Over the past two weeks, rates have slowly increased to their current state. Whereas last month you could get into an FHA insured mortgage for a low 4.5% interest rate, the current rate is about 5.25%. That 0.75% increase can mean a lot for someone looking to purchase a home and even more for someone who wants to refinance their current mortgage.
With a home loan of $200,000, a borrower would be paying $1,065 per month at 5.25% instead of the low $975 per month at the old rate. That’s almost $100 per month, for 30 years! This rate increase has thrown some homeowners and homebuyers for a loop, but it doesn’t have to. There is a simple solution in what is commonly called a ‘hybrid loan.’
In a hybrid loan, the borrower takes out a mortgage at a low fixed rate for three to five years. After that period, the loan becomes an adjustable rate loan. However, unlike other adjustable rate loans, this loan can never adjust more than one percent each year.
Now this loan doesn’t sound that great at first glance, but there are a couple of perks that will end up saving you, the homeowner, a lot of money. First, when you get the hybrid loan insured by the FHA, because it will eventually adjust, rates are significantly lower than flat fixed rates. That means you could enter into a fixed rate mortgage for three to five years at up to a two percent lower interest rate!
In addition to a lower fixed rate which can save you hundreds of dollars each month, there is another benefit of this loan. You have a low fixed rate with an FHA insured home loan for at least three years. That means, once the interest rate is eligible to adjust, you are eligible to streamline your FHA loan. Streamlining your FHA loan is fast, easy, and affordable. It will lock your interest rate in at the low fixed rate of the time, preventing your loan from adjusting afterwards.
If you’ve been thinking about refinancing or purchasing a home and are worried about interest rates rising, this hybrid loan is the answer to your problems. You can get a fixed low rate for the next three to five years, saving you hundreds of dollars each month, and then streamline your loan into a fixed rate when it starts to adjust, locking it in and ensuring that you will always be saving money.
We here at CREFCO strive to make sure our customers understand their options and make the best choice available to them when getting a mortgage. If you want to save money, whether you want to refinance your home or are looking to purchase a new home, Contact us today.
Consumer Real Estate Finance Company
CREFCO
1-866-854-4242
http://www.crefco.com
Tuesday, June 30, 2009
Wednesday, June 3, 2009
Low Mortgage Rates... Fleeting?
Last week’s events in the financial markets carry a simple message to people looking for a 30-year mortgage, whether they’re purchasing or refinancing: Get your low rate while you can.
Over the course of last week, rates on 30-year loans jumped drastically, ending around 5.25%. That rate is still low compared to historic standards, but it is a significant jump when compared to the 4.75% and below of previous weeks.
Many are wondering what caused this surge in interest rates. Well rising government debt and growing hopes of economic recovery are driving up long-term interest rates on government debts. The 10-Year Treasury bond yield surged from 2% earlier this year to over 3.5% last week, which caused other long-term rates to increase.
What does all that mean? Well for those of you looking to refinance your home, buy a new home, or even sell your home, it may mean bad news if the mortgage rates continue to rise.
For those of you looking to refinance, you may be out of luck already if you have not locked in your rate. Last year, new mortgage rules were introduced to avoid another subprime mortgage scandal. The days of being able to lock in a rate while you refinanced or looked for a home are over. Now borrowers’ rates are not locked in until after the home’s appraisal comes back.
And for those of you looking to buy a new home, these increased rates can translate to a significant increase in cost. On a typical $200,000 home with an 80% loan, the increase from 4.75% to 5.25% can mean $50 per month.
Rates are still reasonable now, but who knows where they could be in the coming future. The message is clear: Get your low rate while you can.
Let CREFCO help you move through the process while the rates are still low.
Apply Online Today
Over the course of last week, rates on 30-year loans jumped drastically, ending around 5.25%. That rate is still low compared to historic standards, but it is a significant jump when compared to the 4.75% and below of previous weeks.
Many are wondering what caused this surge in interest rates. Well rising government debt and growing hopes of economic recovery are driving up long-term interest rates on government debts. The 10-Year Treasury bond yield surged from 2% earlier this year to over 3.5% last week, which caused other long-term rates to increase.
What does all that mean? Well for those of you looking to refinance your home, buy a new home, or even sell your home, it may mean bad news if the mortgage rates continue to rise.
For those of you looking to refinance, you may be out of luck already if you have not locked in your rate. Last year, new mortgage rules were introduced to avoid another subprime mortgage scandal. The days of being able to lock in a rate while you refinanced or looked for a home are over. Now borrowers’ rates are not locked in until after the home’s appraisal comes back.
And for those of you looking to buy a new home, these increased rates can translate to a significant increase in cost. On a typical $200,000 home with an 80% loan, the increase from 4.75% to 5.25% can mean $50 per month.
Rates are still reasonable now, but who knows where they could be in the coming future. The message is clear: Get your low rate while you can.
Let CREFCO help you move through the process while the rates are still low.
Apply Online Today
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