Thinking of Refinancing? 4 Good Reasons to Follow Through

For the past couple of years, mortgage rates have been lower than they’ve been in decades. So if you’re thinking about refinancing your home loan, now’s as good a time as ever.

Refinancing involves getting a new home loan to replace an existing one. If you’re unfamiliar with refinancing or if you don’t understand the benefits, trading one mortgage for another might seem pointless. However, refinancing a mortgage loan is one of the most effective ways to modify your mortgage terms. Here’s a look at four things you can accomplish by refinancing your home.

1. Get a cheaper interest rate

Since mortgage rates can change from year-to-year, the rate you’re paying might be higher than current mortgage rates. You might also have a higher rate if you didn’t have the strongest credit score when originally applying for the loan. If your credit has improved since buying the home, this is your chance to get a cheaper rate. Unless you’re able to get a mortgage modification, refinancing is the only way to take advantage of lower mortgage rates, which can save thousands in interest over the life of your loan.

2. Get a lower mortgage payment

Not only can refinancing lower your mortgage rate, it can lower your mortgage payment. Your monthly payment is based on your loan amount and your interest rate. And if your monthly interest charges decrease due to a lower rate, so does your mortgage payment.

Depending on the difference between your old and new mortgage rate, refinancing can potentially reduce your mortgage payment by hundreds every month. This creates additional cashflow that can be used for other purposes, such as paying off credit cards, saving for retirement or building an emergency fund.

3. Get a fixed-rate mortgage

If you have an adjustable-rate mortgage, refinancing to a fixed-rate home loan is the only way to get a fixed, predictable mortgage payment. Adjustable-rate mortgages have a fixed-rate period, which is typically between three and five years. After this period, the interest rate resets every year, either increasing, decreasing or staying the same. Locking in a fixed-rate offers protection from rising interest rates.

4. Get cash from your equity

If you’re sitting on thousands of dollars of equity, you don’t have to sell your property to get this money. A cash-out refinance puts equity in the palm of your hands. You can use the money for debt consolidation, college expenses, a wedding, home improvements or start a business. You can borrow up to a percentage of your available equity, usually 80 percent. Just know that a cash-out refinance increases your mortgage balance, often resulting in higher monthly payments.

The Bottom Line?

There’s plenty to think about before refinancing your mortgage loan. It’s important to understand exactly why you’re refinancing, and you need to weigh the pros and cons. There’s no way to know for certain when rates will rise again. So take advantage of low mortgage rates and save money while you can.

source: totalmortgage.com

Current Mortgage Rates for Wednesday, January 28, 2015

Despite your standard intraday swings, mortgage backed securities were largely flat yesterday. Mortgage rates were effectively flat.  A lot of domestic data was issued yesterday, and it was largely mixed.  The Durable Goods report for December was very poor, and the Richmond Fed Manufacturing Index showed weakness, while Consumer Confidence and New Home Sales jumped. Very low trading volumes (largely a result of the snowstorm that shut down a lot of the transportation in the northeast), the prospect of today’s Federal Reserve meeting announcement, and overseas events pretty much kept our bond markets on an even keel yesterday.

This morning, mortgage backed securities are just slightly in the green, and I think things are going to be choppy.  Not a lot of data is being issued with the exception of today’s Fed announcement (which I guess could be termed “data.”). Any improvement that we’re seeing is likely a result of a flight to safety from the disaster that is Europe at the moment.

Click here to see our current mortgage rates.


Today’s Economic Data:

Not much today, but since we have space to fill, it’s worth discussing Greece and Europe for a bit. This is going to be a simplified explanation (I’m not an expert in the Eurozone), but here goes: As part of a bailout deal back in 2012, the European Central Bank, the IMF, and the European Commission imposed very severe austerity measures on Greece (the Germans, in particular, had a big hand in these austerity measures).  the austerity measures caused widespread unemployment to become worse, and sent poverty levels soaring.





In response the Greek people elected new Prime Minister Alex Tsipras from the anti-austerity Syriza party (which is an acronym for “The Coalition of the Radical Left).  Jacobin Magazine – yes I know, hardly an unbiased source – has a pretty good rundown of the party’s platform and what it could mean for Greece moving forward here.

Tsipras has already began fighting the austerity measures, remarking “We won’t get into a mutually destructive clash, but we will not continue a policy of subjection.”  He has said that Greek will not default on its debts, but the markets don’t seem to be buying, and a Bloomberg article says that Greek credit-default swaps are signalling a 70 percent probability of some form of default in the next five years.  Furthermore, there is a concern that this win will embolden leftists in some of the other countries where austerity has been imposed, particularly Spain, Italy, and Ireland.  If Greece’s creditors blink, it may embolden the populist movements in these countries.  A disorderly break-up of the Eurozone still seems pretty unlikely to me, but it’s a little more in play than it was before the weekend.

TL; DR: Greece’s rejection of austerity measures is roiling European debt markets, and we’re seeing a flight to the safety of U.S. bonds.  This should be of benefit to mortgage rates.

Today’s Fed Meeting:

I don’t know that I can bring myself to recap this again.  For more background, you could read yesterday’s blog, Tim Duy’s recent work, or Jon Hilsenrath’s preview.  Long and short is that while there is some risk to rates today, I don’t think there will be much impact from the statement.  If it is interpreted as being more dovish, we’ll benefit a little, and if it is more hawkish, rates will rise a bit in response.  But I expect that this will be more of a “stay the course” type deal, and that the Fed is still balancing what to do in the face of global headwinds, inflation that is low and likely to be going lower, a stronger dollar, low oil prices, and weak wage gains.  I don’t think we’ll glean much today.  If there’s something of interest, perhaps I’ll write up something additional this afternoon.

This Week’s Scheduled Economic Data That Could Impact Mortgage Rates:

Monday:

• Greek election: Syriza wins – ultimate outcome very uncertain.

Tuesday:

• Durable Good Orders: Headline expectation: 0.7 percent, actual, -3.4 percent.  Core expectation: 0.8 percent, core actual: -0.8 percent.
• S&P/Case-Shiller Home Price Index for November: Expected seasonally adjusted month-over-month expectations: 0.6 percent.  Actual: 0.7 percent.
• New Home Sales: Expectation: SAAR of 452k.  Actual: 481k.
• Consumer Confidence:  Expectation: 96, actual: 102.9.

Wednesday:

• Fed meeting:

Thursday:

• Weekly Jobless Claims:

Friday:

• Advance Estimate Q4 GDP:
• Chicago PMI:
• Consumer Sentiment:

source: totalmortgage.com
 

Current Mortgage Rates for Wednesday, December 24, 2014

So much for the prediction that mortgage rates wouldn’t change much before the end of the year. Yesterday mortgage bonds took an absolute beating.  Bonds broke through key levels of support, and just sort of went into free-fall in the afternoon.  The sell-off was kicked off by a strong third quarter GDP reading, but I think yesterday was really about an illiquid market and low trading volumes as much as anything.  We’ll see if yesterday’s momentum carries into today or not.  As of now mortgage bonds are in the red once again, and rates are under upward pressure.

Are you looking for a new mortgage?  Every big investment deserves a last look.  Give us a chance to beat another lender’s rate, and we’ll give you $25 just for calling (click here for terms and conditions).  Whether we can beat the rate or not.  Call us today!


Today’s Economic Data:

The only release of import today is the weekly jobless claims report, which came in a little better than expectations.  I seriously doubt anyone really cares too much about this today.  The markets close early today, and most people who aren’t already on vacation (ahem) are thinking about travel and the holidays.

So What Happened Yesterday?:

As I mentioned at the top, yesterday’s GDP report was really strong (showing +5.0% growth in the third quarter), and that kicked off the sell-off.  However, some of the other data that was issued yesterday (Durable Goods Orders, New Home Sales, and Core Personal Consumption Expenditures) came in below expectations.  One would normally expect that would balance out the strong GDP report somewhat, at least enough to stanch the bleeding.

But that’s not what happened yesterday.  I think yesterday’s massacre was a result of an illiquid market (yesterday was one of the lowest volume days of the year, and had about half the volume of the ten-day average).  After bonds broke through key support levels, things just sort of snowballed. We do sometimes see this sort of thing around holidays.  If the sell-off continues after the new year, I think that’ll be something to be concerned about.  Given that the underlying economic conditions are largely the same as they were two days ago (a stronger-than-expected third quarter notwithstanding), I think we’ll recoup at least some of the losses over the coming days.

Have a great holiday, we’ll be back next week.

This Week’s Significant Economic Data:

Monday:

• Existing Home Sales: Expected: 5.20M, actual, 4.93M.

Tuesday:

• Durable Good Orders: Expected: 3.1%, actual: -0.7%.
• GDP: Expected: +4.3%, actual. +5.0%
• Personal Income and Outlays:

Wednesday:

• Weekly Jobless Claims: Expected 290k, actual: 280k.

Thursday:

• Markets Closed for Christmas

Friday:

• No significant data.

source: totalmortgage.com

Current Mortgage Rates for Tuesday, December 23, 2014

Yesterday mortgage backed securities gained ground, to the advantage of mortgage rates.  This morning, we’ve pretty much given up those gains.  Just in the event you’re unfamiliar: there is an inverse relationship between mortgage rates and MBS prices.  As prices rise, rates fall, and vice versa.  Generally speaking, bond prices rise on bad economic data or increased riskiness, and fall on good economic data.  This morning’s domestic economic data is mixed, but on the positive side, and right now mortgage rates are under upward pressure.

Are you looking for a new mortgage?  Every big investment deserves a last look.  Give us a chance to beat another lender’s rate, and we’ll give you $25 just for calling (click here for terms and conditions).  Whether we can beat the rate or not.  Call us today!


Today’s Economic Data:

So third quarter GDP was revised upward to 5.0%, well above the 4.3% consensus.  This is the fastest growth since 2003.  We may see GDP estimates dip a bit in the coming quarters as a result of the drop in oil prices.  Still, this is an unexpectedly strong report, and another sign that the economy is picking up steam heading into 2015.

On the other hand, Durable goods orders contracted by -0.7% from October to Novemeber, compared to expectations of a 3.1% increase.  Durable goods orders excluding transportation orders were down -0.4%, compared to expectations of a 1.3% increase.

How does This Impact Mortgage Rates?:

Well, in the short term, mortgage rates are under upward pressure.  In the longer term, if we continue to see growth like this, a mid-2015 rate hike from the Fed looks increasingly likely.  Tim Duy had a really good post yesterday about the last cycle of rate hikes, and how they were communicated and executed.  It’s good reading.

Of course everything is data dependent, but everything is lining up for a rate hike in the middle of 2015.  If you’re looking for a new mortgage, this is something of which you need to be aware.

This Week’s Significant Economic Data:

Monday:

• Existing Home Sales: Expected: 5.20M, actual, 4.93M.

Tuesday:

• Durable Good Orders: Expected: 3.1%, actual: -0.7%.
• GDP: Expected: +4.3%, actual. +5.0%
• Personal Income and Outlays:

Wednesday:

• Weekly Jobless Claims

Thursday:

• Markets Closed for Christmas

Friday:

• No significant data.

source: totalmortgage.com

Current Mortgage Rates for Monday, December 22, 2014

Mortgage backed securities have been quite volatile over the past month, but at the end of the day, there hasn’t been a tremendous net change in mortgage rates since the middle of October.  On the week of October 16th, Freddie Mac’s Primary Mortgage Market Survey showed the average rate on a 30-year fixed-rate mortgage at 3.97%.  Last week it was 3.80% (however, that survey was collected largely prior to Wednesday’s Fed meeting, which caused rates to rise).  On average, rates have plateaued for several weeks now.  With the next two weeks being holiday weeks with lots of people on vacation, I don’t believe we’ll see any great changes in rates between now and the end of the year.  So far this morning, rates are teetering right around unchanged.

Are you looking for a new mortgage?  Every big investment deserves a last look.  Give us a chance to beat another lender’s rate, and we’ll give you $25 just for calling (click here for terms and conditions).  Whether we can beat the rate or not.  Call us today!


Today’s Economic Data:

Not much today.  Some short term Treasury bond auctions, and the Existing Home Sales data for November.  Home sales missed expectations, coming in at a seasonally adjusted annual rate of 4.93M, compared to expectations of 5.20M.  This is a -6.1% month-over-month change from October, but a 2.1% year-over-year increase from November of 2013.  This could help our markets a bit, but again, I think the impact of any report this week is severely dampened by the holiday.

The week ahead:

Not a ton to say here.  There are a couple of significant releases this week, but their impact will most likely be dampened by the Thursday holiday and the sheer number of people that are already on vacation or will be on vacation in the immediate future.  I would caution that low-volume days can cause seemingly out-sized market movements, and that this is something you should be aware of if you are in the process of getting a mortgage but haven’t locked your rate.  Trying to time the market is largely a fool’s errand, and the best policy is probably to go ahead and lock your rate when the number makes sense for you, rather than wait around to see if MBS rally by a few basis points.  It really depends upon how risk averse you are.

This Week’s Significant Economic Data:

Monday:

• Existing Home Sales: Expected: 5.20M, actual, 4.93M.

Tuesday:

• Durable Good Orders
• GDP
• Personal Income and Outlays:

Wednesday:

• Weekly Jobless Claims

Thursday:

• Markets Closed for Christmas

Friday:

• No significant data.

 source: totalmortgage.com

Current Mortgage Rates for Friday, December 12, 2014

Despite the volatility we’ve seen in mortgage backed securities recently, mortgage rates are really not significantly changed since the middle of October.  This week’s Primary Mortgage Market Survey from Freddie Mac reported the average mortgage rate on a 30-year fixed-rate mortgage at 3.93%. The average rate on the week of October 16th?  3.97%. So far this morning MBS are rallying, and presuming the rally continues, we’ll see a slight improvement in rates today.


Today’s Economic Data:

There are a couple economic releases today.  First off, The Producer Price Index for November was released today.  Inflation continues to be low to non-existant.  The headline number showed a -0.2% decrease in PPI from October, just a little above expectations.  The core number (ex-food and energy) came in flat from October, and at 1.6% year-over-year.  Next week we get the Consumer Price Index for November, and I wouldn’t anticipate we’ll much inflation there, either.

The mid-month reading of consumer sentiment for November came in at 93.8, compared to a consensus expectation of 89.5.  Although this is not a particularly significant release, it’s another sign that the economy is trending in the correct direction.

Today’s Fed Speculation:

There’s a Fed meeting next week, and it’s widely anticipated that there will be a change in the forward guidance, specifically that the promise to keep rates low for an “extended period” will be changed to something indicating that the time frame for a rate hike will be determined by the data as opposed to the calendar.  I think the expectation is so widespread that any change is likely baked into bond prices, although I wouldn’t be surprised if things get a little volatile on the 17th.  If you are in the process of getting a mortgage and have a floating rate, it may be wise to lock prior to next Wednesday.

I don’t know that I can summon up any more words on the Fed this morning.  I would direct you to Tim Duy’s December 8th blog post “Fed Updates Ahead of FOMC Meeting” if you want to read some pertinent (and fairly wonkish) insight into what the Fed may be planning for the next few months.  The long and short is that it still looks like the path is being cleared for a Mid-2015 rate hike.  Depending upon the data, of course.

This Week’s Significant Economic Data:

Monday:

• No significant data.

Tuesday:

• Job Openings and Labor Turnover Survey

Wednesday:

• No significant data.

Thursday:

• Weekly Jobless Claims: Expected: 295k, actual: 294k.
• Retail Sales (core, ex-gas and -auto): Expected: +0.5%, actual: +0.6%.

Friday:

• Producer Price Index – Final Demand (headline, month-over-month): Expected: -0.1%, actual: -0.2%.  Core expected: +0.1%, acutal: flat.
• Consumer Sentiment

source: totalmortgage.com

Current Mortgage Rates for Monday, December 8, 2014

On Friday a better-than-expected November jobs report hit mortgage backed securities with the force of an Earnie Shavers right hook.  Although the market eventually found its footing, it remained somewhat staggered for the remainder of the day.  Mortgage rates deteriorated as a result of the sell-off. (For the uninitiated: the simplest explanation of how mortgage rates are calculated is that they are a function of the yield on mortgage backed securities.  When the price of MBS rises, yields fall, and mortgage rates fall.  The reverse is also true.)  The week ahead doesn’t feature much economic data of great import, and I think that we will see rates bounce around current levels until next week’s Fed meeting.


Today’s Economic Data:

There’s some short duration treasury auctions today, and we hear from Dennis Lockhart of the Atlanta Fed, but outside that, there’s not much on the docket.

The Week Ahead:



We’re not looking at a very exciting week, methinks.  On Thursday we get November’s Retail Sales report, and on Friday the Producer Price Index for November.  These are likely the most influential numbers of the week, and some of the last influential data points we’re going to see prior to the last Fed meeting of the year.  As I mentioned above, I think we’re probably in a holding pattern, rates-wise, until the Fed meeting that ends on December 17th.

Today’s Fed Speculation:

Most of the speculation right now revolves around whether or not the Fed is going to remove language from it’s forward guidance saying that rates will be kept low for a “considerable time.” Thrilling stuff.  A lot of what I read seems to suggest that the Fed will switch the language to something indicating that future rate hikes will be data dependent rather than calendar dependent, and that the expectation of a change in language is already largely baked into bond prices.  So unless the statement is more optimistic than expected, I don’t think the removal of the “considerable time” language will cause any seismic changes to the mortgage rate landscape.

This Week’s Significant Economic Data:


Monday:

• No significant data.

Tuesday:

• Job Openings and Labor Turnover Survey

Wednesday:

• No significant data.

Thursday:

• Weekly Jobless Claims
• Retail Sales

Friday:

• Producer Price Index – Final Demand
• Consumer Sentiment

source:  totalmortgage.com