Orlando Mortgage Blog

A long time mortgage rate forecaster went for an eye exam last week and as the doctor was finishing up asked him, "So, how did I do doc? Does it look like I need stronger contacts?"

Smiling, the doctor turned off his equipment and said, "I can't believe you waited this long to come in to see me, Ben. Both your forward and lateral vision has gotten much worse since your last checkup, so your current contacts can't be doing you much good...but as always your hindsight is nearly perfect."

Ok, I worked hard for that one folks. But, all you procrastinating fence sitters out there (love using double entendre when I can), opportunity and decision time may soon be upon you once again.

Apparently even the so-called experts, talking heads and sometime self ordained financial guru's can't get together on whether interest rates are going up, by how much and how fast after the Fed's stop artificially supporting the mortgage market. Well, the crutch gets put away March 31. Few believe rates will sink lower.

The latest market factoid (heard the rumor/not seen the source) being kicked around is that as much as 37% of U.S. mortgages still carry rates higher than 6% today. Whether due to being upsidedown in equity or off the planet for a while these folks haven't taken advantage of lower rates. That's remarkable for those that still can with both fixed and ARM rates having been at or below 5% for at least a year. The difference between a $200,000 payment at 5% vs. 5.5% is nearly $62 a month...and some folks are still waiting? On what? Want to read more?

Today was the last day of the Fed MBS purchase program that started in November of 2008. Tomorrow begins a brave new world for mortgage rates. Though most forecasters don't expect vast movement in the next few days or even weeks as investors try out the market looking for their comfort position in the near term, we're all going to be out there without a safety net.

Mr. Bernanke has stated that the FOMC will continue to monitor results and impact on the mortgage market of this pullback, not wanting to further aggravate an already sickly housing industry. Time will tell. If I were thinking of refinancing, in any way, in the near term I think I'd get in line to buy your ticket. Remember I told you so.

This was a very good article on the "why" today. Read on...

The Feds keep saying they intend to keep rates low (0 to .25%) for an extended period due to weaknesses in the economy. We've all heard those comments. But that doesn't directly relate to long rates (mortgages). So with the Feds pulling out of the MBS (mortgage backed securities) market in a week, congress licking its lips at the possible (legislated) demise or breakup of Fannie and Freddie and the full expectation that DC is chomping at the bit to make new inroads into our pockets to pay for all these social ideas with so many more plans to come that we will probably only have explained after those laws pass too....the bond issues have apparently lost their luster today, though the bond market may have opened flat, the 10 year jumped to 3.82% from yesterdays close at 3.69 and lenders have bumped their afternoon 30 year fixed rates up by an 0.125% to 0.25% across the board...bye-bye 4.875 at zero points, at least this afternoon. Still on the fence? Read more...

So you'd like to take advantage of these historic rates, but you believe your home value has dropped and are concerned about being forced to take Private Mortgage Insurance on a new conventional loan or Mortgage Insurance on an FHA loan. Not to mention whether you have enough equity to finance the costs of closing. In either case you've convinced yourself you'd rather stick with that 6%+ rate (over 35% of home mortgages are said to still be at over that rate level) because of it. Well...

When you Refinance your current mortgage...

The appraisal that is completed on the new loan will establish the value at that time and the new mortgage amount will determine whether or not your new loan exceeds 80% financing. Exceeding 80% is the trigger that would require PMI again generally speaking. If it's 80% LTV or below on your owner-occupied or second home you are in the clear. Losing the PMI portion of the old payment could be another advantage of refinancing the current loan.

There is an alternative available called the Home Affordable Refinance Program also known as "HARP", available to current Fannie and Freddie held mortgage borrowers and the availabilty of that Federal program has just been extended to loans funded no later than June 30, 2011. Most lenders allow up to 105% of the appraised value today without PMI, though the program authorizes up to 125%. This makes refinancing possible today for many that would otherwise not be eligible on a standard conventional basis with or without PMI and without MI on an FHA loan. You can see all the details by clicking on this link to HARP ELIGIBILTY .

Or contact me for personal assistance with your questions.

Bill Wilbanks

If you've ever wondered what the various taxes are based on your state, the following link should be very interesting to you. Read on...