Sacramento Real Estate Views

Home Loan Interest Rates Down

Mixed Economic News Keeps Rates At Historic Lows

I’ve been in the real estate industry for 8 years and have been spoiled the entire time with interest rates that have never gone above about 6.5%.

Historically, I know, as with this housing downturn nationwide, that it can’t last.  The “good” market didn’t last, low interest rates won’t last either.

Currently, low rates are the one bright spot in the entire picture.  First time homebuyers or people new to home buying just don’t appreciate how low rates are by historical standards.

Since 2001, the average weekly interest rate on a 30 year fixed rate mortgage has been at or below 6.97%.  That is an incredible run of low interest rates.

From 1975 to 2001, only once, in 1998, did the average weekly interest rate for at 30 year fixed rate mortgage dip below 7%, the high being in 1981 at 16.63%!

Interest rates, from a historical perspective, are very low.  Taking advantage of them will pay off in the long term.

Freddie Mac Drivel For The Week!

At least the information is mixed this week instead of all bad!  We’ve got that to be thankful for.  It looks like the recovery is firmly established.  For now.  LOL

Frank Nothaft, the Big Wig, Head Economic Honcho from Freddie Mac said this week:

1.  Mortgage rates eased this week from mixed economic data.  The 30 year fixed rate averaging about 4.91%.

2.  Pending home sales fell 7.6% which was unexpected.  (Surprise!)

3.  Job losses were low this week in comparison to numbers over the last year shedding only 36,000 jobs for the week, fewer than expected.

4.  The unemployment numbers were stable at 9.7% nationwide.  (it’s higher here in the Sacramento region)

Overall, not a bad report.  These are recovery numbers.  How low can they go!

Back At The Ranch…

The following quote is from one of my favorite local mortgage brokers.  Pat has stayed with me even when I failed to publish the weekly mortgage post.  Thank you for your diligence Pat.

If you’re looking for a mortgage broker, she is one of the best in the business.  Give her a call.

Pat Murphy, Guild Mortgage, 916-212-9451 or pat@patmurphyloans.com

“We’re holding steady this week at 5% on the 30yr fixed rate mortgage as of this morning.  As you know, rates change constantly; sometimes more than once in a day!  But the real urgency is that in order to take advantage of the Federal first time homebuyer $8,000 tax credit, you must be in contract to buy a home by April 30^th !  “First time homebuyer” is anyone who hasn’t owned a home for the past three years.  If that’s you, don’t wait!  Contact me at (916) 212-9451 or pat@patmurphyloans.com, because I would love to help you finance your dreams!

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Tags: home loans sacramento, sacramento mortgage interest rates

Your Questions Answered!

“Are lenders making loans on lower priced homes?”

I got this question from Debbie in Cameron Park this week and I thought it was a great question.  My initial reaction is that I didn’t see why lenders wouldn’t make loans on these lower amounts.

I called my friend Tim Clark at Capitol Mortgage and my friend at Masters Team Mortgage, Stephen Hart.  They both have closed loans in the lower price ranges within the last two weeks.  Tim closed a $49,000 note and Stephen a $79,000 note.

So yes, it was confirmed through my favorite lenders, loans are being made on lower loan amounts.

“Are lenders modifying loans?”

Because I’ve done articles on loan modification success stories, I get calls every so often regarding whether or not I coordinate loan modifications between borrowers and lenders.  I do not help with the loan modification process but  because I get questions, I called Hope for Homeowners.org to find some answers.  Here is what I’ve been told:

1) If you’re not currently behind on your mortgage, your lender, generally, will not consider you for a loan modification. I know this doesn’t seem to make sense but this is what I’ve been told.

2) Lenders are not modifying principal loan amounts.  They are adjusting interest rates and restructuring loans but, from what I’ve been told, getting a principal loan amount reduction is rare.

My view is that this is the only valid modification tool.

3) If you don’t have the income to sustain your restructured payment, they lender won’t grant the modification.

4) The goal of the lender is to get your payment to 31% of your gross income.

5) “Strategic defaults” are beginning to increase nationwide. A strategic default means the homeowner is so far underwater that they don’t see their value coming back and just walk away from their homes regardless of their ability to make their payment. I’ve been hearing stories of this happening throughout the Sacramento region from many different sources.

6) 50% or more of restructured loans are re-defaulting within the first year of the modification.

7) Don’t call a third party to help with a loan modification until you talk to Hope for Homeowners.org. Although most of the shady loan modification scams have been shut down, they are still some out there.  Help for Homeowners.org is free and is working directly with the lenders to modify loans.

Loan modifications are happening throughout the nation and it is possible to get one. However, with perhaps as high as 45% of homeowners underwater in California (and getting worse), without a principal loan amount reduction most loan modification efforts will not be long term solutions.

Of the 500,000 homeowners that have been given trial loan modifications under the “Home Affordable Modification Program” only 5, yes just 5, have been given principal loan amount reductions.

Please call me if you have any questions you’d like answered.

Thanks for visiting!

Tags: home loans sacramento