How to Compare Mortgage Rates

Mortgage rates can change daily based on on economic information, so in order to get an accurate comparison, try to get mortgage quotes on the same day.

The lender's rate sheets usually have pricing based on a lock period, which are offered in increments, such as, 30 or 45 days. 

A lock guarantees the mortgage rate for a specific time. Longer lock periods may have higher mortgage rates. Compare mortgage rates for similar rate lock periods.

Mortgage rates have tiered pricing that allows you to buy the rate, or the points up or down. Compare mortgage quotes with the same loan points, such as, zero points, or one point.

Lenders fees like, processing, document, or underwriting, may be negotiable. Property taxes, home insurance, and pre-paid interest are not lender fees. 

Mortgage Quotes

U.S. Mortgages in Default Still Growing

Even with low mortgage rates, the number of mortgages in default continued to grow at the nation's banks in the third quarter as even prime borrowers increasingly fell behind on their mortgage payments.

For the first quarter ever, the number of homes in foreclosure with mortgages serviced by U.S. national banks topped the one million mark, according to news released Monday by the Office of Thrift Supervision and the Office of the Comptroller of the Currency.

The percentage of prime mortgages that were 60 or more days past due doubled from the July-to-September period a year earlier. Plus, more than half of all homeowners whose payments had been lowered through loan modification defaulted again.

Mortgage Rates and Loan Information

Change in Mortgage Rates Affecting Refinance Loans

News from Freddie Mac shows average 30 year fixed mortgage rates rose above 5%, which is up from 4.94% last week. The last time the average mortgage rate was above 5% was the end of October 2009. Last year at this time, the 30 year fixed mortgage rate averaged 5.14%.

The yields on Treasury debt have surged from declining investor demand, which caused an increase in mortgage rates and a decrease in loan applications. The volume of refinance mortgage loans could be higher except for higher mortgage rates and other barriers facing many homeowners, such as, home values and lender qualifying guidelines.

Refinance Rates

California Home Sales Overview

Southern California real estate gained in sales and price last month. 19,181 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in November.

Home sales have been stimulated by several factors: A federal tax credit for first-time buyers; investor activity; low mortgage rates; low down payment mortgages; distressed property deals.

Foreclosures and short sales continue to influence the California real estate market, which accounted for 39% of home sales.

Discretionary home buying and selling outside the more affordable markets are limited, due in part to the lack of financing. Mortgages above $417,000 accounted for only 15% of all home purchase loans, compared to nearly 40% of purchases before the August 2007 credit crunch.

The median price for home sales in Southern California was $285,000 last month. That was up 1.8 percent from $280,000 for the month before.

Mortgage Rates and Information

Foreclosure Home Sales Skew Housing Recovery Reports

You may have heard that the housing was getting better. News reports are saying existing home sales came in "above expectations."

Those news reports are talking about resale homes, because new home sales dropped 11 percent to an annual pace of 355,000, lower than estimates from economists.

Why the disparity?

The increase in existing home sales is due in part to distressed home sales, meaning foreclosures, and short sales. NAR acknowledges that 33% of existing home sales were foreclosures, not basic real estate transactions that drive the housing market. If you were to exclude the distressed sales portion of the market, normal existing home sales did not rise 7.4%, as reported, but instead remained down similar to new home sales.

Many experts believe that foreclosure inventory is being held back from the real estate market because of government attempts to keep people in their homes who may not be able to afford them, which delays the inevitable. Foreclosure home sales may continue to influence the real status of the housing recovery and raises a question about home price stability.

Home Loan Rates

Conventional Home Loans Starting to Compete More with FHA Loans

FHA loans have gained a substantial share of the home purchase and refinance mortgage market because of flexible qualifying guidelines and low down payment options.

Conventional home loans have been following more conservative underwriting guidelines, but there appears to be some changes in the works. For example, home loans up to 95% may be available in some areas to purchase a home, because mortgage insurance companies are now willing to insure some high loan to value mortgages.

Mortgage rates and qualifications are expected to be higher as well, but this news could provide more borrower options in addition to FHA loans, which offer minimum down payments of 3.5%.

Home Loans

News for Better Credit Scores and Mortgage Rates

Credit scores obviously have a big impact on mortgage rates and terms.

What may be news to some people is that credit card balances can determine up to 30% of your credit score. In order to maintain good credit scores, your outstanding balances on credit cards should be less than 50% of your available credit, and preferably less than 30%.

Also, it's a good idea to check your credit before getting a mortgage, and if you find any errors, you are entitled to dispute the accuracy. The Federal Fair Credit Reporting Act gives you the right to challenge inaccurate information by contacting the reporting agencies. Under the FCRA, they are responsible for correcting any errors on your credit report free of charge.

Your dispute must be investigated by the credit reporting agencies within 30 days of reporting an error. They will contact the source of the derogatory information to confirm your record. If you have any, provide documentation to support your claim to expedite the process. It could help to get better mortgage rates.

Mortgage Loan Rates

Home Equity Loans Still Available Even up to 100%

After researching current information on home equity loans and second mortgages, I found mortgage lenders are still offering loans and credit lines up to 90%, and some even 100% of home value.

Home equity loan rates are of course higher than conventional mortgage rates, especially for higher loan to values. Many of the home equity lenders are credit unions, which means you would have to qualify as a member, in addition to qualifying for a loan or credit line.

Home Equity Loans

Fed News Indicates Low Mortgage Rates

Some good news from the Federal Reserve indicating that mortgage rates will remain low.

Economic activity is picking up and deterioration in the labor market is abating, the Federal Reserve noted yesterday as it kept mortgage rates low.

The Federal Reserve said most of its lending programs would expire as scheduled because of “improvements in the functioning of financial markets.”

The statement reinforced forecasts that the Fed will wait at least six months before raising borrowing costs. By confirming plans to end its aid to bond dealers, short-term debt markets and money-market mutual funds, the Fed signaled it sees a waning in the “unusual and exigent” conditions that prompted creation of the programs in 2008.

Mortgage Rates

Underwater Mortgages Affecting Home Values?

There's talk in mortgage news circles about an invisible factor that could affect home values. It's not the job market, mortgage rates, or strict lending requirements. It's too much debt, meaning that 25% or more of all homeowners with a mortgage have a balance higher than the current home value, based on a recent government report.

These homeowners with "underwater mortgages" may have less motivation to care for their properties and could affect surrounding home sales. Also, underwater owners are more likely to lose the property to foreclosure, which can impact normal home sales.

Compare Mortgage Rates

How Mortgage Rates Can Change More Than Just Your Payment

Mortgage rates continue to remain low for now, but recent news and information suggests that rates could rise within the next several months. Of course, there are many factors other than mortgage rates that determine if you should or can buy a home or refinance, but if the mortgage news is right about rising rates, how does that affect your financial bottom line?

If you were to get a $300,000 loan with a 30 year fixed mortgage rate of 5%, the monthly principal and interest payment would be about $1,610. If mortgage rates increase to 5.5%, the same loan payment would be about $1,703 per month.

Not only is the payment higher, but the $93 difference in monthly payment also means that you would need $331 more gross monthly income to qualify at the higher mortgage rate, based on the standard 28% Fannie Mae debt ratio. Another way to look at it is, the maximum loan you can get could be about $17,000 less without the additional monthly income.

So when you hear news of mortgage rates possibly rising, it can affect your potential payment and your maximum loan to refinance or buy a home.

Home Mortgage Rates

FHA Loans Too Cheap and Easy?

FHA loans have become popular since the conventional mortgage debacle because of easier qualifying guidelines. FHA loan fundings have grown to 30% of home purchases and 20% of refinance loans.

Mortgage defaults however, are depleting FHA’s reserves, which is far below the mandated level to cover possible losses. Now, the agency is looking for ways to reduce loan defaults and increase cash reserves, which may include raising the minimum down payments, credit scores, insurance premiums, and cutting seller contributions.

Down Payments - One possible change will be a requirement that borrowers have more equity in a loan transaction to discourage missing payments or risking foreclosure. An FHA loan currently has a minimum down payment of 3.5%, which may increase to a minimum of 5%.

Credit Scores - FHA loans offers the most lenient and flexible credit guidelines compared to Fannie Mae and Freddie Mac. Critics say this generous qualifying policy has contributed to increased loan defaults and foreclosures, which could lead to imposing stricter credit requirements and rate adjustments.

Insurance Premiums - FHA loans have an up-front mortgage insurance premium, which is usually added onto the financed loan amount, plus an annual premium, paid in monthly installments. In order to rebuild capital reserves, FHA could raise these fees to the maximum allowed by congressional limits.

Seller Contributions - One of the popular benefits of an FHA loan is the allowance of home seller contributions to the borrower’s closing costs. The current policy limit allows a maximum of 6% of the purchase price, which critics believe to be excessive. They believe less seller contributions would reduce loan defaults by requiring more funds from borrowers.

FHA Rates

Jobs Report Good News for Mortgage and Real Estate

The national unemployment rate dropped .2% in November compared to the previous month. The Bureau of Labor Statistics reported the lowest number of job losses since the recession began, which is good news for the mortgage and real estate industries, considering that jobs play a major role in the housing recovery.

This is also good news for the Federal Government's mortgage modification program, which has been set back by a high number of re-defaults. The Home Affordable Mortgage Program will probably have better success if employment rates continue to improve.