and I saw 2 homes that has major potentional. However, we also want to know what is the probability of the rates going down to 2.99%.

[Rain Man]

My second mortgage just went down to 2.64 percent. This is like magic. My second mortgage payment has dropped by at least 60 percent in the two years that I've had it. I'm a happy guy.

[Rain Man]

That'd be cool. We're house hunting with a goal of buying in April or so.

Here you go. It's a short commute.

http://www.realtor.com/realestateandhomes-detail/25-Downing-St-Bldg-1,-Unit-Ph1_Denver_CO_80218_1098718360

[DaFace]

Here you go. It's a short commute.

http://www.realtor.com/realestateandhomes-detail/25-Downing-St-Bldg-1,-Unit-Ph1_Denver_CO_80218_1098718360

I may need to ask for a raise if we go for that one.

[Rain Man]

I may need to ask for a raise if we go for that one.

http://www.realtor.com/realestateandhomes-detail/Detroit_MI_48202_1102782376

[cdcox]

http://www.realtor.com/realestateandhomes-detail/Detroit_MI_48202_1102782376

I think if we all pulled together, the members of ChiefsPlanet could buy a majority share of the land area inside the city limits of Detroit.

[Coach]

http://www.realtor.com/realestateandhomes-detail/Detroit_MI_48202_1102782376

ROFL

[007]

We are locked at 4.75% from the last boom. They would have to really work to make it worth refinancing now.

[Marty Mac Ver 2.0]

I just bought a 4175 square foot home that was a model for $230K, locked at 5% for 30 years. It was a sick deal.

[kepp]

So what are the going rates now for a 30 year fixed? This site - http://www.bankrate.com/brm/rate/mtg_home.asp - is saying 5.39%. Is this accurate?

[Rain Man]

I think if we all pulled together, the members of ChiefsPlanet could buy a majority share of the land area inside the city limits of Detroit.


In all seriousness, I've kind of pondered if a group could buy a big swath of land in a place like that. You could then hold it for redevelopment.

I still think I prefer my "build-a-city" plan better, though. It would probably have more market appeal, even if it has a lower upside.

[Stewie]

Heck, just buy a house in Southern California. A buddy who lives there sent me this link. These houses were $350K+ three years ago. Talk about a total collapse in real estate.

http://socallistings.marketlinx.com/SearchDetail/Scripts/PrtBuyFulPhotos/PrtBuyFulPhotos.asp?EMailKey=319993891&prp=mls&AgentID=HHCARRCH

[Coach]

Got mine locked on at 5.0%.