interest rate

The Difference Between Private Mortgage Insurance And Homeowners Insurance

December 28, 2007

Private mortgage insurance (PMI) is insurance for the mortgage lender in the event of homeowner default. PMI helps the lender recover its costs and losses after foreclosing and selling a repossessed home. PMI rates vary by loan type, loan size, and loan characteristics.  The higher the risk to the bank, the higher the cost of […]

Read the full article →

The Difference Between Private Mortgage Insurance And Homeowners Insurance

December 28, 2007

Private mortgage insurance (PMI) is insurance for the mortgage lender in the event of homeowner default. PMI helps the lender recover its costs and losses after foreclosing and selling a repossessed home. PMI rates vary by loan type, loan size, and loan characteristics.  The higher the risk to the bank, the higher the cost of […]

Read the full article →

Mortgage Rates Are Going Up — But Not For The Reason You’d Expect

December 13, 2007

Conforming mortgages are getting more expensive — but not because of mortgage rates. To protect against further weakness in the housing sector, Fannie Mae and Freddie Mac are instituting “delivery fees” on all conforming mortgages, effective March 2008. Fannie Mae’s Adverse Market Delivery Charge and Freddie Mac’s Market Condition Delivery Fee will add a one-time, quarter-percent […]

Read the full article →

Why Credit Card Holders May Benefit From The Fed’s Actions Today

December 11, 2007

The Federal Open Market Committee meets today and will release a public statement at 2:15 P.M. ET. It is widely expected that the FOMC will lower the Fed Funds Rate by at least 0.250%. When the FOMC lowers the Fed Funds Rate, it is trying to “loosen” credit for American businesses and consumers.  When credit […]

Read the full article →

Mortgage Rate Relief Plan: Who Qualifies For Help?

December 7, 2007

Thursday, the White House revealed its HOPE NOW program, aiming to help sub-prime borrowers freeze their initial “teaser” rates for a period of five years. The program is receiving a lot of ink in the newspaper dailies but sometimes it’s unclear exactly what the program offers, and to whom. Let’s look at the details and […]

Read the full article →

The Simple Math Of How Mortgage Rates Are Born

November 9, 2007

We talk a lot about how mortgage bonds are the driving force behind mortgage rates but we never get into the math of it.  So, to help our understanding of the subject, let’s delve a little deeper. Here’s the (very simplified) math behind it: If you pay $100 today for a $6 annual interest payment […]

Read the full article →

Mortgage Rates Fall For ARMs Faster Than For Fixed Rate Mortgages

November 8, 2007

After running neck-and-neck for several months, interest rates for fixed-rate mortgages and adjustable-rate mortgages are finally diverging. Despite pricing worse than its fixed-rate counterpart throughout much of August and September, ARMs are now close to 0.375 percent lower for conforming products sold through Fannie Mae and Freddie Mac. This equates to roughly $25 per month per $100,000 […]

Read the full article →

How To Save Money By Choosing A Better

October 31, 2007

When a loan officer locks a mortgage rate for you, that rate is tied to an expiration date. The expiration may be 30 days, or 75 days, or 90 days, or more into the future, but so long as the rate is “locked”, the bank is committed to delivering that rate to you at your […]

Read the full article →

Is A Fed Funds Rate Cut Good News Or Bad News? It Depends On Your Perspective.

October 26, 2007

The Federal Open Market Committee is widely expected to lower the Fed Funds Rate next week. For holders of credit cards and home equity lines of credit, this is good news. Both of these financial products feature interest rates tied to Prime Rate. Prime Rate is tied to the Fed Funds Rate. When the Fed […]

Read the full article →

How Prime Rate Relates To The Fed Funds Rate

September 20, 2007

Prime Rate is currently 7.750%. Prime Rate is the “shorthand” name for the Wall Street Journal Prime Rate, a variable interest rate that is used in pricing many types of consumer loans. These loans include: Home equity lines of credit Credit card loans Auto loans Prime Rate’s variable nature is tied to the Fed Funds […]

Read the full article →

The Week In Review (September 17, 2007) : What To Watch For

September 17, 2007

The volatile path of mortgage rates last week followed the changing expectations for Tuesday’s Federal Open Market Committee meeting. The FOMC sets the Fed Funds Rate, a benchmark interest rate upon which Prime Rate is based. According to Federal Funds Rate futures, there is a 94 percent chance that the Fed will lower the FFR […]

Read the full article →

An Appetite For Jumbo Loans Returns

September 5, 2007

Yesterday was a rather drab day in mortgage circles — not much happened and mortgage rates idled.  The bigger story was how liquidity appears to be slowly returning to some areas of the beaten-down mortgage market. Specifically, liquidity is returning to prime, fixed-rate, full documentation jumbo loans and pricing appears to be improving (slightly). The […]

Read the full article →

The Week In Review (August 27, 2007) : What To Watch For

August 27, 2007

This week is data-heavy so markets will finally get to focus on fundamentals instead of fear. For the past two weeks, uncertainty about the economy has led to psychologically-driven mortgage interest rate movements. Rising defaults devalue mortgage holdings and many investors are now expecting the defaults levels to rise even more. When defaults exceed expectations, […]

Read the full article →

The Week In Review (August 20, 2007) : What To Watch For

August 20, 2007

Again last week, financiers failed to answer the major question dogging Wall Street: What is the “right” risk model to use for mortgage lending?  The models of the past are being proven to have been wrong. So, why do risk models matter? Because the basic tenet of lending states that the riskier the loan, the […]

Read the full article →

Is Your Loan Officer Incorrectly Reading In Which Direction Mortgage Bonds Are Moving?

August 16, 2007

As we discuss over and over again, mortgage interest rates are determined by the price of mortgage bonds.  Nothing else, and nothing more.  The challenge in that truth is that mortgage bond pricing is not very accessible to the general public. This includes the press. As a result, the media tends to use a government […]

Read the full article →

The Fed Funds Rate Does Not Directly Impact Mortgage Rates

August 14, 2007

It’s been on the news a few times lately, so let’s address a key misconception about the Fed and its relationship to mortgage rates. The markets now anticipate that the Fed will lower the Fed Funds Rate within the next 45 days.  As a mortgage rate shopper, there’s not much reason to be interested.  That’s […]

Read the full article →

The Biggest Banks Are Eliminating The Most Prevalent Sub-Prime Loan

July 24, 2007

Mixed news from the sub-prime sector, depending on how you look at it. Many lenders discontinuing their short-term ARM products. Washington Mutual, Countrywide and Wells Fargo are among the sub-prime lenders no longer offering the 2/28 mortgage product. The “2/28” is a adjustable rate mortgage in which the interest rate remains fixed for two years, […]

Read the full article →

Before You Rush To Make Bi-Weekly Mortgage Payments…

July 11, 2007

Before paying down your mortgage balance with extra principal payments, be sure to plan carefully. The biggest risk in lending for banks is that you will suddenly stop paying your mortgage.  In that event, the banks hope that you owe them as little as possible against the value of the home. That way, your mortgage balance […]

Read the full article →

Three Reasons Why Mortgage Rates Are Higher This Morning

July 5, 2007

Mortgage markets are making like last night’s fireworks, exploding in the sky with a bang. There are three main factors pushing rates higher today: Bank of England raised their interest rates by 0.25% and foreshadowed future increases European Central Bank Chairman Jean-Claude Trichet said that inflation is “likely to rise again significantly towards the end […]

Read the full article →

In The Summer, Mortgage Rates Can Change More Swiftly Than Usual

June 20, 2007

It was another favorable day for mortgage rates yesterday as average housing data and momentum trading carried bond prices higher. Bond prices up, mortgage rates down, of course. All things considered, mortgage bonds should not have moved as much as they did.  But, this is the summer season and in the summer, fewer traders show […]

Read the full article →

← Previous Entries

Next Entries →