My Way Lending

You heard it right folks.  For those of you playing roulette trying to game the mortgage interest rate market in light of recent Fed activity let this be a good lesson.  The Fed cuts and mortgage interest rates go higher.  Don’t be fooled in to believing that the interest rates you pay on your mortgage are in lock-step with the Fed.  They aren’t, and if you try to game the system that way you’ll certainly miss out on opportunity.

From the Market Watch story covering the rising mortgage rates:

The 30-year fixed-rate mortgage averaged 5.68% during the week ending Jan. 31, up from last week’s 5.48%. The mortgage averaged 6.34% a year ago. The 15-year fixed-rate mortgage averaged 5.17%, up from 4.95%. The mortgage averaged 6.06% a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.32%, up from last week’s 5.13%. The ARM averaged 6.04% a year ago. And 1-year Treasury -indexed ARMs averaged 5.05%, up from 4.99%. The ARM averaged 5.54% a year ago.

To obtain the rates, the 30-year and 15-year fixed rate mortgage, along with the 5-year ARM, required payment of an average 0.4 point. The 1-year ARM required payment of an average 0.7 point. A point is 1% of the mortgage amount, charged as prepaid interest.

Graeme wrote an excellent post on the problems with gaming the mortgage interest rate market last week.  If you have a rate that puts you in a better financial situation take the opportunity to improve your loan; and ensure that the loan product you choose allows you flexibility to make additional changes.

This gives you the best of both worlds.  You get protection against rising rates with flexibility should rates start to fall again.

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Jobless claims surged and sent stocks plummeting in the opening minutes today as traders worried about the possible onset of the credit/housing-bust led recession.  First time claims rose by 69,000 to 375,000 smoking estimates of a smaller rise of jobless claims to 320,000.

Even factoring in for seasonal volatility the number came as a shock to people on Wall Street.  From the Market Watch story on the higher jobless claims:

Initial claims for state unemployment benefits rose 69,000 in the week ended Jan. 26, reaching 375,000, the Labor Department reported Thursday. It marked the highest level since early October — and the biggest weekly jump since September 2005 in the wake of Hurricane Katrina.

Non-seasonally adjusted claims actually fell in the latest week, but seasonal factors expected a much steeper decline.

All the same, Robert Brusca, chief economist at FAO Economics, said that, despite the technical noise, claims are now indicating a “border-line recession warning.”

The spike in jobless claims tied with the continued turmoil in the credit markets and the tapering-off of consumer spending are not the way most people bullish on the economy would like to see them headed.  Consumer spending is an important one to watch as many believe the economy was propped up on home equity withdrawals as part of the housing bubble.

In addition, the Commerce Department reported that real consumer spending flattened out in December, further evidence that the economy was getting weaker as the fourth quarter sputtered to an end.

 

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Homeowners who take out loans based on their equity are multiplying

All the television commercials about reverse mortgages caught Pat King’s attention.

Digging deeper, the Jacksonville homeowner went last week to the Housing Partnership of Northeast Florida for a reverse mortgage seminar sponsored by Wells Fargo.

“You have all the blurbs out there on TV, and we thought we would come and see what it’s all about,” she said.

Her verdict: She’s intrigued, but still wants to do more research because the loans are so different from her experience with regular home mortgages.

“You have to literally think in reverse,” she said.

(more…)

Post from: Reverse Mortgage Loan Blog

Mortgages work in reverse

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